What is the risk of stock trading








Of course, dealing with securities is not completely risk-safe. The risk of larger losses can be reduced, for example, by a balanced depot with a well thought-out mix of solid values and risky, but attractive and lucrative investment options. Many banks offer their clients via equity funds the opportunity to invest in professionally assembled depots and thereby also minimise their own risk. These funds often have a double-digit rate of return. Interested parties should look at the performance of the last years in order to get a concrete overview.

 

The chances and risks of certain investment opportunities in securities can usually be estimated very realistically by stock traders. In the case of share learning, beginners must always be focused and develop a position in which they can already evaluate their first real investment objectively based on various information and details. Sufficient information in advance is part of the risk of individual stock trading.

Stock trading as an alternative

Wer Aktienhändler werden will, der hat den ersten Schritt zu einer cleveren Geldanlage bereits getan. Denn die Einsicht, dass aktuelle Finanzprodukte am Ende ein dickes Minusgeschäft sind, zeugt von einem objektiven und selbstsicheren Überblick über die Wirtschaftslage. Auf das bestehende Grundinteresse ist aufzubauen. Den Handel mit Aktien lernen ist der beste Weg zu einem selbstbestimmteren Umgang mit seinen Finanzen und hebt das Bewusstsein der Eigenverantwortung über Altersvorsorge, Eigenheim und alle größeren Investitionen, die Ersparnissen bedürfen.

Ob die internationale Wirtschaft blüht oder es starke konjunkturelle Schwankungen gibt: jedes Wertpapier reagiert auf diese äußeren Einflüsse anders. Die Börsenkurse von Unternehmen aus der Nahrungsmittel-Branche beispielsweise werden von schlechten wirtschaftlichen Ausblicken meist nur wenig beeinflusst. Nahrungsmittel werden immer benötigt und von den Verbrauchern entsprechend auch gekauft. Steht es schlecht um die internationale Wirtschaft, dann verzichten Konsumenten eher auf die Anschaffung eines neuen Fahrzeugs als auf das tägliche Brot zum Frühstück. Die Verkaufszahlen für Lebensmittel verändern sich also auch in wirtschaftlich schlechten Zeiten nur minimal, sodass auch die Börsenkurse relativ stabil bleiben.

Why invest in shares?

Why invest in shares?

 

Gold, forward money and real estate: The number of investments possible ketene seems almost unlimited nowadays. Stock trading, however, stands out from the crowd. Those who are sufficiently involved with the financial markets are very likely to have profitable profits and returns.

 

Hardly any lucrative investment opportunities
Bulle and BärSelten were as bad as the international financial markets, as is currently the case. Obviously this is going to be the normal consumer, especially in the steadily falling interest rates on the money, savings and more. Even a few decades ago, banks in Germany offered annual interest rates in the double-digit range – today it is usually below 1.5 percent return. At the same time, the annual rate of inflation, i.e. the rate at which prices increase on average per year, is about 2 percent. Every euro that is now invested in a savings account with a percentage of less than 2 percent is therefore worth a real amount next year. As interest rates are below the inflation rate, investors can buy less each year for their money. The savings are losing value.

Not only the interest rates and yields of money and savings accounts have become unattractive. In the end, safe financial products do not offer a financial advantage in the long term and are therefore shunned more and more.

 

Forex Strategy Trading with the trend

Forex Strategy for Beginners 1: Trading with the trend
Forex strategy: Trend trend Follow-up strategies are not for nothing the classic among trading strategies and also for beginners well suited. Trading often makes sense to choose the path of least resistance. For example, if there is a stable upward trend in a forex currency pair, the likelihood of a trend continuation is higher than for trend reversal.

How do I find out that there is a trend?

Before developing a strategy for forex, it makes sense to deal with basic principles of trend recognition. These are the prerequisites for a successful trading strategy. In principle, an upward trend is characterized by higher high points and higher low points. If the low points are connected to a straight line, a so-called trend line or in this case a upward trendline is obtained. In the downward trend, it is the other way around: deeper low points and lower between highs mark the downward trend.

In addition to trend lines, indicators such as moving averages can also be used for trend analysis. As a general rule, if the moving average increases, there is an upward trend. The combination of two moving averages with different time horizons is also useful. If the averages are almost parallel and rise or fall, there is a stable trend in the short and medium term.

