CANDLE STICK

Candlestick charts were formulated by the Japanese, and are widely used in forex. Successfulforex traders should know how to identify patterns in candlestick charts. Based on the patterns incandlestick charts, they can make decisions on buying or selling forex pairs.
There are many types of candlestick patterns, and the most important ones are explained below.

Spinning Tops Candlestick Patterns

These are candlesticks which have an upper shadow and lower shadow (both long), and smallbodies. The body’s colour is not very significant. This pattern denotes likely indecision between buyers and sellers.
The small body shows that there has been little movement from the opening to the closing point,and the long shadows show that in the tussle between buyers and sellers, no one has gained an upper hand.

Marubozu Candlestick Patterns

These are candlesticks whose bodies have no shadows. The highest point and the lowest point are the same as the opening or closing point. There are two types of Marubozu candlestick patterns, namely the White Marubozu and the Black Marubozu.
White Marubozus contain long white bodies with no shadows. In this pattern, the opening price equals the lowest price, and the closing price equals the highest price. This pattern indicates
bullishness.
Black Marubozus contain long black bodies with no shadows. Here, the opening price equals the
highest price, and the closing price equals the lowest price. This pattern denotes bearishness.

Engulfing Candlestick Patterns

Bullish engulfing patterns include a large white body that engulfs a small black real body in a downtrend.
Conversely, bearish engulfing patterns are seen in the chart when bearishness overtakes bullishness i.e. a long black body engulfs a small white body in an uptrend.

Three white soldiers candlesticks pattern

When there long bullish candlesticks are following a downtrend, the three white soldiers candlesticks pattern is said to have been formed. This pattern indicates that a reversal has taken place.
The first candle is called the reversal candle, which either concludes the downtrend or denotes that the consolidation period that followed the downtrend has ended.
The second candle that follows should be bigger than the first candle’s body. The second candle also has to be near its highest point, with a very small wick or none at all.
The third candle should be the same size as the second candle and have a small shadow or no shadow at all.

Three Black Crows Candlesticks Pattern

In the three black crows patter, three bearish candles follow an uptrend, which indicates that a reversal is on the cards.
The second candle should have a bigger body than the first candle. It should be close to its lowest point or be at the lowest point itself.
The third candle should be larger than the second candle, or be the same size. It should either have a very small shadow or no shadow at all.

Conclusion

To conclude, knowledge of identifying the above candlesticks (spinning tops, Marubozus, engulfing candlesticks, three white soldiers and three white crows) is an asset to every trader.

Volatility 

Word For The Day

Volatility is a measure of how much the price of a financial instrument (stock, bond or currency) varies over time.

It’s important to understand that volatility does not measure the direction of price changes, but rather how big, frequent and different the changes in value are over a given period of time (the dispersion of price changes). So a currency can be quite volatile (i.e., go up or down a lot every day) without ever going anywhere. Similarly, a currency that rose by 0.5% every day would not be volatile at all, because the changes are the same every day.

Often when people say something is “volatile,” what they really mean is that its price is falling. People rarely call a rising market “volatile,” but they often call a falling market “volatile.” But this is wrong.

Volatility is good for our business. If currencies don’t move, nobody makes money in the FX market, so nobody trades. But as you’ve noticed, sometimes currencies move around a lot and sometimes they don’t.

There are two ways that people talk about volatility in the FX market: historical volatility and implied volatility.

Historical (or realized) vol (people in the FX market say “vol” instead of “volatility”) is the actual volatility of a currency pair over a given period of time. It’s a simple mathematical calculation that everyone agrees on.¹

Implied vol is something very different. It comes from the options market. (If you don’t know what an option is, then unfortunately this part is going to be hard to understand!) When market-makers price options, one of the things they have to put into the pricing formula is the volatility of the currency. But since the price of the option is also determined by supply and demand, often it’s different than what you’d get just by plugging the historical vol into the formula. You can take the price of options and back out from it what volatility is implied by the option price. The two aren’t always the same. Sometimes the market assumes volatility will fall, and implied vol is lower than realized vol. Or sometimes people expect a currency to become more volatile and implied is higher than realized.

