Articles

Our Articles section hosts a collection of articles to assist traders of various professional levels.

  • Bond Spreads and Forex Markets​ (part two)

    Forex traders can take advantage of carry trade strategies by observing yield spreads and the expectations for changes in interest rates embedded in those yield spreads. ​ ​​ For example, the spread between the AUD and the USD was declining between 1989 and 1998, due…

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  • Bond Spreads and Forex Markets​ (part one)

    The two-sided strong relationship between currencies and bond spread (e.g. the difference between countries' interest rates) is well-know. The forex market and the currencies affect the monetary policy decisions by central banks, and, conversely, monetary policy decisions impact the price of currencies. For instance, currency…

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  • Forex Tips: Current Account Index and the Forex Market

    The current account index is one of the most famous and useful international macroeconomic indicators used by forex traders in their daily activities. Specifically, the index measures the difference in value between goods, services and interest payments exported and imported during the abalysed month. A…

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  • Cryptosquawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on July 17. After a bearish rejection, bitcoin price started a downward move below $9,200 and $9,150. BTC even broke…

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  • The Bank of Japan’s monetary policy (part two)

    The monetary policy of the BOE changed at the September 2016 Monetary Policy Meeting, when the central bank conducted a comprehensive assessment of the Japanese economic activity and prices as well as the policy effects since the introduction of quantitative and qualitative monetary easing (QQE).…

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  • The Bank of Japan’s monetary policy (part one)

    The Bank of Japan, as the central bank of Japan, decides and implements monetary policy with the aim of maintaining price stability. The inflation target is equal to 2.0% Like any other central bank, the BOJ believes that price stability is important because it provides…

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  • The Bank of England’s monetary policy (part two)

    The Bank of England’s monetary policy affects the value of the Pound through changes in interest rate and money supply. The following rule of thumb should be used by forex traders: the Pound appreciates when interest rate expectations increase, not just from increases in the…

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  • Bank of England’s Monetary Policy (part one)

    According to its goals, the Bank of England sets its monetary policy to achieve the British Government’s target of keeping UK inflation at 2,0% level. This is because the BOE thinks that a low and stable inflation is good for the UK’s economy and its…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on July 10. After a steady rise, bitcoin price struggled to continue higher above the $9,480 and $9,500 levels. BTC is correcting lower and it…

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  • How to read the Forward Guidance about the Federal Funds Rate (part two)

    Investors and traders use the Federal Reserve's forward guidance about future monetary policy for their trading strategies, as it influences forex markets today. In the aftermath of the 2008 Global Financial Crisis, for example, the Fed used forward guidance to support economic activity and a…

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  • How to read the Forward Guidance about the Federal Funds Rate (part one)

    Investors and traders use the Federal Reserve's forward guidance about its future monetary policy for their trading strategies, as the guidance influences forex markets. In the aftermath of the 2008 Global Financial Crisis, for example, the Fed used forward guidance to support U.S. economic activity…

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  • The FED's forward guidance (part two)

    There are many events in the economic calendar a forex trader should follow to get useful information on the Federal Reserve's monetary policy. For instance, the central bank publishes its economic projections on the U.S. economy in the “Summary of Economic Projections,” a document published…

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  • The FED's forward guidance (part one)

    The forward guidance of a central bank, also known as the style the central bank uses to communicate its monetary policy to investors, is one of the most important market event a forex trader needs to know. Understanding in advance what the central bank wants…

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  • Cryptosqawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on July 3. Bitcoin price reacted to the downside below $9,200 and $9,050. BTC even spiked below 9,000 and tested…

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  • Crypto spread

    Cryptomarkets have recently observed the creation of several tools to monitor cryptocurrencies price and bid/ask spreads for many of the popular cryptos across different exchanges. The aim of these software is to enable traders to gain from possibility of arbitrage arising from crytomarket's inefficiencies, due…

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  • Crypto trading bots

    The objective of trading cryptocurrencies is perfectly identical to that of trading any other asset class: a trader buy at a low price and sell at a higher one. Unlike other markets, however - e.g. stock market - which only sometimes is very volatile, cryptomarkets…

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  • Arbitrage in cryptomarkets (part two)

    Crypto arbitrage software allow a trader to gain from cryptocurrency price differences existing in the cryptomarket, capitalising on changes in market price between the same pairs listed on different exchanges. In order to execute an exchange arbitrage, a trader needs to own the cryptocurrencies he…

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  • Arbitrage in cryptomarkets (part one)

    Cryptomarkets are not a good example of efficiency. Empirical evidence shows that market-efficiency in the five largest cryptocurrencies is highly time-varying. In particular, cryptocurrency-markets were mostly inefficient before 2017 and they become more efficient over time in the period 2017-2019. On average, Litecoin is the…

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  • Cryptosquawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on June 26. After testing the $9,000 support, bitcoin price started an upside correction. BTC recovered above 9,200, but it…

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  • Purchasing Manager Index (PMIs) and EURUSD

    The publication of the Purchasing Manager Index (PMI) is always one of the most awaited moments on a forex trader's agenda. These indicators are important because they are able to anticipate the economic cycle. In fact, they are defined in financial jargon as 'anticipatory indicators'.…

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  • Bitcoin Could Hit $50,000, With Just 1.0% Allocation From Institutions

    Crypto research firm Messari has recently estimated that, should institutional investors allocate just 1.0% of their portfolios to Bitcoin, then the most famous cryptocurrency in the world's market capitalization would rise to above $1 trillion and its price jumps to $50,000. The calculation of the impact of…

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  • Bitcoin and Beta Risk (part two)