 

Forex Trade Signal 2: Support and Resistance

Very simple but often effective is the focus on important supports and resistors in the chart, which can be used for a favorable entry. The introduction of support and resistance is often the advantage that the risk is clearly defined in the form of the stop. Because of their simplicity, support and resistance do not require a complex explanation of forex indicators, but this can be completely dispensed with.

Forex trading Signals: Support and resistance
The chart above shows the support and resistance areas in GBP/USD. For example, the third Test of the support zone in the range of 1.5250 – 1.5330 offered a forex trading signal for a long entry. The stop is clearly defined and is placed slightly below the lowest low point. The opposite situation is due to the resistance of 1.6300. A short entry with low risk can be made here.

The trade signal support and resistance is one of the most effective trade signals and is also known from English with support and resistance. By setting stops, this trade signal is recommended especially for forex traders and forex trader, who like to be safe on number.

Forex Trading signal 3: Oscillators

Forex Trading Signals: Oscillators
While moving averages deliver very good forex signals with pronounced trends, oscillators can act as good forex indicators in sideways phases. The most famous oscillators are RSI (relative Strength index) and stochastics. These indicators are part of the standard program of any good forex trading platform. RSI and Stochastics Mark Overbought and oversold areas. A RSI below 30 provides a purchase signal, above 70 is a sales signal. In the GBP/USD chart below, the purchase and sales signals in the area of support and resistance zones are clearly identifiable.

The important thing to note about oscillators is that they work very well as forex trading signals in sideways phases, but the oscillator values can remain very long in the overbought or over-sold area in marked trends. Oscillators then deliver false signals and should be ignored.
Like the support and resistance trade signal, the trading signal oscillators also belong to the frequently used trading signals. The oscillators are also better known as relative strength and stochastics. Your history gives you signals for buying or selling.

Acting systematically: linking trade signals to a strategy

Theme icon WissenMarket scanners support the assessment of the current market situation and are good decision-makers in the choice of a sensible trade signal. To be able to select the right trade signal, it is advisable to look at the functioning of the market scanners and the scanned markets from time to time and not simply accept the results data.

In addition, when a trade signal is coupled to a forex strategy, it is also possible to determine a purchase or sales decision when reaching certain top or bottom limits. Let’s refer to the Stop loss order. When linking trade signals with a strategy, one can also speak of a trading system.

In trading systems, it is important to pay attention to the trading strategy underlying the trading systems. Not only the trading strategies vary according to the online forex broker, but also the calculations of the respective reference quantities and their parameters for weighting. Here we refer to oscillators and trend.

Forex trading Signals: The most important concepts

Forex trading is now open to everyone and many private traders start trading in the forex market. The market is extremely liquid and can be traded around the clock, so there are countless trading opportunities every day.
It is all the more important to focus on a few effective strategies to act successfully. Successful trading strategies generally take into account the areas of entry, exit and risk management. We present some Forex signals with example, which can be used for entering a trade.

 

The most popular forex trading signals and strategies at a glance:

The trading signal moving average crossover
Support and resistance, also known as outbreak strategy
Oscillators as a trade signal
1-2-3 Formation Strategy
Break-out and range strategy
Forex Trading Signal 1: Moving average crossover

Forex trading Signals: Moving average crossover
Forex trading Signals: Moving average crossover
Moving averages (MA) are a classic among the indicators used for trend analysis. Combining two moving averages with short and longer time horizons, these moving averages can provide forex signals – always when the faster (shorter period) of the two Mas crosses the slower MA (ideal typical example of forex trading signal).

The EUR/USD chart shows a 7-day average (red) and a 17-day average (blue). If the ma7 crosses the ma17 from above, this offers a forex trading signal for a short entry (trading on falling prices in the EUR/USD), at crossing from below for a long entry to rising prices. It is also clear that moving averages work best when there are clear upward or downward trends. In sideways phases they tend to produce more false signals.

How does the forex lever work?

This is how the forex lever works!
One of the most attractive characteristics of FX trading is the use of large financial levers, which also enable large profits in the case of manageable operations and in a very short time. The forex leverage, however, carries significant risks that should be understood before the commencement of trading. In the following we would like to explain the forex lever on an example.

