HF Social

Monday, 27 June 2016

Britain's Exit from the EU

Britain in the EU

The European Community was established in 1967 stemming from the Treaty of Rome that was signed by 6 European states in 1957. Subsequent to the forming of the European community Britain joined in 1973. In 1975 Labour Minister Harold Wilson had a referendum on whether Britain should stay in the European community. That was the last national referendum and had 66.8% voting Yes to stay in the Community.

With the recent vote to exit the European Union 43 years has passed with the Brits as part of the EU. Now that they have exited what will take place going forward. Will other countries have referendum and leave as well? Will the Pound (GBP) suffer? Will the commodities market plunge? so many things will be affected by the Brits exit.

Who voted to leave?

From the Poll shown above it shows that the older persons (above age 50) have decided the future of the youths. The voting break down is very clearly shown and begs the question, why does the older folks who are on their way out is deciding such a future for the younger generation and others to come?
It seems as if these older voters have gotten tired of Britain being in the EU and thought it was best for them to leave the community. The after effects of this exit will have a huge effect on things going forward since Britain has been a part of the EU for so long.

Effects on GBP

In the hours following the results of the vote saying Britain will exit the EU the British Pound fell against all competing currencies. It was almost an instant nose dive for the GBP. Anyone that had a trade open in favour of the GBP would lose severely while traders who had trades against it would be smiling all the way to the bank.
It is  normally recommended that you close trades when such huge events are to take place since it isn't normally guaranteed which direction they will go and how it will affect the market. Some Traders took the risk and won while others to the risk and lost a fortune. In the previous blog post it was discussed how some brokers prepared for the Brexit vote adjusting margins, spreads and leverage. This help the brokers but can hurt the traders if they didn't prepare for it.

Effects on other currencies and Commodities 

The Exit of the Brits from the EU have already negatively affected the currencies in the EU by creating an uncertain of trade relations and the one border that the EU stands for.
The exit also affected numerous other currencies either in a negative windfall or a positive growth. For instance the Aussie was affected due to trade reasons with Britain and also because the Brexit affected oil prices as well. The greenback smiled against the pound in trading in light of Britain's exit. The BOJ governor have taken measure to ensure the Yen (JPY) doesn't climb too much as it would affect import cost and as such the stock market.
Before you trade a currency research the effects and implications of the Brexit and use it to enhance the probability of your trade being good.

Future Implications

There's a lot of implications of the Brexit on global economy, commodities, trade relations and even sporting contracts. Laws will be changed which will impact immigration, visitor travels and existing court cases.
All markets whether stock or Forex will need to reorganize and ensure that the future uncertainty of Britain doesn't affect them too bad. Forex brokers will have to keep a track of their margins and leverage while the traders will need to pay keen attention to their risk management strategies.
Companies will need to keep focus of their expenditure in loom of reduced value of the pound. This could affect raw materials, export quantity as well as other operation expenditures. All stock markets took a blow with the Brexit.
From a traders perspective I would recommend holding off on any trades that is not above 80% probability of winning and this recommendation is only if you definitely want to trade. Otherwise I recommend just watching the market for another couple weeks to see if fundamentals balances out the currencies.

Like us on Facebook at Compass Trading Association
And join our group for weekly trading info Compass Trading Association