    Is Bitcoin a good candidate to be considered a reliable proxy for the cryptocurrency market beta? Empirical analysis shows that the world's most famous cryptocurrency has a certain degree of systematic risk, but also that its correlation with the digital market is only moderate, not…

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  • Bitcoin and Beta Risk (Part One)

    In stock markets, beta is a well-known measure of market volatility, or unsystematic risk a single stock has relative to the systematic risk of the entire market, whose beta coefficient is equal to 1.0. The difficulty in defining a market beta in the digital currency…

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  • Cryptosquawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on June 19. Bitcoin price saw an increase in selling pressure below $9,400. BTC followed a bearish path and traded…

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  • Inflation and forex trading (part two)

    The determination of a currency's value and its exchange rates are two fundamental bases of forex trading. Expectations regarding currencies' future value are directly influenced by several economic and political factors related to a country. If a country is perceived as politically or economically unstable,…

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  • Inflation and forex trading (part one)

    The inflation rate is one of the most commonly observed variables by forex traders, because of its strong impact on the value of the domestic currency and the exchange rates. The effects of inflation on the forex market are higher in cases where the inflation…

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  • The Euro Currency Index

    The Euro Currency Index (ECI) is one of the most widely used currency indices in the forex markets. It is measured as the arithmetic ratio of the four major global currencies to the euro: US dollar, sterling pound, Japanese yen and Swiss franc. All currencies…

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  • How to trade at the ECB press conference

    The governor's press conference which follows the publication of the monetary policy decisions taken by the Governing Council of the European Central Bank (ECB) is one of the most eagerly awaited moments for forex traders, as it is the occasion in which the bank discloses…

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  • Cryptosquawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on June 12. In the past few hours, bitcoin price saw a sharp increase in selling pressure after another rejection…

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  • How to read the ECB's monetary policy decisions (part three)

    The monetary policy decisions of the European Central Bank (ECB) represent one of the most awaited moments in the economic calendar of traders, as these decisions have a strong impact on financial markets and forex markets, in particular the euro-dollar one. The most awaited decision…

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  • How to read the ECB's monetary policy decisions (part two)

    The monetary policy decisions of the European Central Bank (ECB) represent one of the most awaited moments in the economic calendar of traders, as these decisions have a strong impact on financial markets and foreign exchange markets, in particular the euro-dollar one. Certainly, the decision…

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  • How to read the ECB's monetary policy decisions (part one)

    The monetary policy decisions of the European Central Bank (ECB) represent one of the most awaited moments in the economic calendar of traders, as these decisions have a strong impact on financial markets and foreign exchange markets, in particular the euro-dollar one. Monetary policy decisions…

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  • The Nominal Effective Exchange Rates (NEER)

    The nominal effective exchange rate (NEER) of a national currency is a weighted average of nominal bilateral rates between the national currency and a basket of foreign currencies. It is an indicator of the external values of the national currency vis-à-vis the currencies of selected…

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  • Cryptosquawk

    Weekly Market Analysis of Cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on June 5. In the past two sessions, bitcoin price mostly traded in a range above the $9,550 support zone.…

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  • The correlation matrix in forex markets

    The currency pairs correlation matrix shows the statistical correlation existing between any currency pair selected by a trader, on his chosen timeframe. Correlation is a statistical index which tells how a currency pair follows the same movement of another currency pair and how strong this…

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  • Are volumes in forex markets useful?

    Is the volume analysis in forex trading really useful? This old question is still open, as there are still many doubts on if the volume is a reliable variable on which a trader can count in his daily activity. Prices transparency in forex markets and…

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  • Measuring PIPS in forex markets

    In the forex market, the "percentage in points" (PIPS), equal to 0.0001, is the basic unit to measure the change of a currency price or the difference between two currency prices. It is used to measure all the currency pairs but the Japanese yen, which…

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  • Breakaway gaps

    A breakaway gap is a technical configuration which typically appears on a trading chart when a currency pair is testing a specific level: a support, a resistance, a trend line, and so on. Initially, the pair is either slightly trending or moving sideways and no…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 28. After a close above the $9,200 level, bitcoin price gained bullish momentum. It rallied above 9,400 and 9,500. BTC is trading comfortably…

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  • Types of gaps (part one)

    Forex gaps, a technical figure very often used by forex traders, occur from time to time during the trading activity. There are several types of gaps. Continuation gaps and exhaustion gaps are the most famous. Continuation Gap: it is a figure which forms when a…

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  • Forex gaps

    In forex markets, a gap is a technical figure observable when the opening price of a candlestick moves away from the closing price of the adjoint candlestick, so that there is no overlap in the two trading ranges. Under normal market circumnstances, candlesticks open at…

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  • The case of the EURUSD's 1.08-1.10 trading range

    International economics textbooks have always taught students that currency exchange rates depend, among many other things, on the monetary policy stance by central banks. A famous rule of the thumb in the International Economics, has always explained that expansionary monetary policies, consisting of cutting interest…

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  • Are CBDCs 2.0 the future of cryptocurrencies?

