Author Archives: Sara Patterson

About Sara Patterson

Since my teenage years, I've had two passions - politics and making money. Shortly after completing my MA in the field of political science, I stumbled upon the world of Forex, and I realized I can have my cake and eat it too. Now, I enjoy translating the news into profitable trades, and helping others explore the world of Forex.

Introducing the FX Global Code of Conduct

The Forex industry has long been plagued with complaints of improprieties on behalf of brokers, despite the heightened regulation and increasing number of watchdogs whose goal is to supervise brokers and to make sure that they act within accepted legal and ethical guidelines.  To protect Forex traders and to keep brokers on the straight and narrow, the FX Global Code of Conduct was launched in May 2016 as a precursor to the document that was released earlier this month by the Bank of International Settlements.

The code is designed to create a fair, liquid, open and transparent market where traders are protected and supported by a solid industry infrastructure.  The Global Code was developed by a partnership between central banks and Market Participants from 16 jurisdictions worldwide.  Among the guiding principles are:

  • Market Participants are expected to behave in an ethical and professional manner to promote the fairness and integrity of the FXM Market.
  • Market Participants are expected to promote responsible engagement in the FX Market and to have an effective governance framework to provide for comprehensive oversite of their activity.
  • Market Participants will comply with laws and regulations applicable to them in the jurisdiction in which they do business.

As it stands, the Global Code is meant to include Market Participants which are outlined as all persons or organizations engaged in the Forex market including, but not limited to organizations such as financial institutions, central banks, asset managers including sovereign wealth funds and hedge funds, non-bank liquidity providers, brokers, trading platforms, money changes and money services.  The Global Code confirms that all Market Participants will act in an ethical way and to be aware of potential conflicts that will need to be resolved with professionalism and care.

The initiative is a good one – there is certainly room for additional oversight and a commitment to moral activity within the Forex industry.  However, we question whether the initiative will be successful on the global level as there may always be brokers who are likely to engage in unscrupulous behavior in an effort to dupe innocent traders out of their money.  For this reason, we suggest that in addition to engaging a code of conduct for Market Participants, it is also critical for traders to know their rights and to understand that such a Global Code exists, so that they insist upon choosing a broker or other financial service provider that will maintain the highest standards of ethical and professional integrity.  Only with proper education on the traders’ side and honorable intentions on the side of Market Participants, will we be able to make strides against Forex fraud.

FXTM Sponsors Rookie IndyCar Driver Ed Jones

Indy500Leading global Forex broker FXTM has announced its sponsorship of Rookie IndyCar driver Ed Jones, a partnership which comes right after the company partnered with Sahara Force India, an F1 team.  FXTM’s partnership with these leading brands gives the company a prominent role in two-thirds of the most iconic motorsport events of the season.

FXTM’s motorsports partnerships serve a dual purpose; they testify to the company’s continued success in becoming a recognized global brokerage, and they attest to the qualities that FXTM wants to be known for in the financial world.  Specifically, said Martin Lamming, FXTM’s Global Head of Marketing, success in motorsports requires “dedication, innovation and a commitment to learning.”  It is exactly these three attributes that Lamming believes have lead to FXTM’s recent success as well.

Added Lamming: “Ed is a phenomenal young driver.  He has displayed a dedication to his sport that has seen him successfully climb the ranks of lower series to earn a place on the grid of the iconic Indy 500. As an ambitious brand driven by a commitment to excellence in trading, learning and innovation, FXTM are proud to be sponsoring him for the landmark race of his career so far.”

We look forward to hearing about Jones’s continued success and, of course, about FXTM’s continued achievements as well.

FXCM Stock to Move from NYSE to NASDAQ

Global Forex broker FXCM announced on September 13, 2016 that it is transferring its stock trading from the New York Stock Exchange (NYSE) to the Nasdaq Global Market. The company’s final day of trading on the NYSE will be on Friday, September 23, 2016. Trading will commence on Monday, September 26, 2016 on the NASDAQ. The company’s trading symbol will remain FXCM.

In its press release about the change, there was no reason given. The company’s CEO did note that “At this time we feel moving our shares to NASDAQ is the right decision for our business. We recognize all that the New York Stock Exchange has done for us over the last few years, and we look forward to our shares trading on Nasdaq.”

FXCM’s stock has been the subject of much scrutiny since dropping close to 90 percent after the Swiss National Bank unlinked its currency in January 2015. By September 2015, the company’s stock had plummeted to under $1 per share, and the company faced ejection by the NYSE because its price breached the exchange’s standards. The company’s stock price eventually bounced back to nearly $25 before settling in at lower levels. At the close of the NYSE yesterday FXCM stock was trading at $9.25 per share.

