A simple EURUSD trading strategy - the Parabolic SAR and MACD

In my pervious post was a simple trading system on the EURUSD evaluated; in this post is another trading system evaluated.

Trading system

The trading system is the use of the Parabolic SAR indicator as primary indicator and the MACD as a secondary indicator.

The MACD is in the post “TradingForex using the trading strategy 123 trading signals” described and the Parabolic SAR indicator is in the post “Parabolic SAR Stop and Reverse Technical Indicator” described.

Time frame

The evaluation focuses on the charts 15 minutes, 30 minutes and 1 hour.

Note

Please note that this post is only illustrative and the purpose is to give insight into how to trade. 

Evaluation 1

The evaluation is on the EURUSD.

The charts show that the system is working well in connection with this evaluation; the charts also illustrate that the market is in a trend-following market condition which is the market condition the parabolic SAR works best in.

The time frame; the trend direction the parabolic SAR indicates;  is longer in the 1 hour chart than in the 15 and 30 minute charts which does that the 15 and 30 minute charts are better to use than the 1 hour chart in connection to the time frame in a trade.

The time frame in a trade on the 30 minute chart is days; in the 15 minute chart is the time frame in a trade a day or hours.

The charts

The charts; 15 minutes, 30 minutes and 1 hour; are illustrated in the following; trades are illustrated as long and short trades; first is the Parabolic SAR trend evaluated and second the MACD; is the lines crossing each other and indicating that the trend direction is changing.

Evaluation 2

The evaluation is on the NZDUSD.

The charts show that the system is working well in connection with this evaluation; the charts also illustrate that the market is both sideways and trend-following; the Parabolic SAR is difficult to use in a sideways market where the currency rate is sideways.

The time frame; the trend direction the parabolic SAR indicates;  is longer in the 1 hour chart than in the 15 and 30 minute charts which does that the 15 and 30 minute charts are better to use than the 1 hour chart in connection to the time frame in a trade.

The time frame in a trade on the 30 minute chart is days; in the 15 minute chart is the time frame in a trade a day or hours.

Conclusion

In connection to this evaluation is the trading strategy Parabolic SAR and MACD working best in a trend-following market.

The 15 minute and 30 minute charts are the best charts to get an indicator of the trend direction as the trade is shorter than on 1 hour chart.

Note this evaluation is only illustrative and only inspiration to traders’ thoughts. 

A Simple EURUSD Trading Strategy

On my blog are different trading strategies described; most of them are indicator trading.

In this post

In this post is a simple strategy evaluated. The strategy is in a video I found on YouTube; the video is on http://youtu.be/CDhgjsQEbBM.

Please note that this post is only illustrative and the purpose is to give insight into how to trade.

Strategy

The video illustrates a strategy that starts each trading day at 9:00 o’clock GMT.

The strategy is;

·       Find the trend direction on the EURUSD

·       Place a trade at 9:00 o’clcok GMT;

·       The profit target is 50 pips

·       Stop loss is 40 pips.

Evaluation

9:00 o’clock GMT in my time zone is 7:00 o’clock.

I evaluated the strategy at 7:00 o’clock in my time zone; the four days I evaluated were the price volatility in one direction; the trades would have been profitable if a trade was placed but not 50 pips if the take profit target was 50 pips.  

CFD Trading: Coffee

Coffee is a commodity and is under the section commodity on the trading platforms.

Coffee is produced in developing countries as Brazil and Africa.

Weather and coffee

The weather has effect on the outcome of the coffee production; in Brazil is the weather dry and hot.

January 2014

Brazil is hit by a drought and is on its way into the dry season; which has an effect the coffee production and the price of coffee.

In February 2014 has the price of coffee raised from 140 to 174 dollars per contract. The 20 of February is the price decreased from 174 to 163.

Price of coffee

The prices of coffee raised from 108 to 287 from 2009 to May 2011; the price has since decreased from 287 to 163.

Please note

This post is only an illustration of how the weather has an effect on the coffee prices. Please note also my disclaimer.

