Fundamental versus technical analysis

Apart from having a bear or a bull approach towards market trends, there are two main types of traders, namely fundamental and technical traders.
The fundamental traders’ trading decisions are based on market news and corporate data, while technical traders try to analyse the charts and this way they seek to predict the possible direction of the specific instrument. Of course both party think they are right and the other party is wrong.
It’s really hard to decide what types of traders are more successful, because there are examples from both groups. It also depends on what instruments you trade. Some traders can be really good with stocks if they are up to date with the underlying company’s data. However for example on the forex market where a very big percentage of the trading activity is done by robots it’s quite important to consider technical levels as well.
Fundamental analysis
When we talk about fundamental analysis we mean analysing actual economic data. We can analyse corporate reports, macroenonomical reports such as GDP and inflation numbers, and interest rate decisions among others. Financial intstruments tend to react intensively when unexpected events occur.
Some traders try to trade these so-called fundamental announcements. When good or bad data get released about a corporation it can determine the direction of its stocks for a while and can bring good trading opportunities for the traders.
Disasters
Sometimes disasters can also happen for example the 11th September terror attacks. These are absolutely unexpected events and this time most participants of the market start panicking and sell their assets thus avoiding further risks.
These sell-offs can create huge turbulances on the market as more and more people start selling when they see that the price sharply falls. In times like this huge losses can take place just in a few days. This is one of the reasons for using a stop loss because unexpected market events can and will occur from time to time.
Economic cycles and crisises
The economy moves in a cyclical way therefore there are times when corrections occur meaning the trend breaks for some time. It can be just a few days but, several weeks or months and even years. For instance during the 2008-2009 economic crisis many stock markets suffered around 50% losses.
 When prices are at a low level for a longer time buyers slowly come back to the market and the price starts rising again.

Such event took place in 2009 when everything could be bought for a very cheap price. Many economists called that period the start of the latest bull market*. 

*generally everything is in uptrend, there are more buyers than sellers

Sources for economic news
There are many sources to find out about fundamental news. The most often used source for learning fundamental data is http://www.forexfactory.com 
This site marks the importance of the data. Yellow news usually don’t cause considerable movements, orange ones can cause some changes but not really strong ones and red news cause significant movements most of the time, especially when the numbers are different than expected.
Endorsements
Sometimes celebrities promote companies and this can create strong demand for the stocks of the promoted firms. It can be intentional or random. Several companies pay for endorsements and this method can boost sales thus make the stock price higher.
When a filmstar wears a branded accessory afterwards many people might want to copy his style. For example following Tom Cruise’s performance in Top Gun wearing Ray Ban sunglasses Ray Ban’s sales rocketed.
Technical analysis
Technical traders look at the graphs and try to predict where the instrument will go. There are several indicators which use mathematical calculations. One of the most popular indicators is the RSI, that stands for Relative Strength Index.
If its level is over 70 it means the instrument is in the oversold territory hence a pullback is expected soon.
If it’s between 50 and 70 it is a bullish sign.
If it is around 50 it’s a neutral sign meaning the bulls and the bears can’t decide which way the intrument should go.
If it is between 30 and 50 it is a bearish sign.
If its under 30 it means that the instrument is in the oversold territory and a rebound can be soon expected.

Chart patterns

There are also many patterns on the chart that traders use to predict the directions. Some patterns signal a trend reversal while others confirm the continuation of the current trend.
The main ones are the following:
Double bottom: when price touches the bottom line again it can be a buy signal that lasts to the top of the previous high.
Double top: it is the reversed version of the above formation.

Head and shoulders: it is a relatively rare but strong formation and when price reaches the right “shoulder” it signals a strong selling signal that can last to the previous low.

Reversed head and shoulders: it is the reversed version of the above formation.
Triangle: when triangles are formed prices tend to go in the direction where they broke out from the triangle.

There are several other formations, but most of the traders (even the professionals) use the main ones above to predict the movemnets of the prices.

Trends
“Trend is my friend until it bends.” As the saying goes, the most fundamental tradig technic is get on the trend, go with it and get off before it ends. 

Of course it is not as easy as it sounds, but it is still much better to follow the trend than play some extra risky counter trend techniques that won’t work most of the times.

We are talking about trends when we can see higher highs (uptrend) or lower lows (downtrend).
If we connect the lower lows or higher highs with a line we can see a trendline and we can stay in position till the rate breaks down the trendline.
This is the most basic trading technic nonetheless it is very effective and has a very high hit rate.
Japanese candles
There are three main types of charts namely bar chart line chart and candlestick chart. Most traders use candlesticks charts because candles are the most accurate in predicting expected price movements. Reading candles takes some time but once we get used to them they will tell us a lot about the current picture of the instrument.

Candles can be used for all the time frames from 1 minute candle to month candle. The bottom line is the colour of the candle. 

When the price closes higher in the given timeframe than where it started it is a bullish candle (usually green clour is used to indicate this) and when the price closes lower than where it started it started it is a bearish candle.