NYSE vs. NASDAQ

The primary difference between the NYSE and NASDAQ exchanges is the way the transactions take place. The NYSE is an auction market through which individual traders buy and sell between one another and an auction occurs to match the highest bidding price with the lowest asking price. The Nasdaq, on the other hand, is a dealer’s market in which traders aren’t trading with each other, but through a dealer or market maker.

The price for getting listed on the Nasdaq is only $50,000 to $70,000, while a listing on the NYSE can be up to $500,000. For this reason, Nasdaq stocks are generally thought to be more tech-oriented and to have higher volatility and potential for growth, whereas NYSE stocks tend to be more stable and established companies.

CMC Markets to be Listed on London Stock Market in February

By: DailyForex.com

CMC Markets UK plc has officially announced its plans to go public on the London Stock Exchange (LSE).

CMC Markets, a major online trading services provider and one of the largest Forex and CFDs brokers in the UK, said today that it intends to apply for admission of its ordinary shares to the premium listing segment of the Official List of the FCA and to trading on the main market of the London Stock Exchange plc. The admission of the company’s shares is scheduled for early February 2016.


CMC logo

CMC Markets is offering its existing clients special offers depending on the number of shares they intend to purchase based on the amount of a shares in commissions paid to the brokerage. Customers who traded between £100 to £499 are eligible for up to £5,000 worth of shares, while those who have paid between £10 and £99 per share will be able to purchase between £500 and £1000 worth of shares. Anyone who paid above £500 per share in commissions to the brokerage will be able to purchase up to £20,000 worth of shares.

As part of the offering, CMC is expected to raise gross primary proceeds of approximately £17 million to meet admission and staff incentive plan costs.

CMC operates globally through regulated offices and branches in 14 countries, with a significant presence in the UK, Australia, Germany and Singapore. In total, the Group has retail clients based in more than 70 countries.

It joins several other Forex companies on the LSE including Oanda, IG Markets, Plus500 and Interactive Brokers.

According to its own figures, in the six months to 30 September 2015, the Group had 44,017 active clients and the Group processed approximately 45 million and 34 million trades in the financial year ended 31 March 2015 and in the six months ended 30 September 2015, respectively.

For the six months ending 30 September 2015, the Group reported Net Operating Income and EBITDA of £78.9 million and £30.1 million, respectively, 34% and 72% ahead of the same period last financial year.

CMC is targeting £250 million of total revenue (before rebates) by the end of the financial year to 31 March 2020 (FY2015: £157.9 million).

How to Trade when the Headlines Read like a Horror Story

Have you noticed that the latest global news headlines have been a cross between a comedy and a horror movie? Between planes going down, hundreds of thousands of refugees wandering the world, the threat of global terrorism, and indecisive Federal Reserve and an impending United States election with comical candidates, there’s a lot to read about but trade the news not necessarily a lot to trade about if you’re a news trader. In fact, if you you’re probably interested in more than just the announcements coming – and with good reason. There’s a lot going on, and a lot to be worried about looking towards 2016. But it probably doesn’t have much to do with the market. So what’s a trader to do?

Keep Things in Perspective

It’s not hard to get scared when reading about ISIS, even when you don’t live anywhere near the Middle East. But as a trader, it’s important to realize that while there is a lot of political unrest to be fearful of, it’s not likely to impact the markets in any significant way, at least not in the first quarter of 2016. The refugee crisis which some analysts fear may have more immediate financial repercussions is questionable at best. The refugees have currently arrived predominantly in Greece, and some in Germany. Greece’s economy is already floundering – the influx of immigrants certainly won’t help them, but considering that Greece hasn’t been a strong global player in the past few years, further weakening won’t likely have global repercussions. Germany, on the other hand, has a fairly strong economy and a leader that seems to have plans for the migrants, making the thread of financial instability less worrisome than doomsday-seekers might think.

Stay Focused

For traders, the problems going on in China may be bigger than the threat of ISIS. China’s dismal reports lately have certainly thrown a wrench into a significant part of the global economy, affecting both the most populous country in the world and the countries dependent on China for financial investments and its formerly huge purchasing power. If you’re trading emerging markets and exotic currency pairs you may want to step aside for the moment to see how things develop towards the end of the year and if plans are put into place to ameliorate the problem.

Likewise, oil trading may be something to focus on if you’re a news trader, as prices remain at remarkable lows and the formerly powerful oil producers are suffering from both political unrest (and sanctions) and overproduction of oil elsewhere. That being said, there may be some great oil trading opportunities ahead for those who know how to read between the headlines and to stay focused and patient as things develop.