Sunday, 19 June 2016

The Brexit and its effects

Forex traders ain’t the only ones prepping their game plan for the EU referendum… Brokers are gearing up to make some adjustments for the Brexit vote, too! In case you’re scratching your head wondering what in the world all this is about, make sure you read our Brexit primer first.
As you’ve probably guessed, this highly-anticipated event is bound to bring an unprecedented amount of heart-stopping volatility to the mix. Heck, even Brexit opinion polls from various groups have been enough to push pound pairs to spike this way and that!
Now brokers have probably learned their lesson from last year’s SNB shocker to remember that fast and furious market moves could potentially trigger margin calls and wipe clients’ accounts out in an instant. A number of brokers were even forced to close shop then! Apart from that, majority of market participants might make several adjustments to their trades or close their pound positions, enough to push the market in a particular direction ahead of the vote.
Because of that, a number of firms have already ironed out their plans to manage their exposure to this event risk, not just for pound and euro pairs but also for other U.K. securities. Thanks to the intel shared by a few of my honorary ninja traders, here’s an updated list of adjustments being made by forex brokers ahead of the Brexit vote.
AlpariAdjustments in margin requirements for Standard, ECN, PAMM Standard, and Pro accounts by June 20
ActivTradeIncreasing margin requirements by four times for GBPUSD, GBPCHF, GBPAUD, GBPCAD, GBPJPY, GBPNZD, EURGBP, and UK100 index by June 19, and two times for several euro pairs and European indices
ADS Securities: Increased margin requirements on GBP pairs to 5%, EUR pairs to 2% and the UK100 index to 2%
FXPrimusIncreased margin for all GBP pairs and for Brent crude oil from June 19 to June 24
FXCC: 200% increase in margin requirements for all GBP pairs and 100% for EUR pairs as of June 13, 200% increase in margin requirements for EUR pairs and 100% for all remaining instruments by June 20. Margin call level raised to 150% and stop out level adjusted to 100%
Admiral Markets: Five-fold increase in margin requirements for GBP pairs and FTSE100 CFD. It will also disable internal fund transfers to and from GBP accounts via back office by June 23 and introduce close-only restrictions on trading exotic GBP crosses
Vantage FXTwo-stage adjustment to trading conditions for EUR and GBP pairs, USD/NOK, USD/SEK, DAX30, FTSE100, DJ30, SP500, and XAU/USD as of June 13 and also on June 20 Increase from 0.5% to 3% in minimum margin requirements for GBP pairs and UK indices by June 19. Increase from 0.5% to 1% in minimum margin requirements for EUR pairs, European indices, and US indices by June 19
IronFX: Increase in margin requirements for GBP crosses, FTSE100, spot metals, and UK shares by June 17 and possibly another round of adjustments by June 22
AxiTrader: Lower maximum leverage available for all products starting June 20 until market close on June 28
AFX Group: 100% increase in margin requirements for GBP pairs and FTSE100 index as of June 10, with potential adjustments upon appropriate notice
RoboForex: Close-only mode for GBP instruments from June 20 to 24, six-fold increase in margin requirements for GBP instruments for MT4 and MT5 ECN accounts and a twenty-fold increase in margin requirements for MT4 and MT5 Standard and Cent accounts
LiteForex: Increased margin requirements for GBP pairs, EUR pairs, commodities, and major indices. Five-fold margin increase for ECN, NDD, and PAMM accounts, a ten-fold margin increase for CLASSIC accounts, and twenty-fold increase for CENT accounts. Suspension of opening of new trades in a number of related currency pairs from June 20 to June 27
Tier1FX: Adjusted margin requirements for GBP pairs and UK100 index as of June 6, another round of adjustments by June 20 until further notice
Capital Index: Two-stage hike in margin requirements by June 17 and June 22 for GBP and EUR pairs, as well as European indices
FXTF: Changes to trading conditions for GBP-related currency pairs regarding bid-ask spreads
Orbex: Margin requirements for GBP and EUR pairs increased to 4% and margin for all other instruments at 1% as of June 16. Margin stop out level adjusted to 50% by June 20
FXCM: Adjustments for margin requirements for EUR and GBP pairs beginning on June 10, with additional increases by June 17
Saxo Bank: Revised starting margin levels for currency pairs with GBP, EUR, CHF, and JPY, as well as higher margin rates for U.K. Index CFDs that are GBP-denominated
IG Group: Increasing margin rates for all GBP pairs by June 10, with additional measures to be put in place by June 17 and June 22
OANDA: Lower maximum leverage on GBP pairs to 20:1 after the market close on June 17
CMC Markets: Margin changes for GBP pairs and several European indices to take effect by June 13
TradersWay: Increasing margin requirements on GBP pairs by four times as much (i.e. leverage on these pairs will be four times lower) by June 13
And the roses among the thorns…
easyMarketsIt will continue to offer 200:1 leverage, free guaranteed stop loss, no slippage, negative balance protection, and fixed spreads on GBP pairs
Trade360: No changes in margin requirements or leverage available, no limits on trading GBP pairs as well
Whether this plays out to their advantage or turns out to be a painful lesson in risk exposure remains to be seen, but it turns out that some exchanges would also rather be safe than sorry.
Moscow Exchange: Increasing margin requirements for EURUSD and GBPUSD FX futures contracts on June 20 and 21, with these changes up for review after the referendum results are announced

Courtesy of Espipionage from

Wednesday, 15 June 2016

The Mind of the Market

Zero Spread Account

The Forex market is like a complex organism with a lot of moving parts, influences and players (Traders). With all the complexities there are ways for you to understand and trade the market profitable. However, there will be times when you will need to just sit back and watch the market. This may be due to no trading signals showing up using your trading strategy or some global event that has influenced a currency you are looking at. Within this time all you need to do is keep reviewing market conditions, charts levels and currency news.

