The Forex Chronicles

Why The GBP/USD Is At A Critical Point At The Start Of October 2015

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At this time of the year, the summer holidays are well and truly over and we start to see decent volumes in the forex markets, and large price moves in many of the major currency pairs.

So it’s interesting to take a look at the GBP/USD pair because this is at a critical point right now.

If you take a look at the chart below, you will see that this pair has just managed to fall below the horizontal trendline (indicated by the black line), which will often signal the start of a breakout, but has had a mini-rebound since then (and is in fact moving higher and higher as I write this article):

GBPUSD_OCT15

So it is still unclear whether this is a decisive break, in which case we could see this pair fall to around 1.46 – 1.48, or whether it is going to bounce off this level once again and head back into the trading range that has been established over the last 4 or 5 months.

From a trading perspective, this is definitely not a good trading opportunity at the moment because it really is a 50/50 shot, but if we could get a few more days of consolidation where the price hovers around the trendline, followed by a large down day, this would present more of an opportunity.

That’s because you will often see the price move out of a trading range and break through a trendline before retracing slightly. It’s often the second price move that confirms the breakout.

So we will have to wait and see what happens next.

Why This Is A Perfect Time To Start Trading Forex

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As you may be aware, stock markets all over the world have slumped this week due to China’s economic woes and the continuing decline in commodity prices.

Commenting on the week’s events, this article from Bloomberg reports that China’s Shanghai Composite Index has fallen by more than 10% this week, and is very close to wiping out all of the gains that have occurred as a result of the government’s intervention last month.

It is a similar story in Europe and other areas of the world, and the United States didn’t escape unscathed either because the Dow Jones closed more than 500 points lower on Friday.

Indeed in some cases, stocks have recorded their worst losses since 2011, which shows the depth of the current stock market slump.

So if you hold stocks in your investment portfolio, it is almost certainly a lot lower now than it was at the start of the week, and could continue to fall in value if you plan on holding them for the foreseeable future.

That’s why I think this is a great time to consider trading forex if you haven’t already done so. The great thing about forex trading is that it doesn’t matter if currencies rise or fall because you can make money from long and short positions.

Furthermore you don’t have to endure sleepless nights wondering what’s going to happen to the value of your stocks because it is possible to enter and exit positions on the same day if you so wish.

Another benefit of forex trading is that you don’t necessarily have to risk lots of money in order to make some decent returns. If you make use of leverage, for example, you can turn a relatively small amount of capital into quite a tidy sum if you are successful.

I myself started off this way many years ago and managed to build up a decent pot using a few basic trading strategies.

Of course I have to put in a disclaimer and point out that it is not easy to make money from currency trading. It is estimated that up to 95% of people end up losing money in the long run.

However if you are fed up of seeing the value of your stocks going down and don’t think that the world’s economies are going to improve any time soon, you might want to take control of the situation and consider forex trading as an alternative way to make some money from the financial markets.

If you can contain your losses and ensure that your winning trades more than compensate for the occasional losing trades, you should find that it is not that difficult to come up with a winning strategy that will generate decent returns in the long run.

Trading Is Becoming More And More Popular With Women

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City Index are one of the most popular brokers in the UK, so I was very interested to read some facts about their customer base that they published earlier this year.

One of the most significant findings concerned the number of women who enjoy trading the markets because according to City Index, there are more and more women who are choosing to open live trading accounts.

The world of forex trading, and indeed trading in general, has always been a male-dominated profession, but it would appear that an increasing number of women are realising that this is a very viable way of making some extra money.

Here is an infographic that reveals some of the most important findings:

Female Traders
Source: http://www.cityindex.co.uk/market-analysis/trade-statistics/37500772015/the-rise-of-the-female-trader/

As you can see, 46% more women opened new accounts between January and March 2015 compared to the same period this year, which is a dramatic increase.

Furthermore, it would seem that most of these women are professional women rather than stay-at-home moms, for example, because the customer base includes accountants, administrators, business owners, managers / senior managers, secretaries and directors (which is the most popular profession).