    Digital currencies, like cryptocurrencies, are changing the way individuals make their transactions. By combining cryptocurrency benefits (disintermediation, high speed, and low cost of transactions) with those of fiat currencies (price stability and being able to act as legal tender), they may challenge the traditional financial…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 22. After a successful break below the key $9,550 support, bitcoin price extended its decline below the $9,200 support. BTC even spiked below…

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  • Multi-indicators forex strategies

    In developing a forex trading strategy, traders often believe that the best thing to do is following only a single technical indicator. Sometimes this is really the right choice but some other times it is better to use a combination of indicators. It is not…

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  • Multi-indicators forex strategies

    In developing a forex trading strategy, traders often believe that the best thing to do is following only a single technical indicator. Sometimes this is really the right choice but some other times it is better to use a combination of indicators. It is not…

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  • The determinants of Bitcoin price (part three)

    What kind of asset Bitcoin is? This is a question which still has not a unique answer, neither among traders nor among global watchdogs. The debate on how to classify cryptocurrencies is more open than ever. The following example is significant to depict the confusion…

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  • The determinants of Bitcoin price (part two)

    After its introduction on the market, Bitcoin has been subject to a fierce competition by many rival cryptocurrencies, with hundreds of tokens created by alternative developers. Bitcoin is currently the most famous global cryptocurrency, as measured by market capitalization, but many other coins (also known…

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  • The determinants of Bitcoin price (part one)

    What are the determinants of Bitcoin price? Are there some features which drive the price of the most famous cryptocurrency in the world more than others? To answer these questions we have to first remind that, unlike fiat currencies, cryptocurrencies transactions are recorded in a…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 15. After a steady rise, bitcoin price faced sellers near the $9,980 and $10,000 levels. As a result, there was a sharp downside…

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  • 'Buy the Rumor, Sell the News' forex trading strategy (part two)

    Central banks' decisions on money supply and interest rates are the most common events that generates both rumors and news on the forex market. When a central bank undertakes an expansionary monetary policy (e.g. it hikes interest rates), it ususally hints that the economy is…

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  • 'Buy the Rumor, Sell the News' forex trading strategy (part one)

    The 'buy the rumor, sell the news' is one of the most used fundamental analysis-based strategy in forex markets. It is a strategy based on market common beliefs, or what forex traders believe will occur in a forthcoming forex event. First, a trader buys a…

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  • Bitcoin's post-halving

    The third bitcoin halving, one of the most long-awaited events for cryptocurrencies investors, occured on May 12. The halving was not accompanied by any particular price movement, and there had been a drop in the previous days, after the world's most famous cryptocurrency had previously…

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  • What Bitcoin Halving is

    What Bitcoin halving is and what it means for the price trend? In order to better understand what Bitcoin halving is and what will change after this operation on the price and in the entire market, you must necessarily take a step back and ask…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 8. There was a strong increase in bitcoin price above the $9,500 resistance. It gained more than +6.0% and broke the 9,800 and…

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  • Fair value strategies in forex markets (part two)

    The fair value forex trading strategy aims to assign a value to currencies based on the strenght of their economies. It is used to compare the performance of economies in order to take decisions on relative currency pairs. After having analysed the most important sectors…

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  • Fair value strategies in forex markets (part one)

    The fair value trading is a strategy based on the fundamental analysis which origins from corporate finance, and in particular from the Western accounting standards of IFRS (International Financial Reporting Standards), according to which the fair value of a company is the total value of…

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  • Differences between carry trade and arbitrage forex strategies

    Carry trade and arbitrage are two of the most useful trading strategies used by forex traders. Sometimes, the former is considered as a particular type of the latter but their features make them quite stand-alone and diverse techniques. More in details, the carry trade is…

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  • Four useful fundamental strategies used by Forex traders

    As we know, strategies used by forex traders can be divided in two main categories: those based on fundamental analysis and those based on techinical analysis. Among those of the first types there are four strategies which are very often exploited by traders. Carry Trade…

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  • Cryptosquawk

    Weekly market analysis of cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 1. After a successful close above $8,000, bitcoin price gained bullish momentum. The BTCUSD surged around 20% and…

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  • How the interest rates affect forex markets

    We know that central bank’s decisions influence the forex market. This happens through interest rates and money supply. Economic textbook teaches that the lower the rate, the less willing the banks are to keep deposits at the central bank, therefore, and the more domestic currency…

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  • Bollinger Bands and candlestick patterns

    Bollinger bands are both a volatility indicator and a tool used by forex traders to generate trading signals. When the upper and the lower bands are close to each other, the volatility of the currency pair is low and so is the trading volume, and…

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  • Bollinger bands strategies

    Bollinger bands are both a volatility indicator and a tool used by forex traders to generate trading signals. When the upper and the lower bands are close to each other, the volatility of the currency pair is low and so is the trading volume. This…

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  • The Bollinger Bands

    The Bollinger Bands is one of the most famous technical tool used by forex traders. They belong to the on-chart volatility indicators, as they have been created to capture market volatility. Graphically, they are made of an upper and a lower band, whose trend depend…

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  • Cryptosquawk

    Weekly market analysis of cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on April 24. In the past few hours, bitcoin price followed a strong bullish path above the $7,200 resistance. The…

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  • Cryptocurrency-backed stablecoins

    As the name itself suggests, cryptocurrency-backed stablecoins (CBSs) are a category of stablecoins backed by cryptocurrencies, or other crypto assets, used as collateral. The working principle is analogue to that one on which fiat-backed stablecoins (FBSs) are based but, while FBS collateralization process usually takes…

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  • Commodity-backed and fiat-backed stablecoins

    x There are stablecoins which are backed by commodities, such as precious metals (e.g. gold, silver, palladium) or oil (Petro). They are called Commodity-backed stablecoins (CBSs), created because much less inflated than other kinds of stablecoins. The value of a CBSs depends on the value…

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  • Stablecoins

    Stablecoins are a particular category of cryptocurrencies, having the caracteristics of being pegged to a (supposed) "stable" asset, such as gold or a strong fiat currency. They usually have a fixed valuation in relation to their underlying asset. Tether (USDT) is the most famous stablecoin.…

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  • Channel trading strategies