If you’re staying on the sidelines these days there’s nothing to be afraid of – trading opportunities will be coming along, especially as the holiday numbers and end of year reports begin to unroll. Now’s the time to brush up on your strategies, practice new ones so that you can keep your Forex trading psychologyand most importantly, review your emotions in check during these hectic times. This time investment now will likely pay off financially later.

NFA Raises More Margin Requirements

Following its announcement last week that it would raise the minimum security deposits for transactions involving the Norwegian krone, the Swedish krona and the Swiss franc, the US regulatory body announced that it will also be changing the margin for Forex brokers offering five other currency pairs. Although US brokers can currently offer leverage up to 50:1 (2% margin) on major currency pairs, the NFA announced its intention to raise the margin on two popular currencies, the Japanese yen and the Australian dollar, to 3%. The NFA also increased the margins on the Russian ruble, the Mexican peso and Brazilian real. The changes for these exotic pairs were increased to 20% for the ruble, 9% for the real and 6% for the peso. All increased margins will be valid until further notice. Though such limits may restrict profits on these pairs they also prevent extreme losses which, after last week’s challenging volatility, may be some form of relief for traders.

FXCM, one of the leading Forex brokers worldwide issued a statement on January 21, 2015 stating that it will adjust its margin requirements globally for all Forex instruments and for gold, to make the global margin requirements consistent with the firm’s US entity, FXCM LLC which has always had more conservative requirements as per the demands of the NFA. Despite rumors of trouble at FXCM, the industry leader has shown itself to handle recent losses with notable grace, responsibility and with an eye towards a strong future. The brokerage’s decision to keep the public fully aware of internal decisions, bailouts and policy changes is an excellent step in maintaining (and restoring) confidence for both retail and institutional traders worldwide.

Gain Capital, the parent company of Forex.com, has also publicly acknowledged its own conservative approach; the broker was one of few that raised margin requirements for EUR/CHF in September 2014, making it possible for the broker to profit from the SNB decision and to weather the volatility without any major fanfare.

Though many traders enjoy the risk of high leverage and relish in the rewards (or potential rewards), it seems that the cautious policies of the NFA will be rolled out globally to help protect traders and brokers from dangerous losses.

 

Interview with Nenad Kerkez

You were an analyst at Admiral and at Platinum Investment for many years. What made you move over to currency trading?

Let me tell you about my background first. While I was doing the analysis I was also trading. When I start trading seriously I also felt obliged to help traders make money. I started doing that on Forex Factory ( the biggest forex site in the world ) on EURUSD thread. Doing the analysis without trading is just…not right. I did that on small account but as you already know, making 3 % on a 100 USD account is the same as making it on 1.000.000 USD account. The difference is the money. On 100 USD its 3 USD on 1m account it is 30000 USD. But when trading we are calculating in percentage. 3 % is always 3 %.

I have soon found out that 70-80% of my analysis is correct and I started trading.

How did you get the name ‘Tarantula?’ 

Tarantula is a spider. Spider makes swings. Up and Down, Down and Up. I don’t care whether the currency will rise or fall. I am there to set the trap ( as a spider ) and get the pips. Spider is waving her web up and down, just as I do. Taking the swings in both directions. And don’t forget, Tarantula is a spider King hahaha.

Your thread on Forex Factory (Spider’s Den) is among the most read and popular proprietary threads on the whole Forex Factor with 2,150,000 visits since you opened it 2 years ago. How did this thread become so popular so quickly?

Actually its more then 4.000.000 now probably as they removed the counter some time ago.
I think it is because quality is always perceived quickly. I made FREE calls, free setups and actually people were making money with it. Its very unique because it transparent. I always put Entries and Targets. Its like i am teaching traders to fish. All the analysis is backed up by charts, and PRE FACT analysis and charts. I never liked those POST FACT analysis. In that particular time people were bragging about the trades and analysis which was almost always AFTER THE FACT. I was one of the first traders who presented transparent and pre fact analysis as a must. All posts which I have been posting needed to show the logic behind it. That’s one of the many reasons why I trade Price Action and not some 97 USD pdf systems. I am the creator of CAMMACD ™ price action method and that is what I use for analysis, setups and Session Recaps with Admiral Markets- my favorite brokers.

Additional reason for a success is that I respect EVERY trader, no matter if she is a losing or profitable one. I am always there to comment, advise, suggest and admit even when I am wrong. If my trade is stopped out I am not afraid to say it and post it. On my front page (http://www.forexfactory.com/member.php?u=133347) you can see some comments from other traders.