Due to the leverage effect, forex trading holds high yield opportunities with low capital usage – at the same time also the risk of a total loss.
In forex trading you can profit from rising and falling prices.
Currencies are always traded in pairs.
In order to act with leverage, a margin must be provided.
In the case of insufficient capital coverage, a margin call is required.
Analysis tools are designed to help you better assess forex price developments and derive trading strategies from them.
Scheme of a currency transaction: That’s how it works!

In theory, a currency transaction can be reduced to two transactions: an investor borrows money in one currency and puts it in the other currency immediately thereafter. In a perfect market (only theoretically existent), the credit and investment interest rates are identical. If the loan is due, the investor will withdraw the money from his investment account, exchange it in the credit currency and wipes the loan. If a depreciation of the credit currency has occurred in the meantime, the investor gains a profit: He does not have to use the entire balance of the investment account to repay the loan. If an appreciation of the credit currency has taken place in the meantime, the investor suffers a loss: the balance on the investment account is not sufficient to completely pay off the loan.

So works the forex lever
So works the forex lever
In principle, foreign exchange is a foreign currency. For example, you may be credited in a bank account or securities that record a foreign currency.

Currencies are traded in the foreign exchange markets, where currencies are always traded in pairs. Rather, one currency is exchanged for another currency. The Forex trading platform is one of the most important trading venues and is one of the largest financial markets in the world. This is not a centralized exchange, but rather an electronic network of banks, central banks, companies, governments and also private individuals. These mark participants act directly with each other.

Direct to the forex Test winner GKFX

In order to earn money from a currency transaction, investors rely on price changes of one or the other currency and thus on the change in the exchange rate of the traded currency pair. The most traded currency pairs are:

EUR/USD
GBP/USD
USD/CHF
USD/JPY
USD/CAD
AUD/USD
NZD/USD
Investors can rely on both rising (long) and falling (short) price developments in foreign exchange trading. The trader gains profits if, for example, he assumes that in the USD/JPY currency pair the US dollar rate rises against the Japanese yen – it is long – and the corresponding event also arrives. In order to be able to act on the Foreign Exchange (Forex), an account must be opened with a broker specializing in forex. If you do not have any experience in forex trading, it is essential to obtain essential information and try it out with the help of a forex demo account.

As forex trading can always be leveraged to move high trading volumes with a small amount of capital, it is important to know how it works and what opportunities and risks are attached to it. The following section tells you more about it.

Forex Lever briefly explained at an example

For example, if the investor borrows $100,000 and puts it in euros, it corresponds to a EUR-long position in the volume of a lot. In practice, no bank or broker in the world will allow such a business without requiring collateral. The amount of the so-called margin varies from provider to provider. If the broker requires a margin of one percent, the investor must deposit 1,000 euros at a position size of 1 lot. In this amount, credits are blocked as margin on the forex account. The leverage effect is the result of the fact that only a fraction of the volume moving in the market must actually be raised from equity. The forex lever is the reciprocal (reciprocal) of the margin. A margin of one percent corresponds exactly to a lever of 100. How to trade the EUR/USD currency pair with Forex is to be read in our guide.

How does forex arbitrage work?

Forex arbitrage: What’s behind it? 
Forex ArbitrageIm Arbitrage Trading (not only on the FX market) is trying to achieve a risk-free profit by taking advantage of minimal, short-term price inefficiencies. Such market participants, also referred to as arbitrageurs, contribute to the efficient pricing of the markets. The necessary condition for arbitrage trading is the ability to quickly place multiple orders in a market without a broker spread. For this reason, private investors can implement forex arbitrage practically exclusively with ECN brokers, which allow the placement of orders directly into the order book.

 

This content is examined in more detail below:

 

1. Arbitrage at a Glance
2. Forex Arbitrage Example
3. Other Forex trading strategies

 

1. Arbitrage at a Glance

 

Arbitrage exploits short-lived price inefficiencies for risk-free profits.
The prerequisite for arbitrage is to quickly place several orders directly into the order book.
For arbitrage and scalping are best ECN brokers.
The respective trading strategy should match the trading behaviour and the trading level of the trader.
Basically, no trade without a strategy!
Fibonacci retracements are recurring key figures used to determine course and correction goals.
Scalping and break out is particularly suitable for investors who want to trade in the short term.
2. Forex arbitrage explained with the help of an example

 

For a hypothetical forex arbitrage example, which is exaggerated in terms of price differences for reasons of clarity, the following three exchange rates were accepted: EUR/USD 1.20 – EUR/GBP 0.70 – GBP/USD 1.65.