    The use of channel trading strategies in forex markets allows a trader to have a better vision of the market behavior compared to that one he could have by using simple trading exploiting only single trendlines. Long and short positions are taken at the upper…

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  • Cryptosquawk

    We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on April 17. After a sharp rise, bitcoin price faced a strong selling interest near the $7,200 resistance. BTCUSD corrected lower below 7,100 and it…

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  • Channel trading

    In forex markets, price channels trading is a set of strategies which is based on the traditional trend line idea. The difference with respect to a typical trend line is that, instead of drawing a simple and single line, price channels require to draw both…

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  • ZIRP policies and risk of inflation could boost demand for stablecoins, cryptocurrencies

    Zero or negative interest rates policies currently undertaken by global central banks could lead to a greater demand for stablecoins and for cryptocurrencies more generally, because now there's no opportunity cost when it comes to holding USD-backed stablecoins, as opposed to holding USD in a…

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  • Forex arbitrage (part two)

    Forex arbitrage strategies exploit the differences in currencies' quotes, rather than variations in the exchange rates of the currencies in a currency pair. Algorithmic trading systems have shortened the timeframe for forex arbitrage trades. In the past, price differences could last up to several minutes;…

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  • Forex arbitrage (part one)

    Arbitrage is one of the most used strategy in forex markets. It exploits currency price differences. Thanks to an arbitrage strategy, a trader buys and sells currencies whose prices are currently divergent but extremely likely to rapidly converge. The effectiveness of the strategy is based…

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  • Cryptosquawk

    Weekly market analysis of cryptocurrencies We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on Friday, April 10. After a minor downside correction, bitcoin price found support above the $7,120 level. BTCUSD is rising…

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  • The effects of May’s halving on Bitcoin price

    Next May, the third-ever Bitcoin's halving will take place, meaning that half of the current Bitcoin will be mined. This event occurs every four years and may boost Bitcoin prices, although other key drivers could have a more significant, longer-term impact. This is what many…

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  • Closing prices, line ranges and identification of trends (part two)

    A famous tenet of Dow theory affirms that a trend persists until there is a clear evidence that it has reversed. Dow took this idea from Newton's first law of motion, which states that an object moves in a given direction until a force modifies…

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  • Closing prices, line ranges and identification of trends (part one)

    One thing to bear in mind with Dow's theory is that it relies solely on daily closing prices and does not take the intraday movements into account. According to this theory, for a trend signal to be confirmed, the closing price has to signal the…

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  • Dow Theory (part two)

    Let us look at four other postulates that are at the basis of Dow's theory, on which the technical analysis of financial markets is based. The market discounts all available information One of the fundamental postulates of Dow's theory states that the market reflects all…

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  • Cryptosquawk

    As in 1933, is there a threat to Bitcoin in the 2020s? In 1933, the US banned the hoarding of gold and ordered US citizens to deliver their gold to the Fed. Is there a similar threat to Bitcoin in the 2020s? This is the…

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  • Dow theory (part one)

    The Dow theory is one of the pillars of the technical analysis. It origins in the theory formulated in a series of articles written by Charles H. Dow and published on The Wall Street Journal (The Dow Theory, 1932). Dow basically stated that all the…

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  • Trailing stop

    According to an accepted definition, a stop-loss is that level which, if exceeded by a currency pair, results in the automatic closing of a position before a target is reached, generating a loss. A take-profit is the level that, if exceeded, determines the automatic closing…

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  • Higher highs and lower lows in Forex markets

    In Forex markets, a higher high occurs when a currency pair closed higher than the day before's high. This is a signal of traders' confidence in the market trend and hints the upward trend can endure. A lower low occurs instead when a pair closed…

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  • Stop-loss and Take-Profit

    Stop-loss and take-profit are two important tools available to forex traders when they want to plan a profitable trading strategy. The use of these tools can improve overall portfolio performance or reduce the level of risk. For this reason, the first thing a trader must…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on Friday, March 27. Bitcoin made another attempt to surpass the $6,800 and $6,850 resistance levels, but it failed. The pair…

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  • Volume in forex markets

    Volume is one of the most important indicator in financial markets. This is true especially with stock markets, where volume data are easily available. A feasibility that does not exist in forex markets, as they are highly decentralized, unlike the stock markets, which are strongly…

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  • Empirical evidence shows forex autotrading performs better

    Does automated trading perform better than the other trading techniques? This is an old, still open question, to which only emprical evidence can provide answers. Three researchers, Antonio Alonso-Gonzalez, Marta Peris-Ortiz, Vicent Almenar-Llongo in their paper "Providing Empirical Evidence from Forex Autotrading to Contradict the…

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  • The timeframe choice in forex markets

    The choice of the right timeframe in forex markets is fundamental for a successful trading. Form the 1-minute to the 1-hour (or even higher) there are a lot of opportunities among which a trader can choose. Both low or high timeframes have pros and cons.…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on Friday, March 20. After a successful close above $5,550, bitcoin gained bullish momentum above $5,850. BTCUSD is up more than…

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  • The Most Traded Currency Pairs of Forex in 2020

    According to BIS data, more than 50.0% of trades in Forex market involve the US dollar. The EURUSD is the most traded currency pair in the world, with about 30.0% of the total dollar Forex turnover. This currency pair is the most used by traders…

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  • Currency pairs volatility

    In forex markets, volatility measures the variation in a currency pair price over time. The broader the scope of the variation, the higher the volatility. For example, if the pair EURUSD has sequential closing prices of 1.111, 1.113, 1.112, 1.111, then it is much more…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). After a daily close below $7,800, bitcoin started a strong decline. BTCUSD tumbled, testing 4,000 and 3,950 levels. It then recovered losses above 4,500 and…