CFD Trading: Corn

Corn is a commodity; the US and China are countries that produce most corn. The production of corn starts in April to June where the corn is planted; Harvest is from August to late October.

CFD trading

Corn is in the section commodity on the trading platform; with the latter C or ZC.

The corn price often follows the trend; it is either moving up or down. Some of the best times to trade are around the Corp reports.    

The later the corn is planted the higher the price might get as it is an indicator of a low outcome of the season.

Price of Corn

The price of corn is almost on the same level as it was in 2009; since 2009 the price have increased from 410 dollars to 817 dollars in July 2012; the price is in February 2014 442 dollars.

The price chart illustrates the corn market as a trend following market.

An Online Trading Platform

Are you considering trading on another CFD trading platform or just want to try an alternative trading platform? Plus500 might be a good alternative.

Money in segregated accounts

One advantage using Plus500 is how they hold your deposited money and the money you gain on your CFD trading; they place the money in segregated accounts which mean your money cannot be used by Plus500 for any purpose.

More information is at Plus500’s website about how they hold your money is at “abou us” and at “your funds is safe with us”. 

Simple trading platform

In connection to trading CFD is the trading platform simple and easy to use, which means you fast can learn the features of the trading platform.

More information about the trading platform is at Plus500’s website in the demonstration video “Watch how it works”.

Registration

There are different ways to start trading on the platform.

The easiest way is to download the trading platform and write your email address and a password in the login box; the registration gives access to the demo account.   

More information about the advantages trading on the demo account is at Plus500’s website  at “help” and “trading with demo funds”.

Another way to start trading on the platform is to registers as a user and receives the welcome bonus and first deposit bonus if a deposit is made.

More information about the welcome bonus and first deposit bonus is at Plus500’s website.

CFD trading is a leveraged product

Please notice that your capita may be at risk trading CFD.

CFD Trading: Cocoa

Cocoa is a commodity; the most production is from Africa but new market as China and India are up-coming markets.

Cocoa is used in chocolate and related products.

In recent years are the interest on chocolate and health increasing.

Pricing

The price on the global market is volatility; in the African nations is the price fixed to protect the farmers and to improve the quality of the cocoa production.

The Fixed price is called fair-trade; a fair-trade price is a fixed price plus a premium; is the global price lower than the fair-trade price are the farmers paid the fair-trade price; is the global price higher than the fair-trade price are the farmers paid the global price plus the premium.

The price volatility between 2011 and 2014

The price of cocoa has between 2011 and 2014 been among 2575 and 2925 dollars.

CFD trading and cocoa

Cocoa is in the section commodity on the online trading platforms; in the last year has the price been among 2700 and 2900 dollars. Is means that each contract is worth as an example 2900 dollars if the price is 2900 dollars.

CFD is a leveraged product which means that an investment in a cocoa contract only cost 29 dollars if the price is 2900 dollars on each contract. 

CFD Trading: Cotton

Cotton is a commodity and is used in the fashion industry to produce close etc.

How is the price set in the cotton market?

The price is set by demand and supply; but there are restrictions in the market price.

Government policies

One restriction is government policies; in China is the cotton brought by the government at a fixed price and sold at a lower price.

The price of cotton produced in China is higher than the world price.

The world price is set by local prices; the local prices differ from one country to another country.

The price on cotton and competitive products

Another restriction is the price and competitive products; if the price for cotton is high the farmers will produce cotton; as the price is set by demand and supply; the price will start to fall cause to the higher rate of farmers producing cotton; the lower price of cotton makes another product more profitable to produce and the production of cotton will fall and the price of cotton will start to increase.

Analyzing the price chart for cotton

The price for cotton has been falling since February 2011; the reason is the production of cotton has been high. At the present is the market not short on cotton.

CFD Trading and Cotton

Cotton is in the section commodity on the online trading platform; the price range has the last year been among 95 and 86 dollars.