Once you familiarize yourself with trends,chart patterns and candles you will be ready to start trading as a technical trader, but I strongly suggest checking the date of fundamental announcements prior to trading as the news can seriously upset the picture.
If you are interested in other trading related topics, read about trading psychology and money management!

If you are ready to trade click here!

How to choose a broker

When you decide where you want to start trading you need to consider several factors. Among others you need to make sure your broker can be trusted. Protecting your capital is the most important aspect of trading and it means not just the using of stop loss, but to trade at a safe broker where you can withdraw your funds anytime.
 What are the features of a good broker

-transparent operation
-regulated and licenced broker

-clients funds are kept separately and secure

-wide range of tradable instruments

-helpful customer service in several languages

-well-known platform, for example Metatrader4

-possibility of “trade on the go”

-expert advisors are welcome

-flexible leverage

-no requotes

-account in many currencies

-website in multiple languages

-free demo account

-no huge deposit requirements
Transparent operation
It is associated with all the above mentioned features. A transparent broker is regulated and licensed. It has a responsive customer service and a physical headquarter. Its website is clear and includes detailed information about the company, its licences, trading platform, tradable instruments, promotions (conditions of bonuses), deposit guarantees and general terms and conditions.
Regulated and licenced broker
The broker has to have a licence for operation in the country where it is located. On top of that it has to be regulated in those countries where it operates.
Clients’ funds are kept separately and secure
It is a very important factor as any company can go bankrupt without prior notice. However if the clients’ funds are stored separately – preferably in a well known bank in a financial centre, for example in London – a bankrupt situation won’t affect the withdrawing of client funds.
Wide range of tradable instruments
As there are several tradable instruments nowadays that are available even for retail traders it is important that the chosen broker should have quite many instruments to offer. Some traders prefer currencies while others trade indices or commodities.
Helpful customer service in several languages
Most people prefer to do deals in their native language, therefore it is better to choose a broker that have customer service in multiple languages.
Well-known platform
The most popular platform today is the Metatrader4 software (MT4). This platform is available at most brokers and has many functions including the option for using forex robots (expert advisors). 
Possibility of “trade on the go”
When you execute a trade you want to make sure that you can follow it up even if you are not at home. Therefore mobile trading applications for smartphones and tablets are necessary nowadays. Choose a broker with this option!
Expert advisors are welcome
When you use Metatrader4, expert advisors (automatic trading robots) can be used regardless what broker you choose for trading. 
Flexible leverage
Some brokers use fixed leverage, typically x100, but most of them apply flexible leverages. It means you can change the leverage anytime typically from 2x to 1000x and between. 
No requotes
It can be very frustrating when we place and order and the trade is executed at a different price. Therefore you should choose a broker where there are no requotes.
Account in many currencies
Most traders trade in USD, some of them trade in EUR and others trade in their home currencies. It is convenient when you can trade in your own currency though it is not the most important factor when choosing a broker. However there can be some exchange losses when you trade in a foreign currency.
Website in multiple languages
When the broker’s website is in multiple languages it usually means that the company operates in many countries. It creates trust and shows that the company has presence in many territories.
Free demo account
If you are a beginner trader you should familiarize yourself with the trading platform and its features. For that reason a demo account is an optimal solution. Avoid those brokers where you can’t practice on a free demo account.
No huge deposit requirements
When you start your trading career you will probably lose some money. It is completely normal, even professional traders lose now and then. Therefore it is better to place small amounts of money for practicing. When a broker requests significant amount for placing a deposit it is usually not a good sign. 
Check the broker that meets all the above mentioned criterias!

My tips for beginner traders

I wish someone had told me the following useful advice before my first trade! As a beginner trader you can easily get lost or overwhelmed of the mass of information you are bombarded with on the internet. I suggest you just slow down, because the process of learning how to trade is a marathon, not a sprint! I give you ten of the most relevant tips to absorb before getting started in the real market. Let’s start.
Be realistic
Let’s face it, trading is a hard business. I’m sorry but I have to inform you that you are not going to be able to quit your job tomorrow and go work from a sandy beach. If anybody is telling you something like this I recommend you to run away. 
This obviously raises the question whether you can make a stack of money with online trading or not. Sure, you can! Maybe, no other profession in the world has as much upside potential as trading. But that comes at a steep cost; it’s not easy, in a measure not mentally easy.

 Of course, everything comes easier in time. But you have to learn the basics and more importantly, you have to learn how to lose money also, and how to stand up after a trade fails. Just like in real life…

Learning is a must
Many wannabe traders try to jump straight into the market without any experience or professional background. A number of brokerage companies hold out a promise that you can become a professional trader after a few weekends’ training course. Do you really think it works so simply? If you could learn to make a mint of money so quickly and easily everyone would do it, right? In fact, you need to take time and patience to learn to trade.

First just watch the market

I recommend you first trying to trade on demo accounts, thereby you can get experience about different trading platforms and methods.