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  • Cryptocurrecies are not (yet) a safe haven

    Cryptocurrencies have plunged into the generalized sell-off that hit hard the financial markets yesterday, after the decision by the European Central Bank to leave interest rates unchanged, despite the crisis caused by the corona virus at a global level, and the assumption of monetary stimulus…

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  • Technical analysis and Bitcoin

    Many traders ask themselves what is the best way to exploit technical analysis to trade bitcoin succesfully. This is not an easy question to answer. Technical analysis is a tool which can be surely used also with cryptocurrencies. The trouble is that the crypto market…

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  • Technical Analysis: pennants

    In forex markets, pennants belong, together with rectangles, to the so-called 'continuation chart patterns', those who are formed after strong market moves. They are observable after a long upward or downward trend, when buyers or sellers take a break before taking the pair further in…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the usual weekly crypto market analysis on the last trading sessions based on Aayush Jindal (Cryptonews.com). In the past two trading sessions, bitcoin price followed a bullish path above the $ 9,000 resistance level. It is showing positive signs…

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  • Forex CFD: an example

    Suppose you buy 1,000 CFDs on the EURUSD currency pair at the price of 1 euro each. The required margin is € 150, assuming a margin ratio of 15.0%. We also assume that we sell this CFD stock after 20 days at the price of…

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  • Contracts for Difference (CFDs)

    All forex traders, including beginners, have heard of CFDs at least once, which are among the most widely used financial instruments in the foreign exchange market. A CFD, an acronym for Contract for Difference, belongs to the category of derivatives and it is a contract…

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  • Should Bitcoin still be considered a safe-haven?

    This is an old question and we have spoken many times about it already. But the latest evidence on the role of Bitcoin as a safe-haven asset seems to be quite unquestionable. The most famous cryptocurrency in the world has had a great chance to…

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  • Volume spread analysis

    The VSA (Volume Spread Analysis) was developed by Richard D. Wyckoff in 1911 and is characterized by its discordance with market analysts who trade using only the graphic patterns. Wyckoff believed that simple mechanical or mathematical analysis techniques had no chance of winning against the…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the crypto market analysis on the last trading sessions made by Aayush Jindal (Cryptonews.com). Bitcoin corrected higher above $8,650 and $8,700. However, the previous supports near 8,850 and 9,000 prevented a convincing upside break. As a result, it is…

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  • Leading and lagging technical Indicators

    Forex traders are used to make a distintion between leading and lagging indicators. Leading indicators are those which anticipate further currency price movements. They provide a trader early signals of entry or exit from the market. They indicate price momentum over a number of periods…

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  • Technical indicators

    As we already know, in their daily trading activitiy, traders can use either the fundamental analysis or the technical analysis. Fundamental analysts attempt to evaluate a currency's intrinsic value based on financial or macroeconomic data, while technical analysts observe patterns of price movements, trading signals…

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  • Cryptosquawk

    Cryptos weekly market analysis We report the crypto market analysis on the last trading sessions made by Aayush Jindal (Cryptonews.com). After tagging the $9,400 area, bitcoin started an upside correction above 9,550. It even recovered above 9,650 and it is currently consolidating. On the upside:…

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  • Yields, risk and liquidity in forex markets

    In his currency portfolio choices, a good trader should not only look at the expected return of a currency but also at its risk and liquidity characteristics. If, for example, the yield of a currency varies very unpredictably, traders may be reluctant to invest in…

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  • The three principles of technical analysis

    Unlike fundamental analysis, which is based on the observation of macroeconomic data and the analysis of economic relations, forex technical analysis is based on the simple idea that a currency's price encompasses all relevant information impacting the forex market. This is why a technical analyst…

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  • Cryptosquawk

    Cryptos weekly market analysis Bitcoin started a downside correction, after a further rejection of $10,500 level. The 10,350 and 10,200 support levels were broken and the coin is currently consolidating losses, with signs of a corrective decrease towards 9,850. Similarly, there was a minor decline…

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  • The correlation between sovereign bonds and currencies

    Sometimes forex traders are used to trading not only currency pairs but also sovereign bonds in their daily acitivity. If you have a portfolio consisting of both currencies and sovereign bonds, you need to understand what relationship exists between the two, in order to plan…

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  • Bitcoin, the new safe haven

    In forex markets, a safe haven currency is defined as a currency used like a hedge for a portfolio of risky assets conditional on movements in global risk aversion. The Japanese Yen and the Swiss Franc are considered notable examples of safe currencies. Over the…

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  • Backtesting forex strategies

    The question that every forex trader who follows the technical analysis always asks himself in his trading activity is what are the most performing indicators. Understanding which of them guarantee better performances and higher profits is essential to be able to select them, so as…

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  • Cryptosquawk

    Bitcoin rises above $10,000 The price of bitcoin extended its rally in the first week of February, rising above the psychological threshold of $10,000, precisely to $10,158 on February 9th. Ethereum has risen above $215 and XRP has moved closer to the resistance of $0.292.…

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  • The correlation between Forex markets and commodities

    The US dollar and gold don't get along very well in the forex markets. The empirical evidence shows that when the first goes up, the second goes down. And viceversa. The economic explanation for this trade-off is that, during negative economic cycles, traders sell dollars…

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  • Monetary variables and Bitcoin price

    For many analysts, the most important financial innovation after the 2008 financial crisis was cryptocurrencies. Cryptocurrencies are used as a payment method and represent an alternative investment with diversification advantages. Cryptocurrencies were also born in response to the obstacles encountered by current payment systems that…