It's almost as if the market has a mind of its own sometimes and goes in whatever direction it pleases. Well, actually it does. The market can be studied and patterns, historical data and other techniques can be used to understand the mind of the market. With all its moving parts such as central banks, Oil prices and Gold prices the market will move as a combination of these and other factors. Historical data can be used to make calculated decisions along with any medium or high impact economic event. This will enhance your trading range, profitability and trading skill.

Below we discuss a couple of things on how to know the market 'brain waves' and capitalize on its movement to increase your P/L.


First we need to realize the market doesn't normally have a regular pattern. Often it changes the way it way it moves and will throw you off even with a fully outlined strategy. The market fluctuates but you can adapt your strategy for when it goes way beyond its normal movements.

Irregular movements can't be predicted but you can be sure they happen.
Say for instance you are watching a pair on a daily chart and it's been in an uptrend for 3 weeks then it suddenly heads downwards without any definite indication on the chart and then you think a downtrend may start to develop and so you open a short trade only to realize that the pair went right back into the uptrend. Scenarios like this may happen sometimes during trading. It is important that you always seek confirmation based on your strategy. I use 3 indicators and when they consolidate i know i have a high probability trade to enter. Along with the indicators there is support and resistance level, fib levels and chart patterns.

If you think the market isn't providing high probability trades then take a step back from it and just watch a little.

Screenshot showing irregular movement circled in blue. The brown circle encompasses the original trend and after the irregular move down, represented by the blue circle it is returning to the trend.

Economic Events

Economic events can sometimes be fuel to the Forex fire. High impact news depending on the results can drive a currency up or down in a short time. High impact currency news from entities such as the central banks or commodities such as oil have a tendency to put a surge on currencies. A lot of persons chooses not to trade the news due to its unpredictability in moving a currency while other persons play the market with high and medium impact events.

Real Estate reports, Oil prices, Unemployment figures, Interest rate hikes are examples of some high impact economic events that will affect how you trade and how your trade turns out. Be careful

Screenshot showing high impact news among others in the top left quadrant.

Historical Patterns

It isn't recommended that you take past results as future expectations, however historical data is extremely important in trading. Historical data helps show different patterns in the market that normally creates support and resistance ranges. With these ranges you can trade with higher probability of success.

Use Historical data wisely but not as the only reason to enter a trade. support it with price action and indicators if necessary.

Like us on Facebook at Compass Trading Association
And join our group for weekly trading info Compass Trading Association

HotForex Security

Monday, 6 June 2016

Risk Per Trade

Never Risk More Than 2% Per Trade

Courtesy of
Never Risk More Than 2% Per Forex Trade
How much should you risk per trade?
Great question. Try to limit your risk to 2% per trade.
But that might even be a little high. Especially if you’re newbie forex trader.
Here is an important illustration that will show you the difference between risking a small percentage of your capital per trade compared to risking a higher percentage.

Trader Risks 2% vs. 10% Per Trade

Trade #Total Account2% risk on each tradeTrade #Total Account10% risk on each trade
You can see that there is a big difference between risking 2% of your account compared to risking 10% of your account on a single trade!
If you happened to go through a losing streak and lost only 19 trades in a row, you would’ve went from starting with $20,000 to having only $3,002 left if you risked 10% on each trade.
You would’ve lost over 85% of your account!
If you risked only 2% you would’ve still had $13,903 which is only a 30% loss of your total account.
Of course, the last thing we want to do is to lose 19 trades in a row, but even if you only lost 5 trades in a row, look at the difference between risking 2% and 10%. If you risked 2% you would still have $18,447. If you risked 10% you would only have $13,122. That’s less than what you would’ve had even if you lost all 19 trades and risked only 2% of your account!
The point of this illustration is that you want to setup your risk management rules so that when you do have a drawdown period, you will still have enough capital to stay in the game.
Can you imagine if you lost 85% of your account?!!
You would have to make 566% on what you are left with in order to get back to break even!
Trust us, you do NOT want to be in that position. You’d start looking a lot like Cyclopip. Do you wanna look like Cyclopip? Didn’t think so!
Here is a chart that will illustrate what percentage you would have to make to breakeven if you were to lose a certain percentage of your account.
Loss of Capital% Required to get back to breakeven
You can see that the more you lose, the harder it is to make it back to your original account size. This is all the more reason that you should do everything you can to PROTECT your account.
By now, we hope you have gotten it drilled in your head that you should only risk a small percentage of your account per trade so that you can survive your losing streaks and also to avoid a large drawdown in your account.
Remember, you want to be the casino… NOT the gambler!

Read more:

Like us on Facebook at Compass Trading Association
And join our group for weekly trading info Compass Trading Association