In the context of trading, money management involves managing your trading capital efficiently and effectively by implementing techniques and strategies to limit risk with the goal of increasing your reward at the same time. This proficient use of money and risk management is often the difference between being a successful forex trader or not. It …
In forex trading, we often hear about “edge”. It shouldn’t come as any surprise to anyone that if you want to win in forex it doesn’t matter what currencies or timeframes you trade, whether you are a fundamentalist or a technical analyst, whether you are a swing trader taking positions for several days or a short-term …
The Fibonacci sequence and Fibonacci ratio have been discovered and rediscovered in various forms – not only in mathematics, but also across various aspects in our everyday lives – including geometry, architecture, fine art, biology, and throughout the natural world. The Golden Ratio can be seen everywhere. This is often why it is commonly also …
Many traders generally understand that it is important to limit trading risk, but realistically, most would rather focus primarily on the potential returns generated when developing their trading systems. However, the impact of drawdown is equally essential to one’s trading success. In forex trading, drawdown refers to the difference between a high point in the …
Are price movements in the market random? Are there any means that exist for exchange traders to realistically make any significant returns in the market? Many would debate favourable arguments for both sides. Exploring the theory of random walk will help us understand better. Mathematician George Pólya liked to take morning walks in the woods …
The Pareto Principle, also known as the 80/20 Principle, is a very effective concept in achieving efficiency. Instead of wasting time and resources on unimportant tasks, one can focus on the core productive activities. This principle is one of the essential concepts in modern-day business and holds the same value in forex trading. Background This principle …
There are four main types of market analysis: – Fundamental Analysis – Technical Analysis – Sentiment Analysis – Statistical Analysis There exists a continuous debate as to which is better, but it is best to have an understanding of all. Fundamental Analysis Fundamental analysis involves making trade decisions based on global news and economic data reports. It …
The law of large numbers is a probability theory in mathematics that describes the result of performing the same experiment a large number of times. This theory establishes that as the number of trials for testing some probabilistic outcome increases, the average of the obtained results becomes closer to the expected value. In simpler terms, the …
Algorithmic trading, also known as algo trading, involves using computer code to automatically enter and exit trades once certain criteria are met. Algo trading can be used by all sorts of traders – from large institutional traders such as fund management firms, brokerage houses and insurance companies to big retail players and now even smaller …
People are different. They have varying tastes, styles, personalities and preferences. The same can be said for traders. And the traders’ unique characteristics will lead to trading differently from one another. Some traders may be more aggressive, whilst others are more risk averse. Some may have more time to dedicate to the markets, while others’ …
