Archive for the ‘Social Trading’ Category

News Trading: Top 5 Events for News Trading in 2016

News Stand

News trading and the markets

News trading is a method of trading the markets which utilizes economic and socio-political events to predict the possible direction of the financial markets.

News events can have a major impact on the markets, as the release of an important news event can cause traders to buy or sell assets on mass depending on their perception of the news.

Depending on the news release, it can have short or a long term impact on the markets. For example, 3 months since the news broke about the shock results of the Brexit vote in the UK, the GBP has not recovered the value it lost.

What Causes the Price Movements in News Trades?

When the news is released, it can influence the financial markets. This is because news events can impact whether the majority of traders believe the market is in an uptrend (bullish) or in a downtrend (bearish), otherwise known as market bias.

The price movements in the markets, is a result of the actions of buyers and sellers based on what they perceive the future position of the instrument will be.

For instance, buyers take long positions in a financial instrument when they perceive that asset is undervalued, with a potential for a value gain in future. Whilst sellers will take short positions if they believe that a asset is overvalued or will lose value in the future.

Therefore, traders who trade news events are reacting based on market perception based on the news release. The degree to which this market perception has been fulfilled as well as the extent to which the news event deviates from the market expectation can determine the degree to which traders will respond to the news event.

For instance, if the news event is a surprise in the market, the degree of response by traders will be higher as a result of more aggressive buying or selling and this is reflected in the extent of the price movement following the news trade. (see the impact of Brexit here)

But if the market is already expecting a sharp and this surprise has already been priced into their current actions, then the likelihood of seeing much price movement following the news will be lower.

Popular News Trading Strategies

The popular news trading strategies used for trading market events are as follows:

2) Trading the spike.
These are the traders who aim to catch the initial sharp movements that occur in the market when the news release occurs and can create a large deviation from market expectation.

To do this kind of trading effectively, it is best for such traders to have access to premium news feeds as well as facilities which are co-located with the brokers server so that the latency period for receipt of news feeds and execution of trade orders is as low as possible.

This is the level where the institutional traders are very active, and the sheer volume of trades executed by their high frequency trading software is what produces the characteristic news trade spike seen when there is a market-moving news event.

news trading - the spike
Many retail traders try to trade the spike as well, but without access to premium news feeds and the tools to ensure ultra-low latency, it is harder for them to turn a profit under such circumstances.
2) Scalping
Another strategy some traders like to use is scalping. These traders, try to make quick profit by opening and closing positions sometimes within milliseconds in an attempt take a few pips while the news event is in progress. When trading small volumes the gains made with this type of trading could be eaten by commissions and fees, however when done with large volumes, the gains can outweigh the costs.
3) Post-news Swing Trades
After the dust has settled following the news trades, the effects of the news can linger for some time. Some traders may decide to wait until the dust has settled before trading in the direction that the market has assumed in response to the news trade.
news trading - post news swing
These are just some of the methods used by traders to trade news events, however no method is superior or inferior to the other. The skill of the trader is what will determine the result a trader may experience.

Top 5 Upcoming Events for News Trading the last quarter of 2016

Now that you have an understanding of what news trades are, here is a description of the top 5 news trades to watch out for between mid-September and December 2016.

FOMC Rate Statement: Wednesday September 21, 2016

The Federal Open Market Committee of the US Federal Reserve will be releasing its interest rate decision and accompanying statement. There has been a lot of speculation that the Fed Reserve will increase interest rates as the US economy continues its economic recovery.
The question for this news event is: if not now, then when? Remember that the markets react to news events based on perception, so the perception that traders have towards the statement by Fed Chair Janet Yellen will determine how the US Dollar will perform on that day.

Non-Farm Payrolls: Friday October 7, 2016

Scheduled for release at 8.30am Eastern Time on the 1st Friday of October 2016, the US Non-Farm Payrolls report showcases change in employment numbers in all sectors of the US economy except the agricultural sector and the unemployment rate.
This is one of the most watched news events the world over and also one of the most difficult news releases to trade. A tradable report is one in which there are no conflicts in the two news items that make up this report.