Know yourself
Discover who you are as a trader! Size up your risk propensity, set your goals, prepare a plan! Would you take high or low risk? It’s a key factor by choosing products especially in case of leveraged ones.
Some traders are technical traders, some of them are fundamental traders or follow their intuition. If you have enough experience and wish to trade based on your own ideas, you need to decide what to believe in! First, if you just watch the market news, events, trading directions, charts and market behaviors your experience, impression and personality could help you create your individual trading method!

Don’t get lost in the thick of the information
As a beginner trader you can easily get overwhelmed with many broker offers. I know exactly it’s a hard business to find the best broker and the best product that meets your needs. I have tried many brokers but since 2013 I have been trading at the same broker because I’m totally satisfied with them.
You have to consider many many things, therefore the first and one of the most important steps is to look for a relevant source that helps you!

Respect the market

I lost money time and time again. How did I react? First I was nervous and disappointed. However, later I had to learn that the market is always right. As much as you think you know, the market always knows more. Never be afraid to admit you have failed, all of us lose money sometimes. I had no choice but to continue.

Start with small trades and practice

Don’t risk too much of your account at once. That’s the fast lane to burning out. Risking less means gaining more experience and becoming more profitable. Experience with trading on a live account is no less important than acquiring knowledge of technical indicators and no less important than knowing what moves the markets fundamentally.

Don’t freak out when a trade moves against you
Most of the traders, especially beginners tend to over-react at the first sign of a trade moving against them. This is much more of a problem in live trading than demo trading, due to the differences in emotion between them.
A trade moving against you is absolutely normal. When you open a position it is naive to expect that the market is going to work with you immediately. I’ve had many trades that first moved close to my stop loss and went on huge profits after that. 

What should you do? Set your stop loss at a level you’re ok with losing and let the trade go on. Just let the market do the work. Doing nothing with your live trade is usually the best decision. 

Always look at the big picture
It’s very important to be aware of all the financial market connections. If you decide to trade only Forex: how do you know what’s behind a larger price movement? Do you really think it will be enough just to read the Forex news? There are basic relations and it doesn’t hurt if you know them! Financial markets work like a puzzle: there are many small pieces and if you don’t watch every single detail, probably never will see the whole picture together.
If you are curious what broker I’ve been using for many years click here!
 

Hogy much money you should risk with investing

The principles of responsible investing approach is the following: if you have some money, you are responsible for that.

Here are some important factors you need to consider when investing:
Invest only in those assets you are familiar with. These can be currencies, stocks, options or other assets.
Invest only in those assets you have checked. Practise on a demo account for a while in order to feel the behaviour of the particular assets. If you invest in stocks for example, learn as much about the company as you can.
Do not leave your investment decisions to someone else. You can get help to start in the world of investing, but the final decision will always be in your hands. You will be responsible for the profitable as well as for the losing trades.

Diversification
How to diversify well?
Many investors know the theory of diversification, but few apply it properly. Diversification means we stand on more feet, divide the risk among different investment assets. Diversification doesn’t mean that all your money is at a certain brokerage where you buy stocks, bonds and currencies. This is merely significant partner risk, nothing more. There is no point to keep your money in 3 different asset classes if you hold it in one place. If you hold your money in one bank in 3 different investment funds, this is not diversification either!
You should apply the following principles when creating a portfolio:
Geopraphical diversification
Don’t keep your money only in one country. Open account at foreign financial service providers and invest there. It is very easy to open an account anywhere within the EU. Open there where the government seems to be stable. 
Partner level diversification
It is a good idea to place your funds at different financial institutions even within the country. Don’t forget one of the most well known investment principle: don’t put all the eggs in one basket! Not even if the basket is very profitable. You should have your money at a bank, a broker company, an insurance company, etc.
Product level diversification

As I wrote above, money can be kept in different asset classes. For example.: shares, bonds, currencies, etc. But they shouldn’t be at one company in one country. Apart from the capital market there are other investment forms as well, for example real estate or business.

Virtual versus phisical diversification
Today, money is nothing else but bits and information on the servers of some institutions. It is a known fact that there are more money virtually than what is available phisically. If today everyone went into the bank to withdraw all of their money, there wouldn’t be enough cash to make it happen.
Therefore diversification is important between the phisical and virtual world. Phisical investments can be real estate, business or physical gold among others. The control is in your hand in these cases. Because of the above factors it is very important to create a properly diversified portfolio.
Summary
Following the principles above here is a sample portfolio that can survive even if one of its parts go bankrupt, because in this case only a tiny part of the fortune is gone:
50% equity assets (shares, bonds, options, currencies) at least in two countries
25% real estate

20% business

5% cash

If you keep the above rules, all of your money won’t be gone, it is simply just not possible. The biggest conclusion of the recent years are risk management and diversification!
If you are looking for a UK based company  with FCA registration I recommend the one I’ve been using for several years.