Wave analysis

Wave analysis is a method of technical analysis based on the Elliott wave theory. Today this is the most popular way of forecasting the situation on Forex either among novice traders or professionals. Moreover, the wave analysis is considered as fundamental for technical analysis of the currency market.

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ICHIMOKU Indicator

Ichimoku (Ichimoku Kinko Hyo ― Japanese for “one glance at the balance chart”) unites various approaches to forecasting price movements and combines a series of indicators. It is employed to indicate a market trend, determine support and resistance levels and produce signals to sell and to buy. The Ichimoku indicator was developed by analyst Goichi Hosoda (Ichimoku Sanjin) in the 1930-ies with an aim to predict behavior of Nikkei stock index on weekly and daily timeframes.

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Carry trade

On Forex, carry trade means simultaneous execution of two opposite deals with different value dates, one of which closes the already open position and the other one opens it at once. It is a combination of two deals with the same money volume, different value dates and of the opposite character. The main purpose of such operations is a roll of the open position over the night.

 At carry trade the bought currency of the currency pair is conditionally added to a deposit and the sold one is taken on credit. As the time of keeping a trading position is unknown beforehand, deposit and credit accruements are accomplished at the open position rollover. This strategy can be used if a broker works with swaps. Addition or deduction of the swap depends on the difference between the deposit and credit interest rates. If the deposit interest rate exceeds the credit interest rate, the swap is accrued to a trading account. If the credit interest rate is higher than the deposit one, the swap is deducted from the trading account balance.

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Types of Stocks

Common Stock

Common stock is, well, common. When people talk about stocks they are usually referring to this type. In fact, the majority of stock is issued is in this form. We basically went over features of common stock in the last section. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.

Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.

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What Is a Micro Lot ?

A micro lot is 1/10th of a mini lot and 1/100th of a regular lot. Conversely one mini lot equals 10 micro lots and 100 micro lots equals 1 regular lot. Trading 1 micro lot is the smallest amount of real money that most forex brokers will allow you to trade.

Progression of Your Forex Trading

You should begin your forex micro lot trading program only after successfully demo trading. Successful demo trading might be some level of consistency like 3 to 1 win/loss ratio or some other criteria. You would demo trade first to test the effectiveness of the trading system you have chosen. If you find an effective system and can successfully trade that system in a demo environment, you are ready to start micro lot trading. If you cannot prove in a demo account that your trading system works, you must first find a trading system that works for you and produce profitable demo trades before moving on to micro lot trading.

At the point you begin micro lot trading you still have not risked any real money. We believe that almost all forex traders should demo trade their system first, then, if successful, move up to micro lot trading. Demo trading gets you familiar with your brokerage platform and setting orders and stops as well as validating the effectiveness of your trading system out.

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