Charts: Tools to Analyzing the Currency Curve

I was on the eToro blog and read about their new chart service.

Some of the services a lot of traders are interested in are to draw a line from one point to another or set the Fibonacci levels in the chart; these two examples are services eToro offer.

On the eToro blog in the post “Have you seen our new Charts?” is a video illustrating the new service.

CFD: Bitcoin

Bitcoin is a digital coin; the coin is also a CFD instrument on the trading platforms.  

On my website about the social investment network is a link to eToro about the Bitcoin; they explain the coin and how to invest in Bitcoins at the social investment trading platform.

On my website is the link in the list “Latest Updates”; the 13 of January (the Bitcoin has arrived!).

CFD Trading: Natural Gas

Natural gas

Natural gas is an energy source; it is used; amongst others for electricity and fuel.

Measured in

Natural gas is measured in cubic meters.

Pricing

The price for natural gas is given by demand and supply.

The price is affected by the weather as the demand for natural gas is rising in the coldest months of the year; around December and February.

The price is also affected by the economy; in the short run; the demand for natural gas will rise when the economy blooms; in the short run the demand will fall when the economy is in a recession.

The price is also affected by competitions from other energy sources; if the price for natural gas is getting too high the consumer of natural gas may switch to other energy sources.

CFD Trading and natural gas  

On the CFD trading platforms is natural gas in the section commodities.

The price fall from 13,527 in June 2008 to 2,75 in August 2009; From 2009 to 2014 has the price been between 5,8 and 1,927; Monday the 13 2014 is the price 4,12.

The most common trading method; trading CFD; is probably the use of both indicators and fundamental analyses.

CFD Trading: Sugar

Sugar is a commodity; the largest producer in the world is Brazil.  

Sugar production

Sugar is produced as sugar cane or sugar beet; sugar cane is produced in countries where the weather is hot and the sugar beet is produced in countries where the weather is colder.  

Sugar and Price

The percentage of sugar from the sugar cane and beet is depending on the weather which makes the weather a factor in the price development.

The price tent to rise from July/August to the sugar beet harvested; harvested is from late September to November). The reason is the supply on the market is short

In the last couple of years has the price decreased; it is appropriately half of what is was in 2011.

Sugar and CFD trading

Sugar is a commodity on the trading platforms; at one of the platforms is sugar the 9 January 2014 bought at 15,52 and sold at 15;48; the difference between buy and sell is small; only 4 pips.

Spread between the Buying and Selling Price

Correlation between currency pairs, price developments and indicators are thought a trader has to give consideration to.

Another consideration in trading currencies is the spread between the buying price and the selling price.

Purpose of this post

The purpose is to give some examples and a general idea of currency pairs with different spreads.

The content is only illustrative.

What is a spread between the buying and selling price

A spread is the pips between the price the currency pairs are brought at and the price they are sold at.

Why look at the spread

The wider the spread is the longer it will take to get profit.

Currency pairs with different spreads

Examples of different currency pairs with different spreads; the prices and the spreads are from the 18 of December 2013 from one of the trading platforms; the spreads could vary from other trading platforms.

Currency pairs with a 2 pips spread

EUR/USD	1,3741	1,3743
AUD/USD	0,8904	0,8906
USD/JYP	103,06	103,08

Currency pairs with a 3 pips spread

EUR/JYP	141,60	141,63
NZD/USD	0,8246	0,8249

Currency pairs with a 4 pips spread

EUR/CHF	1,2205	1,2209
EUR/AUD	1,5430	1,5434
USD/CHF	0,8880	0,8884
GBP/USD	1,6376	1,6380

Currency pairs with a 5 pips spread

USD/CAD

1,0642

1,0647

Trading Gold

The posts on this blog have been about trading currency pairs; in this post is the content about commodities. The commodity is gold.

Gold

Gold is a commodity and the most of it comes from India and is used in jewelry and industries.

Impact on the price of gold

Industries

The demand and supply of these industries have an impact on the pricing.