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  • Head and shoulders patterns

    Every trader has heard, at least once in his activity, about the head and shoulders (H&S) pattern, one of the most famous pattern in the technical analysis. That is simply a chart formation made by a baseline and three peaks, with the outside two lower…

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  • Cryptosquawk

    Bitcoin Breaks 200-day MA After bitcoin crossed the 200-day moving average line, recognized as one of the most important technical indicator, last week, some analysts believe that this could be the dawn of a long-lasting upward trend. Tom Lee of Fundstrat Global Advisors, for example,…

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  • Swing trading

    Swing trading is a style of trading that capture gains in currency pairs over a period of time which span from a few days to several weeks. Swing trading is mainly based on technical analysis, because of the short-term nature of this style but the…

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  • Exchange rates predictions and oil prices

    Oil prices are not a good proxy to predict exchange rate movements, and vice versa, a recent study by Joscha Beckmann, Robert Czudaj and Vipin Arora (EIA) discovered. A not very helpful result for traders who deal with oil and USD. The authors have identified…

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  • Cryptosquawk

    Bitcoin ETFs could incentivize adoption, study reveals A recent survey has found that U.S. financial advisors would be keen to invest their clients' money into cryptocurrency exchange-traded funds (ETFs), hinting that should Bitcoin ETFs become easily available, widespread BTC adoption could follow, Cryptonews.com reports. "The…

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  • Forex futures

    Forex futures are exchange-traded currency derivative contracts which oblige a buyer to buy a given amount of a given currency at a set price and predetermined time. They are used for two main reasons: hedging, to reduce exposure to the risk associated to currency fluctuations,…

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  • CBDCs and Bitcoin: substitutes or complementary?

    Eurozone, United Kingdom, Japan, Switzerland, Sweden and Canada, with their central banks, have set up a working group at the Bank for International Settlements (BIS) with the aim of creating digital currencies to be circulated parallel to the fiat currencies in their countries. The news…

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  • The effects of Quantitative Easing on Forex

    The Quantitative Easing (QE) was introduced by the main global central banks as an instrument of expansionary monetary policy, with the aim of stimulating stability and economic growth after the great 2008 financial crisis. With QE, the central bank purchases public (sovereign) and private (corporate)…

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  • Cryptosquawk

    Can 2020 be the right year for CBDCs? Many central banks are developing projects to introduce own cryptocurrencies, and year-2020 could be the right year to observe the first examples. J. Christopher Giancarlo, the ex-chairman of the Commodity Futures Trading Commission has established the Digital…

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  • Continuation patterns

    If a trader does not believe in the random walk theory applied to forex markets, according to which currencies move randomly, he must believe that prices follow defined patterns, geometric shapes which emerge from data that provide him a useful tool to understand the price…

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  • USDCHF bull/bear flag trend continuation patterns, a real profitable strategy

    Technical analysts have always manteined that one can forecast the future forex market movements by observing the market’s performance in the past. As a consequence, by using technical analysis it is possible to obtain extra-profits. The empirical evidence provided by economists on this topic does…

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  • Are cryptocurrencies and interest rates correlated?

    According to the most basic economic relations studied in International Economics, currencies are closely correlated with interest rates trend. This is why traders always pay close attention to central bank meetings, when interest rates and money supply are decided. The correlation between interest rates and…

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  • Cryptosquawk

    Bitcoin erases 45% of recent price gains Bitcoin fell at the end of the last trading week, erasing a major portion of the recent price gains. As Omkar Godbole (Coindesk.com) writes, "after a drop back to below $7,800, the cryptocurrency has erased nearly -45% of…

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  • Why any portfolio should contain from 1% to 6% of Bitcoin

    The study by Yale economists Aleh Tsyvinski and Yukun Liu we discussed yesterday on whether cryptocurrencies do in fact represent a whole new asset class, an alternative to traditional, fiat currency and on whether the market’s current volatility is something to worry about show an…

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  • Why cryptos must be a part of any portfolio

    What is the real role of cryptocurrencies? This is the most frequent question which circulates among experts since the day Bitcoin appeared on the scene. Emprical evidence supplied by top economists' studies starts to supply the first answers and shows how cryptos have a great…

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  • Current exchange rates and changes in expectations

    Many traders, in their daily trading activity, buy or sell currencies by observing the current exchange rates and changes in expectations. Let's take, for example, EURUSD trading and study the effects of an expected future EURUSD exchange rate increase on the current exchange rate level.…

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  • Cryptosquawk

    Market evidence on U.S. strike in Iran re-opens debate on Bitcoin role as safe haven Over the last weeks, we have discussed a lot about the possible role of Bitcoin as a safe haven. Over the last days we had another test about this idea,…

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  • The diversification of a Forex portfolio

    The main idea contained in the currency portfolio theory is that a set of currency pairs with different risk and return have a higher performance and a lower risk compared to that obtained by trading in a single currency. The goal of currency portfolio diversification…

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  • The money supply and the EURUSD exchange rate

    One of the questions that forex traders most frequently ask themselves is the following: how does the euro-dollar exchange rate change when the Federal Reserve or the European Central Bank change their money supply? The answer is quite simple. Suppose, for example, that the Federal…

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  • Cryptosquawk

    Japanese authorities wants 50% of transactions to be made in a new Stablecoin by 2025 Tokyo authorities revealed plans to ensure that 50% of all payments in the Japanese capital would be made using a new stablecoin by 2025, Cryptonews's Alper reports. "Per Nikkei, the…

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  • The characteristics of the Forex markets