 Notice that right now, implied vol is higher than historical vol. That’s probably because the market is slowing down for Christmas and volatility is falling, but everyone assumes that it will go back to normal once January comes around. In some cases though the difference between the two could show that people are placing big bets on a currency and option prices have gone up as a result. That might alert you to something coming along in the future or to particular interest in a currency pair. For example, KRW implied is much higher than historical, which may be because people expect the currency to appreciate so they’re buying KRW calls. Similarly, the high implied vol for JPY probably means a lot of people are betting on further decline in the yen. Note too that in the case of the South African Rand (ZAR), implied vol is slightly lower than realized vol, because that currency is just so volatile people probably expect the volatility to fall in the future.

You should be aware of which currency pairs are the most volatile. Those are the ones that our clients are likely to get the most action from. You should also be aware when volatility is rising or falling, because it affects how likely our clients are to make money or get stopped out.

1  For those of you with interest in maths, this is calculated as the standard deviation of the instrument’s yearly logarithmic returns, but if you don’t understand that, don’t worry.

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BROKERS CRITERIA

Due to the ever-expanding interest in trading currencies by the public, new brokers are constantly popping up in the trading world. This gives the current trader many advantages over traders that participated in the markets just a few short years ago. Every day it seems that there is a new and improved version of the forex broker, and as such ג€“ it can lead to a lot of advantages due to competition, but it can also be very confusing at the same time for both new and experienced traders alike.

Add to this the issues of reviews by disgruntled traders, and the situation can be quite daunting as there are literally hundreds if not thousands of firms to choose from, and several different business models as well, meaning that the decision can be a very complex one. In this guide, we will look at some of the most important aspects of choosing a broker in the hopes of clearing up the decision making process you will undoubtedly find yourself in at one time or another.

Table of Contents
1. Regulation
2. Capitalization
3. Popular Platforms and How to Choose the Right One for You
4. Broker Types and their Spreads or Commissions
5. Account Types
6. Customer Service
7. Additional Services
8. What are the right Questions to ask Before Opening an Account?
9. Conclusion

Regulation
Without a doubt, the most important thing your broker must have is proof of regulation. The problem with unregulated brokers isnג€™t what it once was, but it still does happen from time to time. If you choose to do business with an unregulated broker, you are opening yourself up to a whole slew of potential problems. For example, if you have to dispute a trade or action facilitate by the broker, who do you turn to? If they are unregulated, you are going to have very little if any legal protection from fraud.

Of course, simply being regulated isnג€™t enough. You need to have a broker that is regulated in a country where the law is followed and legal protection is strong. For example, you are going to find that a broker regulated in the United States is more likely to be compliant than one that is regulated in a less industrialized and advanced legal framework. Recently, there was a broker that was based out of a country that was in the middle of a civil war at the time. Needless to say, this is absolute folly and very reckless for a trader to deposit money at this broker, no matter how tight their spreads were. The fact is that tight spreads wonג€™t do you much good if you cannot get your money back! This could be the case either by fraud, as there is very little legal protection, or by an overthrow of the government. As a general rule, if you donג€™t feel safe visiting the country, depositing your money there isnג€™t a good idea either!

Capitalization
When picking the broker to facilitate your trades, being well-capitalized is of utmost importance. There have been brokers in the past that have had issues with their capital, and as such ג€“ can be risky places to hold your funds. In fact, this was so pervasive in the past that even in the United States there were firms that held less than $100,000 a few years ago! The CFTC has a website that lists the capitalization of all of its members that is updated monthly. The regulations in the US have been tightened recently to require firms to have capitalization of over $20 million in order to operate. Other countries in the EU and other industrialized nations are following suit as forex trading becomes more legitimized as another market such as stocks, bonds, and options. This trend should continue into the future, so the capitalization issue will become less and less of an issue in the industrialized world. This is further reason to stick to the major markets when finding a broker. As a side note, you can often find out the capitalization of a firm by looking at regulatory body websites.