 

A trader opens a position in the EUR/USD to 1.20: He buys 120,000 USD for 100,000 EUR. At the same time, he exchanged $120,000 for the course in 72,727 GBP. This can also be exchanged at the same time at a rate of 1.4286 euros per pound (the reverse listing of EUR/GBP 0.70) in euros. From this he receives 103,898 euros – and has thus earned a profit of 3898 euros.

 

As already indicated, arbitrage gains are unrealistic in these orders of magnitude. Per lot (100,000 units of the base currency) are often made only a few $ profit. However, since no positions are held over, no financing costs are incurred. By their influence on supply and demand, arbitrageurss themselves eliminate the inefficiencies in their sphere of activity (for example, the market place of an ECN broker). In practice, Forex arbitrage is only possible through software.

 

Only those who look closely and follow the curves attentively have the right strategy
Only those who look closely and follow the curves attentively have the right strategy
With the trade strategy arbitrage, the so-called Arbitrageur uses spatial and temporal price differences between different exchange rates in different foreign exchange markets for profits. Only through an ECN broker is forex arbitrage possible, as this allows a direct placing in the order Book of the Stock exchange. In short: Forex arbitrage is the profit from the price difference between two or more markets.

 

3. Further forex trading strategies for Successful trades

 

Trading strategies to trade with Forex, there are some. The important thing is that the trader finds out which strategy best suits him. Forex beginners should take care to choose a more straightforward and easy-to-understand forex strategy. It is also important to pay attention to well-thought-out and balanced money and risk management. On our rate donor pages forex-Handelsignale, forex-trend strategy and Forex-contra-trend-strategy we present popular and also for beginners suitable trading strategies in detail. In this guide, we want to take the completeness of the strategy for the successful forex trading.
Fibonacci Trading

 

The so-called Fibonacci retracements are recurring patterns, which are also recognizable in the price movements of the financial markets. The so-called Fibonacci number series dates back to the 12th century and was discovered by the Italian mathematician Leonardo da Pisa. The Fibonacci number series is a sequence of numbers to be continued to the infinite. Each number is calculated from the sum of the two preceding numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…

 

If you put two adjacent numbers in proportion and divide them, you get a result of 0.618. If you want to calculate the ratio of two other numbers, there are also important key figures for Fibonacci trading. In general, these figures are also referred to as the “golden section”, so that these numbers can be found in other parts of life. In forex trading these are

What is a forex pip?

 

 

Pip and lot are among the most important FX-specific technical terms. Pips are a unit of measure for price changes, with the number of lots the position size is determined. Understanding both terms is essential for anyone who wants to deal with active trading on the FX market in some way. Below is a forex PIP statement focused on the essentials as well as a forex lot explanation with practical example. We’ve also put together a couple of tips to help Forex beginners get started in trading. We also show the advantages of a forex test account.

A PIP is the last decimal point of the course value and indicates the price change.
The number of lots determines the position size (1 lot = 100,000 units).
Forex beginners should first try the forex trading with a test account.
Only two to five percent of the available trading capital should be traded.
For beginners, the main currency pairs are best suited for action.
Trade should always be preceded by trade strategy considerations.

 

Forex pip definition

Most currency pairs are recorded with four decimal places. A PIP then corresponds to a change of one unit on the last decimal point. For example, if the EUR/USD exchange rate rises from 1.3040 to 1.3050, this corresponds to an increase of 10 pips in favour of the euro in dollars. In addition to price changes, various other facts are measured in pips, FX brokers give their spreads in pips and the (absolute) performance of trading systems is measured in pips. In addition, gains and losses are also indicated in pips.