    Currencies are traded in many international financial centers. According to the Bank for International Settlements (BIS), the daily turnover in the forex markets in September 2019 touched the record of 6.6 trillion dollars. The City of London represents the largest world forex market, with a…

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  • Forex strategies based on currency pairs correlation

    The observation of correlations among currencies can help a trader to hedge or diversify his exposure to the Forex market. If he has a directional bias for a given currency, he can spread the risk by using two strongly positive correlated pairs, in terms of…

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  • Cryptosquawk

    BSG and SBI partner to create a global digital ecosystem Boerse Stuttgart Group, the operator of the second-largest German stock exchange, and Japanese financial giant SBI has partnered to create a "global end-to-end ecosystem for digital assets", although there is still no timeline when it…

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  • Currency correlations

    Correlation is a statistical indicator which, when applied to Forex markets, measure the extent to which two currency pairs move in the same, opposite, or completely random directions over a period of time. Analysis of pairs relationships using historical data is useful to forecast future…

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  • Bitcoin is useful to get diversified portolios

    Yesterday, we discussed whether Bitcoin could be a safe asset and/or a hedge. We concluded that, perhaps, Bitcoin is only a useful way to diversify portfolios. We need empirical evidence to corroborate this hypothesis. Marie Brière, Kim Oosterlinck and Ariane Szafarz (Centre Emile Bernheirm) in…

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  • Is Bitcoin correlated with safe havens?

    The question whether Bitcoin could be considerated as a safe haven is as old as the most famous cryptocurrency. Indeed, the question is rather strange, as the volatility level and possibility to be stolen surrounding Bitcoin is clearly at odds with the definition of a…

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  • Cryptosquawk

    ECB's Lagarde opens to stablecoins The newly elected president of the European Central Bank, Christine Lagarde, opened the door to stablecoins, the digital currencies anchored to fiat currencies of physical assets. In a tweet published by the ECB on December 12, she wrote that: 'My…

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  • How to trade before and after political elections

    The national political elections of a country are always one of the events that generate a lot of volatility on the Forex markets, with the relative possibilities of gains. Trading near these events, however, is not easy, since a trader must constantly inform himself about…

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  • The volume in Forex trading

    Nei mercati forex, il volume è definibile come il totale di scambi effettuati in un determinato intervallo temporale. A seconda del timeframe impostato, è possibile misurare il volume di scambi a 1, 5, 15, 30, 60 minuti e così via. Maggiore è il numero di…

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  • The crossover of moving averages

    One of the most used tools in forex trading is the crossover of the moving averages. The advantage of using the moving average is its simplicity. In a crossover, the signals do not come from the price behavior compared to its average, but from the…

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  • The Future of Money and the Payment System

    Cryptonews.com published a lecture held by Agustín Carstens, General Manager of the Bank for International Settlements at Princeton University, Princeton, New Jersey, USA, on December 5, 2019. We publish the main highlights of the speech: Theoretically speaking, money is a social convention, hence anything could…

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  • Cryptosquawk

    Deutsche Bank thinks that crypto revolution is 'inevitable' Another big global investor has placed its bet on the crypto revolution. Germany's Deutsche Bank wrote in its report 'Imagine 2030' that the forces that hold the current fiat money system together look fragile and, over the…

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  • Trading the pound on Brexit news (part two)

    By considering mere fundamental (macroeconomic) factors, a pound at $1.30 level is undervalued. Any “no deal” scenario will push the Sterling down to $1.20. On the contrary, any “deal” scenario will push the currency up at around $1.50 or even higher. This means the reward/risk…

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  • Trading the Pound on Brexit news (part one)

    The pound has been the most volatile developed currency since the June 2016 Brexit referendum, because of the uncertainty surrounding the UK’s economic and political future, after its forthcoming departure from the EU. This is why traders always pay a lot of attention to Brexit-related…

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  • Investors still believe the Fed could hike rates in 2020

    Investors bet on the fact that the Federal Reserve will keep interest rates unchanged in the next FOMCs, as showed by the CME FedWatch. The FedWatch calculates the implied probabilities assigned to a range of target interest rates for all upcoming FOMC meetings. The euro…

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  • Cryptosquawk

    Bitcoin rebounds After hitting $6,600 at the beginning of the last trading week, Bitcoin rallied +10,0% last Friday, jumping to $7,300 before retracing. Major altcoins have also reduced their losses. Bitcoin trimmed its weekly losses to -16,0% and it is down by -21,0% in the…

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  • The polls and the pound

    The Pound hit a six-month high against the euro yesterday, after the publication of an expected opinion poll in the United Kingdom, which showed how Prime Minister Boris Johnson is on track to get a comfortable majority in the next December elections. The MRP poll,…

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  • Failure and success of cryptocurrencies

    Several cryptocurrencies have been launched in recent years, often with very high expectations. Many of them failed soon after being snubbed by traders. According to Coinopsy.com, a crypto information provider which keeps track of crypto failures, 1,085 digital coins have already failed. A considerable figure,…

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  • Central banks and cryptocurrencies

    The news that the People Bank of China, the Chinese central bank, is seriously intent on issuing its own digital currency, called 'digital yuan', has provoked unprecedented international reactions. After years in which the central banks and the main international policy-makers, from the G20 to…

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  • COT Report-based Forex strategies

    COT Report (Commitment of Traders) is one of the most important provider of volume data in Forex. It is published by the Commodity Futures Trading Commission every Friday, around 2.30 pm EST. Traders are particularly concerned with the role that volume plays in driving currency…

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  • Interest rates, monetary policies and trading

    Interest rates are probably the main factor that contributes to determining the value of a currency, according to macroeconomic theory, as international investors want to own more local currency when the financial assets denominated in this currency increase in yield, just by virtue of the…

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  • When is the best time to enter a forex trade?