Popular Platforms and How to Choose the Right One for You
While there are literally hundreds of trading platforms to choose from, there are some major ones that you will see time and time again. Without a doubt, the most popular one is MetaTrader 4. There is a MetaTrader 5 out as well, but it is still in its infancy. The MT4 platform allows traders to import trading robots, hundreds of free indicators that are readily available on the Internet, and many more features. It is offered for free, and it estimated to facilitate over 85% of the retail trades in the forex market. Because of this, there is a real strong chance that you will either be using it, or at least have the opportunity to use it with whatever broker you choose.

There are other platforms such as ACT Forex, which has many of the same features as MetaTrader 4, and is well-known and used quite a bit in Europe. The platform is laid out a bit differently, but can do most of what MT4 does, so at this point ג€“ it comes down to personal preference.

There are many other options out there as a lot of firms will have their own trading platforms. GFT is a prime example as they have a platform called DealBook 360, which has won many awards. It is a shell program that uses ESignal charting, which makes it very graphically pleasing. Speaking of ESignal, there are many trading platforms like it that are available for a monthly or one-time price. The amount of add-on and standalone platforms is staggering if you look online.

In reality, picking a trading platform is going to be a very personal choice, but by far the best way to make that decision is to try demo accounts in that platform. You will find that a lot of the same basic features are found in all of them, and it is graphically representations and indicators that tend to make the difference with these different platforms. As a general rule, if a demo isnג€™t available ג€“ itג€™s not worth dealing with.

Broker Types and their Spreads or Commissions
There are two basic types of brokers that you can deal with when trading forex. The first model, the dealing desk is sometimes called a market maker. This dealer will often take the other side of your trade, as they will first try to match your order with another customer, but will be the other side of the trade if necessary. This type of dealer typically will make their money based upon the spread of the trade. For example, there might be a 2 pip spread in the EUR/JPY market, but the broker only offers it as a 4 pip spread, thus pocketing 2 pips for facilitating your trade. As a general rule, there are no other costs involved in trading with this broker. Of course, there is potential for the dealer to manipulate the market, and slip you on fills, but these practices are becoming more and more uncommon as the markets mature, and the regulatory bodies are very strict on these types of dealers. Again, another reason to trade with a dealer based in an industrialized country.

The other type of broker is an actual true broker. The ECN, or Electronic Communications Network, allows trader to match orders with other traders electronically. The broker will not take the other side of the trade. So for example, if you are bidding the EUR/USD at 1.4056, and there is no seller there, you simply wonג€™t get filled as there is nobody to sell it to you at that price. (This is rare, but it can happen.) Many people say that the ECN has no interest in the results of your trades, but this is not true. In fact, the ECN wants you to do well so that you will continue to trade as they make their money off of the commissions they charge for each trade. Because of this there is no markup in the spread to compensate the broker. You typically will see tighter spreads, but there will be an added transaction cost in the form of a commission for facilitating the trade.

Let us consider the following example:

You see an opportunity in the AUD/USD pair, and you believe it is going to rise in value. Because of this, you are ready to enter aג€longג€ position. If you had two separate brokers, you could have the following two scenarios possible:

Traditional Dealer:

You buy AUD/USD with a 5 pip spread, and thus start out the position 5 pips down. However, the total cost is 5 pips to place this trade. So in order to make money, you need the market to move at least 5.1 pips in your favor. Some dealers offer variable spreads, so this could change in the middle of the trade as liquidity increases or decreases, but in order to keep things simple, we assume that the spread is a fixed one. If you are trading at $1 a pip, this trade costs you $5 to do. If you are trading standard lots, it costs $50. As you can see, the trade size makes a massive difference.

ECN:

In the same set up, you see that the ECN broker is offering the same rates, but with only a 1.5 pip spread. However, with this broker you are required to pay $2.50 for each trade. Remember, when you open the trade that is one trade. When you close it that is another. So when they say per turn, you simply should double the amount to understand what the trade will cost you.