MPC Official Bank Rate Votes + Official Bank Rate + Monetary Policy Summary: Thursday October 13, 2016

This news event comes out of the United Kingdom and will have an impact on the British Pound, a currency which is still smarting from the effects of the outcome of the Brexit vote. It will be interesting to see what further measures the Bank of England would come up with to stimulate the UK economy.

Bank of England Inflation Letter: Thursday November 3, 2016

This news event features the reading of a letter written by the Bank of England, chronicling their projections for UK inflation and economic growth over a 2-year period. This news event creates a lot of market volatility for the British Pound.

RBA Cash rate and Statement: Monday December 5, 2016

This news event comes out of Australia and features the interest rate decision and accompanying statement released by the Reserve Bank of Australia.

If you want to find a trusted regulated broker – see our list of the top forex brokers regulated by the FCA.

image credit:simplyrikkles

6 Best Online Trading Apps for Android in 2017

Android

As an online trader it is important to be up to date with the latest movements on the stock market. Situations can change quickly so you have to be equally flexible and dynamic. Smartphones and tablets have given people the opportunity to revolutionise their trading and stay up to date with the latest news and trends. In order to this however you need a solid trading platform. Mobile apps are the solution and are now widely available. As well as making trading far more convenient they provide a secure environment to make sure the trades you make are as relevant as possible. In such situations it is important to have the best tools available to you, so for your convenience we have listed the top 7 online trading apps for Android platforms.

All of the following apps are free to download and available on the google play store.

1. MetaTrader 4

MT4 is the most popular android app for online trading and for good reason, its large range of features and polished mobile interface have made it very popular with more than 50,000 reviews on the Google Play store. Some of its key features include: fixed spreads, microlots, technical analysis, customisable tracking graphs and an integrated financial calendar. As the most popular trading app on the Play store it has the added benefit of a large amount of online tutorials and guides to help you get started with the platform.

If you would like to trade using the MT4 platform, ETX Capital is one of the most popular online brokers who use the platform and also regulated by the Financial Conduct Authority in the UK.

2. Trading 212 FOREX & Stocks

Designed by Avus Capital, a well-known trading platform provider, this app is the second most popular on the Play store. It includes a wide variety of features and instruments for tracking your stocks and shares. It’s simple layout and intuitive controls offer greater usability than many of its competitors while sacrificing a few tools. Notable features include: over 400 financial instruments, financial news and analysis and tight spreads, even at news time.

3. eToro – Mobile Trader

This app has been built and designed by eToro, best known for their popular online social trading platform. As a well-established company it has excellent customer support for the app. eToro puts a lot of emphasis on its established community of users to communicate with, the app even includes a function to copy the trades of successful users.

If you are interested in social trading and eToro, you can read our full review of eToro here.

4. FOREX.com for Android

This popular American company aims its platforms at experienced traders and this trend continues with its app. One of the leading platforms for the US market it has won awards for its customer service. However, the app hasn’t proved to be as successful as their other platforms. Although it is a powerful and fairly user friendly app some users have reported it having technical problems.

5. Forex & CFD Trading by iFOREX

The creators of this app are iFOREX, fairly recent entrants into the marketplace. The app includes a customisable layout and access to over 80 currency pairs. The app has received many good reviews and appears to be a solid piece of software. The trading platform even includes a special account for Islamic traders who wish to abide by the principle of no ‘Riba’ – a term used for unjust gains in business transactions. However, the company has received criticism for its lack of transparency, poor customer service and no free demo account available.

6. DTMobile by Delta Stock

Created by the South African company Deltastock this app is currently not very popular, but the users who have downloaded it seem to be very happy with it – the app, receiving a 4.1 star rating on the Play store. Their simple and attractive interface makes it easy to navigate, but as a new company they struggle to keep up with all of the features included in competing apps. However, their excellent customer service puts them in a strong position to continue to improve the app.

Hopefully this has inspired you to check out Android apps, many of the benefits listed here can only be judged subjectively so it is important to try the apps out to find which one is best for you. As with all financial trading your capital is at risk. These apps are designed for experienced traders, however trial accounts are available on several of these apps and are a good way to build up experience without risk. Mobile apps provide many strengths over traditional trading and can greatly benefit you when used responsibly.