Forex Pip lot_1

Currency pairs at a glance, always up-to-date and fast actionable
Explanation and definition of PIP and LotDer value of a pips depends on the position size. This is usually measured and agreed in lots. A lot is equivalent to 100,000 units of the base currency. Some forex brokers offer mini-lots with 10,000 and micro-lots with 1,000 units. If a currency pair is quoted in the form EUR/USD, the euro is the base currency, the USD is the exchange rate currency. The appreciation of the EUR in this listing means that more units will be paid USD for a EUR. Newcomers are sometimes insecure when reporting a “rising euro” in financial media, and a downward-facing chart is shown. Many media write down the price in the form USD/EUR (the reciprocal of EUR/USD). If the EUR is to be revalued, fewer units of EUR must be paid for a USD, which explains the falling chart.
Exchange rate movements in forex trading are measured in pips, with a PIP being the fourth decimal point. However, in the USD/JPY currency pair, the second decimal is already counted as a pip, as Japanese yen is only indicated with two decimal places. A lot is the specification of the position size. A lot corresponds to 100,000 currency units, for example 100,000 euro.

Forex market Trading Hours Facts for investors

Forex market Trading Hours: Facts for investors

Core Forex trading does not take place on a centralized exchange.
All market participants act globally and directly with each other.
Trading on the stock exchange is possible almost around the clock.
Course gaps – so-called opening gaps – do not appear as well in forex trading.
The so-called overnight trading can result in both a positive and a negative rollover.
At Forex daytrading with daytrading Software or in seconds trading, minimal price fluctuations can lead to short-term profits.
In principle, FX trading could also be continued over the weekend without interruption. With regard to private traders, this is particularly evident in ECN brokers: They could also run their platforms on weekends and allow traders to place orders that could be served by other traders. What would theoretically be possible, however, cannot be achieved at present, because at weekends the market is simply not frequent enough.

Forex Trading Hours
Overview of Forex Trading hours
In practice, however, liquidity is too low on the weekend, even on the FX market, which is why trading on weekends will hardly take place in the foreseeable future. The reason for this is obvious: on Saturdays and Sundays, institutional market participants do not act, which eliminates a significant part of the market volume. Forex Retail brokers cannot offer their customers trading on weekends because their own liquidity brokers do not provide courses (STP broker) or because they are unable to reliably secure net positions (market maker). The liquidity of ECN brokers would not normally be sufficient.

Nevertheless, Forex trading times have an enormous advantage over stock trading – and since trading in foreign exchange on the market is possible in principle from Sunday night to Friday evening, only small trading hours are lost. Already Sunday 22:00 CET opens the market in Australia, while Fridays is around 11pm. It becomes interesting when opening times overlap, because here are particularly many market participants active. In Germany, especially in the afternoon from 1pm, good chances are calculated, as both trade in the US market and trade in European countries is possible.

The fact that opening hours play a much lower role in forex market than in exchange trading brings many advantages. First, during the week there will be no opening gaps, which can be undertaken by risk management. Secondly, there are distortions in the price development that arise solely from the reaction of market participants to the impending end of a trading day (especially in front of important news!).

While large fluctuations occur in the stock market, especially after the opening and shortly before the closing of the market, trade in foreign currencies remains largely unaffected. In the stock market, it is necessary to keep an eye on the positions in these times. It is recommended to buy or close first positions when the initial fluctuations have calmed down to avoid major losses.

The fluctuations are largely due to news and unforeseeable actions of market participants, often as mentioned just before the closing of the market. Some traders may have made a negative deal and tried to compensate for the loss shortly before the end of an increased risk. Others are putting the day’s profit on the whole, in order to strike out again as much as possible. Messages that arrive late in the evening or at night bring participants to action. For example, you want to take advantage of announced price fluctuations. These actions have a huge impact on the market and, of course, have a certain risk as they are difficult to assess.

In the forex, however, these daily fluctuations are more or less due to the fact that the trade is consistently possible. Thus, this also means a reduced risk of suffering losses due to the unpredictable price fluctuations. Of course, no one can predict exactly how the market will develop without speculating. This means that no direct recommendation can be given on the forex when positions should be closed. Rather, the activity here is based on the current price trend. To take full advantage of trading around the clock, all time zones should be kept in mind. Find out in advance what time you can trade with which currency.

Due to the time shift and the direct trading of market participants among themselves, currencies could basically be traded around the clock seven days a week. However, as market participants are also