    This is a fundamental question for traders. The trouble is that there is no a single answer as this depends on the strategy and style of trading, which is personal. Nevertheless, we can summarize three approaches which are among the most popular. Trend channels are among…

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  • Fundamental and technical analysis in forex markets

    Fundamental and technical analysis in forex markets show several differences. Fundamental analysis is a technique of examining currencies so as to identify the intrinsic value of exchange rates for long term investment opportunities. As against, technical analysis is a method of evaluating and forecasting currencies…

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  • Correlation between currency pairs

    Currencies are always quoted in pairs in forex markets, one currency price against another. For example, the price of the euro is quoted against the US Dollar, the Swiss Franc against the Sterling, the Turkish lira against the Brazilian real and so on. Currency pairs…

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  • Are Bitcoin and gold correlated?

    In times of economic stagnation and financial instability, like these, both Bitcoin and gold are labelled as safe-haven assets, a hedge against financial risks. However, while the demand for gold has historically increased during uncertain times, we don't have sufficient data to say the same…

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  • Things to do and mistakes to avoid in carry trading

    Yesterday, we discussed about the main characteristics of carry trading strategies. Today we discuss about the actions a trader must follow to be successful with this strategy and the mistakes he has to avoid. The first think to do is following the actions of central…

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  • Carry trading

    Carry trading is one of the most famous forex strategies, which requires going long a 'high-yield' currency against a 'low-yield' one. The Japanese yen or the Swiss franc are commonly used as examples of 'cheap currencies' while emerging markets currencies as 'expansive currencies'. The success…

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  • From Draghi to Lagarde: what impact on the forex market?

    The mandate of Mario Draghi, the most powerful governor in the history of the European Central Bank, has come to an end. The savior of the euro, which will go down in history for his famous "whatever it takes" pronounced on July 26, 2012 in…

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  • The Euro and the Brexit

    When it comes to the effects of Brexit on the forex markets, it is normal to immediately think of the effects on sterling. The pound has lost -14.0% against the Euro since June 2016, when the fateful referendum which established the will of the British…

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  • The best 5 currencies to trade

    Forex trading is a way to diversify a trader's portfolio. It's also a very profitable business that can offer a trader opportunities to make money. But what are the best currencies to trade? Here is a list of the top five: 1. U.S. Dollar (USD)…

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  • The role of macroeconomics in forex trading

    Macroeconomic factors have always driven forex markets, as they influence traders' decisions and determine the value of a currency. Overall economic strength depends on many events and information that may rapidly change. Some of the factors that influence an economy's stance and drive changes in…

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  • The Correlation Between Oil and the Dollar (and how it is changing)

    Crude oil shows a strong correlation with many currency pairs in Forex markets. This evidence is confirmed by many empirical studies and supply a great help to forex traders. The main reason for this correlation is that oil contracts are denominated in U.S. dollars. Therefore,…

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  • Three Typical Short-term Forex Strategies (and how they work)

    Carry trade, momentum and term spread are among the most widely practised short-term multicurrency investment strategies in Forex markets. A carry trade strategy is one in which a trader borrows in currencies with low interest rates (funding currencies) and invest the sum in those with high interest rates…

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  • Swing Trading vs. Scalping Strategies in Forex markets

    Scalping and swing trading are two of the most popular trading strategies used by traders in their daily activity. They are very different and, sometimes, they are considered as opposites. The reason is simple. While scalping requires a trader to do hundreds of daily operations,…

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  • Moving Average Cross

    The Moving Average Cross is a simple but very effective strategy used by forex traders based on the intersection of two standard indicators used in technical analysis, the 'fast' exponential moving average and the 'slow' exponential moving average. We recall that the exponential moving average…

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  • Long or Short in Forex Markets

    ‘Going long’ in the ForEx markets means buying a currency, or a basket of currencies, betting on the possibility that their value may rise in the future, with the aim of making a profit by selling them when their price is higher than the purchase…

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  • Long Short Strategies in Forex Markets

    In Forex markets a long/short strategy is used to maximise traders' profits, from both the rise and fall of exchage rates. The reason why it was created is that such a strategy is more profitable than the simple 'buy and hold', or 'just go long'…

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  • When the rules of thumb are not respected in Forex market

    The international monetary economics textbooks teach a trivial rule of thumb: a domestic currency appreciates when a central bank hikes interest rates, as it makes the financial assets denominated in that currency relatively advantageous and depreciates when the rates are lowered, for the opposite reason. This should…

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  • Will Bitcoin exceed $100,000?

      Will Bitcoin exceed $100,000? Yes, at least according to the forecasts made by Murad Mahmudov, an old analyst of the investment bank Goldman Sachs who later became a strong supporter of Bitcoin, who has actually stated that the cryptocurrency will reach a value of $100,000.…

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  • Autotrading performs better

    Does Forex autotrading perform better? Is it better to trade by yourself or through a robot, expert advisors and so on? These questions are very easy to find in forex markets nowadays, as an increasing number of financial institutions rely on automated trading. This phenomeno…

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  • Things to know when trading the GBP/USD pair

    The GBP/USD Basics and History GBP / USD pair has a long history. Trade has been going on between these two currencies for so long that there is no way to state any kind of relative value for an original Pound other than to its…

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  • Correlation Among Cryptocurrencies

    Ever since cryptocurrencies have made their appearance on the Forex markets, traders have wondered what their level of correlation was. Knowing whether digital currencies follow the same trend or not is decisive for adopting profitable pair trading or portfolio diversification strategies. Two recent studies by…

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