The average age of these female traders is 43, which backs up the idea that these are relatively wealthy professionals who have a reasonable amount of disposable income to trade the markets.

However it was interesting to read that the youngest trader was just 19, whilst their oldest female customer was 83 years old, which I find incredible because although I have been trading for most of my adult life, I can’t imagine that I will still be trading stocks and currencies well into my 80s.

With regards to which markets they trade, 80% are trading the stock market indices, whilst 10% trade forex, 7% trade stocks, 2% trade commodities and 1% trade commodities, which I find quite surprising.

I would have thought that most of these female traders would be trading stocks or currencies because this is how most people get started, but it would appear that they prefer to trade the FTSE 100 and the Dow Jones instead, which can be quite a challenge for the inexperienced trader.

Anyway the main point that I wanted to get across in this article is that an increasing number of women are choosing to trade the financial markets. Of course they are still in a minority because just 8% of the trades were placed by women during this period, according to this infographic, but it is clear that they are a growing force.

Why The GBP/USD Has Been Difficult To Trade This Summer

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The GBP/USD is many people’s favorite currency pair to trade, but as you may have noticed, this particular pair has been pretty hard to trade in recent months. So why is this?

Well there are a few reasons. First of all it has to be pointed out that many of the forex pairs become a lot harder to make money from during the summer months because many traders are on holiday and volumes naturally drop off.

Therefore intraday price movements tend to be a lot smaller, and that’s certainly been the case with the GBP/USD pair because the average true range indicator (which is a good indication of daily price movements) has been falling since May and is now below 100 points.

This isn’t the sole reason why this pair has been a lot harder to trade, however, because 100 points movement a day is not bad at all when you consider that it was barely trading in a 50-60 point range this time last year.

I think the real reason why people have struggled to generate some decent returns from the GBP/USD pair is because if you look at the daily chart, you will see that the 200-day exponential moving average has been moving sideways since the start of May (indicating a trendless market) and has barely moved away from this key indicator at all since then.

Subsequently traders who trade off the 4-hour and daily charts may well have struggled to make money from this currency pair this summer because price moves in either direction have tended to fizzle out fairly quickly, and short-term traders may also have found it difficult because of the reduced volatility.

So you need to be aware of this if you continue to trade this pair during the rest of summer, but it’s worth pointing out that there are other pairs that are more volatile and are in much stronger trends right now, even though volumes will be lighter for all pairs.

Plus you can always trade other markets such as gold, crude oil and the Dow Jones / FTSE because these have all been very lively in recent weeks.

The Forex Chronicles Website Is Now Live

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I first registered this domain name in April 2014 with the aim of setting up a new forex website, but it is only now that I have finally got round to writing my first blog post.

To give you a bit of background, I’m a full-time trader from the UK and I have been trading the currency and stock markets since around 2002.

If you are subscribed to a number of different forex blogs, you may well know me from my previous blog (theforexarticles.com), which has been running since 2007.

This site has hundreds of different articles relating to forex trading, but it has a very basic template and is very badly organised because it has no categories as such. Therefore it can be quite hard to find articles on a particular subject.

So I have decided to set up this new website and gradually migrate over to this new blog from now on because I am frankly bored with theforexarticles.com now, and am keen to start all over again with a fresh and innovative new site.

With regards to the content of this new website, Theforexchronicles.com will includes lots of forex trading tips and strategies that I use in my everyday trading, as well as some of the best new trading ideas that I pick up along the way.

Although I have been trading for around 13 years now, my strategies are constantly evolving because market conditions change all the time. So I will write about some of these latest tactics on this blog.

In addition, I shall also be writing articles on all of the main technical indicators that are available for you to use, and will also be reviewing some of the signal services that are available for those people who don’t necessarily want to trade the markets themselves.

Plus I shall also be analysing the major currency pairs on the main blog section of this site, which will include some long-term predictions, as well as all the latest forex news.

If you would like to keep up to date with all of these new posts, you can subscribe to the RSS feed, or simply bookmark the site and add it to your favorites.