Much like the dealer situation, the value in this spread will depend on the size of the trade. For example, if you are trading at $1 a pip like the first example above, the trade will cost you $1.50 for the spread difference, $2.50 to open it, and $2.50 to close it. This is a total of $6.50 for the total position, which is actually more expensive than the dealer. However, if you compare it to the trade above that involved the standard sized lot, the cost is $15 for the spread, $2.50 to open the trade, and $2.50 to close the trade. This totals $20, saving you $30 over the dealerג€™s price!

As you can see, it all comes down to the trading size you will be doing.

Margin can vary from broker to broker, and country to country. As of the time of this writing the US had recently brought down the allowable leverage for its citizens to trade. Because of this, a US broker will only allow 50 to 1 leverage, which means you need to place 2% of the value of the trade for margin. For less liquid trades, it has been dropped down to 20%, meaning a 5% margin amount is necessary. Contrast that with countries around the world that allow unlimited leverage, and you can see it as high as 700 to 1! Because of this, margin requirements can very drastically, depending on your broker.

Account Types
There are many different types of accounts you can get at the various brokers available to you. Some of the most common include standard, mini, micro, and demo. The differences all basically come down to the trading size, which can also vary from broker to broker. For example, a standard account might mean that you have to trade full lots or more on your trades at one broker, but at another broker it may mean that you simply have the ability to trade them, but can trade much smaller amounts.

The most common difference is the spread that brokers will charge you. Under most circumstances, there will be lower spreads for the larger account. (When there is one.) Another common difference is that some brokers will offer value-added services for larger accounts as well, which can also be called ג€œPlatinumג€, ג€œPremiumג€, or ג€œGoldג€. Make sure to see if there are any differences at the broker of your choice listed on the website before opening your account.

Customer Service
Customer service is paramount when it comes to dealing with a broker. Remember, they need you ג€“ not the other way around. If you do not see a clear route to contact someone at the brokerage on the website, this should be a huge red flag when it comes to using them. The professional firms will have several different ways to contact them including phone, email, live chat, and many others. If you ever run into a problem, the last thing you want to do is have an issue getting a hold of your broker in order to fix it. If the broker only has limited hours of customer service, that is also a sign that bad things could come of the business relationship.

Additional Services
Value-added services are starting to become the norm as the competition between forex dealers heats up. The competition dictates that many of them are offering analysis, news, signals, and even education for free. Some will ask that you deposit a certain amount before offering all of these features, but they are starting to become a regular feature of dealers. Some of these technical analysts are even well-known, such as Kathy Lien and Boris Schlossberg from GFT. Brokers that are ECNs typically will offer less, as the account size needed to trade those types of accounts normally suggests that the trader is a little more sophisticated. However, even in these firms there is a bit of a change in that thinking.

What are the right Questions to ask Before Opening an Account?
Asking the right questions before opening an account is absolutely vital if you wish to avoid issues down the road. The list of questions you should ask any broker before joining include:

ג€¢ Are you regulated? If so, in which countries?
ג€¢ What currency pairs do you offer?
ג€¢ Is the money deposited separated from operational capital, in other words ג€“ is it segregated?
ג€¢ Do you have a dealing desk, or are you an ECN?
ג€¢ What types of customer service do you offer, and what methods can I contact them through? What times are they available?
ג€¢ What trading platforms do you offer? Is there a mobile application as well?
ג€¢ What is the deposit/withdraw process?

Conclusion
As you can see, there is a lot to think about when choosing a broker. However, by using these simple guidelines, you should be able to narrow down the list quite a bit. A lot of it comes down to personal preference as well, and what your trading needs and wants are. For example, you may want to trade the CAD/JPY pair, a market that isnג€™t always offered by all brokers. Maybe you prefer MetaTrader4 over other platforms, and as such would avoid any broker that only allows trading through their own platform. As you can see, preference can play a huge part in all of this. But by paying attention to the important issues about regulation and capitalization as well, you can find the right broker for you.