One of the things you like to look out for as an entry opportunity is “breakout, pullback, continuation”. Would you agree that except for very short-term and small moves, you often have to wait a pretty long time in Forex for really good set-ups of this type to happen? What would convince you not to wait for the re-test?

Exactly. Some years ago, especially back in mid 2000s it was all about swings. Average ATR was huge compared to ATR as of now. So, BPC pattern was one of the very first breakout patterns I learnt. The times have changed. Its hard to get BPC except for short term trades, that why I apply 2 additional methods: Trigger Happy and Breakout-Retest ( without continuation ). BPC best works when pairs are having big movements in a zig zag ( trend ). Unfortunately conditions have changed , so we need to adapt.

You like to use shape patterns to judge breakouts. Do you think some currencies tend to print and respect these patterns more than others? For example we often seem to see them more these days in USDJPY and EURUSD, but not so much in other JPY crosses. Do you think price action in minor pairs is less valid as these prices are a “product” of their parent pairs?

Well to be honest the patterns are the “patterns”. Its about how you approach the trade.
The answer to your statement is obvious. USDJPY is most heavily influenced by BOJ statements about quantitative easing, which was caused by the country’s GDP declining by 7.1% in the second quarter of 2014. USD being strongest safe heaven is the exact opposite of JPY. When USD is gaining JPY is declining. This has led to double exposure as most investors were buying dollars ( especially due to strong fundamentals coming from US ) and selling JPY. On big trends patterns are definitely showing better then on small and weak trends.

All traders need to know that trading is heavily influenced by historical buyers/sellers and historically important levels. No indicator can tell you that, you need to spot those yourself.
Behavioral analysis has its place in psychology and trading is a psychology game ;)

The answer you your other question is “yes” and “no”. For example, look at GBPJPY. Again we have GBP weakness last few months and USD strength. Translated to trading terms is that GBP is getting stronger against YEN but due to GBP weakness its not so exaggerated as opposed to USDJPY.

Currency trading is always watched through the prism of base and quote currency.

I trade 25 pairs. When you trade minors you should always pay attention to correlations table.

Do you modify what you are looking for in entries and exits between different currency pairs? For example, do you expect EUR/USD to pull back more than GBP/USD? Or do you just treat every pair the same and expect technical to tell the same stories?

I always place technical target and look for a momentum push. Once I am in a profit I tend to place trailing stop. Because I am trading intraday my stop is rarely higher then 30 pips. In this volatile market, it’s an absolute necessity to use trailing stop for intraday trades. I did a webinar – “how to turn scalps into scalps swings and scalp swings into intraday”. So that is the strategy I have been using, as I have personally created it. So once I place the trade, I put my SL. Then I use trailing stop. I usually go for 15-60 pips on each trade.

When I do trend trades I open the position when the price has lost its momentum ( aka retracement ). For trends, I always want to sell higher and buy lower. For that we need a loss of momentum, so called retracement.

Do you use any quantitative statistics in your trading?

No.

What is the best way for technical traders to avoid the trap of seeing too much confluence on the chart, which might spook them into exiting a good trade too early?

I use POCs(points of confluence) strictly for ENTRIES. I personally don’t look confluence for exits. Early exit is absolutely justified if price momentum suddenly changes. We have been witnessing a lot manipulation from big banks so once the trade is in the profit you should protect it. Many times price has been spiked at “the fix” time ( 1.15 PM and 4 pm gmt ) only to hit SL and then proceed in the direction you wanted. Trailing the stop is protecting a trader from rumors, unexpected events, power outages, macro economical shakeouts, strong news. All intraday traders are prone to above mentioned. Technical traders should learn the METHOD,RISK and MONEY MANAGEMENT. Targets are not the problem as long as they “feel” the market and trust their own analysis. As you know , successful trading is based on a TRIPOD:

1.Profitable strategy

2.Risk-management (money-management)

3.Trader’s psychology

I always say “If one leg falls- all will fall”

Trader’s assignments should be:

  • Primary – Not to lose money during any given timeframe period
  • Secondary – Gradually growing the account
  • Third – Make profits

Problem is that most traders switch the third for the first assignment.

 

Now if traders are suffering from undertrading symptom that is something else. They need to work on their psychology then. That is why I work on Psychology webinars with Admiral Markets. I want to educate traders to fully understand this profession. This is not a rocket science. But it’s still a science. I could talk and brainstorm it so much as there are always things which could be learnt and which most traders simply do not recognize. But it is also a thrill of this profession.