IRON FX

Dewan Direksi Iron FX

Markos A. Kashiouris

Direktur Non-Eksekutif
Mr. Kashiouris mendirikan IronFX pada tahun 2010. Beliau memiliki kepentingan bisnis yang luas mencakup Real Estat, Layanan Finansial dan Franchising/Brokerage Internasional. Mr. Kashiouris mendirikan Terra Capital 2000 dan telah menyelesaikan transaksi real estat dalam kapasitas utama atau junior dengan nilai sekitar €400 juta di beberapa negara Eropa, termasuk Inggris, including the UK, negara-negara Eropa yang sedang tumbuh (emerging Europe), Yunani dan Siprus. Di samping itu, beliau memiliki dan mengelola portofolio perumahan terspesialisasi di London yang khusus melayani sektor publik Inggris. Mr. Kashiouris memilki gelar Sarjana Ekonometrik dari University of Manchester dan gelar Master dalam bidang Manajemen Pemasaran Strategis dari UMIST. Beliau merupakan Associate di the Institute of Chartered Accountants di Inggris dan Wales (ACA), Associate di the Chartered Institute of Marketing (ACIM) dan Anggota dari Chartered Institute of Securities and Investment (MCSI). Mr. Kashiouris juga merupakan Agen Sekuritas yang Terdaftar di FSA atau FSA-registered Securities Representative (Level 3). Beliau bekerja di JP Morgan dan Commerzbank Securities di London di mana beliau mendapat peringkat teratas pada Survei Extel tahun 2001 dan 2002.

Peter G. Economides

Direktur Non-Eksekutif

Mr. Economides mendirikan IronFX pada tahun 2010. Saat ini beliau adalah Ketua dari Totalserve Group yang didirikannya pada tahun 1972. Totalserve Group merupakan salah satu dari perusahaan konsultan Pajak dan Trust regional terbesar di Mediterania Tenggara dengan fokus utama pada Eropa Timur dan Eropa Tenggara. Beliau merupakan Direktur dari sejumlah perusahaan lokal dan internasional besar baik perusahaan swasta maupun publik. Mr. Economides adalah Fellow di the Chartered Institute of Certified Accountants (FCCA), Anggota dari the Chartered Institute of Securities and Investment (MCSI), serta Anggota dari the International Tax Planning Association, the international committee of the Society of Trust and Estate Practitioners (STEP), Founder and Chairman of STEP Cyprus dan Anggota di berbagai asosiasi akuntansi, pajak dan trust internasional.

Markos Drakos

Direktur Non-Eksekutif

Mr. Drakos adalah Mitra Pendiri dari Touche Ross & Co pada tahun 1988 dan tetap menjadi Mitra Deloitte hingga tahun 2002. Dari tahun 2003 dan sesudahnya Mr. Drakos menjadi Managing Director Markos Drakos Consultants Group dan spesialisasinya adalah dalam menawarkan Layanan Administrasi Fiskal dan Akuntansi Internasional ke Perusahaan Bisnis Internasional dengan fokus khusus pada Industri Pengiriman dengan kapal (shipping industry). Beliau adalah Wakil Ketua dari the Cyprus Telecommunication Authority pada tahun 2000–2003 dan juga merupakan Direktur di sejumlah perusahaan lokal dan internasional besar, baik perusahaan swasta maupun publik. Mr. Drakos memegang gelar Sarjana Ekonomi dari London School of Economics dan merupakan Fellow di the Institute of Chartered Accountants di Inggris dan Wales (FCA) serta Anggota dari the Institute Certified Public Accountants di Siprus.

Polyvios Rialas

Direktur Non-Eksekutif

Sebelum pensiun, Mr. Rialas berdinas selama 31 tahun di Department of Inland Revenue di Republik Siprus, dengan terakhir sebagai Kepala Departemen. Selama masa tugasnya di Inland Revenue, Mr. Rialas sangat berperan dalam modernisasi Undang-Undang Pajak di Republik tersebut dan penyelarasannya dengan standar internasional dan Uni Eropa. Mr. Rialas merupakan Fellow di the Chartered Institute of Certified Accountants (FCCA).