Big events

Big events as the Indian wedding seasons (from September to December) have also impact on the price.

The dollar, inflation and interest rate

The price of gold is valued in dollars which makes the price of the dollar an element in the pricing. As currencies are influenced by the inflation rate and the interest rate are they also factors that influence the price of gold.   

The inflation is measured by the consumer price index (CPI); if the inflation starts to rise the impact of the gold price is negative which means that the price will fall on gold.

Before starting to hedge gold and inflation it would be a good idea to know the inflation rate around the world as the inflation's impact on the gold is not equivalent cause to the calculation of the inflation rate.

The price of gold

The price of gold in 2013 has been bearish; as it is decreased from 1.780 dollars in October 2012 to 1.230 in December 2013.

In the short run gold has been bullish and bearish.

How to buy gold

Gold can be brought on an online CFD trading platform; gold is placed under the section commodities.

More about how to trade on an online trading platform is illustrated in the video on my website.  

Trading CFD: Correlation between AUD/CHF, AUD/USD and EUR/USD

In the post CFD Trading: Correlation between Currency Pairs is written about some common correlation between currency pairs.

In this post

In this post is the focus on the correlation between the AUD/CHF and AUD/USD. The correlation between the AUD/CHF and the EUR/USD is also illustrated.

The purpose is illustrative only.

Correlation

The correlation between currency pairs can be stronger or weaker over a time period. 

In this post is illustrated how the correlation is at the 15 minute charts; the correlation could be stronger or weaker if the correlation was illustrated in charts where the time period was longer or shorter.

Often is the correlation strong or weak as illustrated. The correlation can also be opposite as illustrated in the charts from 10:45.

The correlation between AUD/CHF and AUD/USD

The charts illustrate the correlation between the AUD/CHF and AUD/USD; the charts illustrate a positive correlation between the currency pairs.

The correlation is weaker at 10:45 than it was between 1:45 and 10:45 as the AUD/CHF is decreasing and the AUD/USD becomes flatter.

The correlation between AUD/CHF and EUR/USD

The charts illustrate the correlation between the AUD/CHF and EUR/USD; the charts illustrate a negative correlation between the currency pairs.

The correlation is weaker at 12:30 than it was between 1:45 and 10:45 as the AUD/CHF is increasing and the AUD/USD is increasing.

Correlation between NZD/USD and EUR/USD, GPB/USD, AUD/USD

Correlation between currency pairs is a factor in trading CFD and should be considered before entering a trade.

In this post is the correlation between the NZD/USD and EUR/USD, GPB/USD, AUD/USD illustrated visual in the charts under the section Visual illustration. The purpose is to exemplify the correlation between currency pairs and give a little inspiration on how to think as a trader.

The correlation between NZD/USD and EUR/USD, GPB/USD, AUD/USD are usually strong as changes in the USD has effect on all the currency pairs in the same direction.

Visual illustration

Visual are the charts NZD/USD and EUR/USD, GPB/USD, AUD/USD illustrated; the charts illustrate how the currency pairs are moving in the same direction with a small delay. 

The NZD/USD is increasing (bullish) approximately at 2:15 and again at 9:45 which is also the case for the EUR/USD, GPB/USD and AUD/USD; some of the currency pairs start to rise (bullish) at approximately 9:00 o’clock.  The EUR/USD is rising (bullish) for a shorter period than the NZD/USD, GPB/USD and AUD/USD. 

CFD Trading: Goals

I have been studying the tropic positive psychology a bit deeper the last couple of months.

One of the interesting part is that well-being is valued higher when a person can explain why he or she is at certain points in life but also can explain how to come to the next level.

Another interesting part is that well-being is connected to grow and our well-being is increasing as we grow but only if we have an influence on the progress. Well-being can also be life stages where the goals are reached and where the feeling complacency and tranquility is present.

Well-being in connection to CFD

Well-being is also important in trading CFD as we have to set goals for our trading; the purpose is to measure if we reached our goals. An example of a goal could be a surplus of 20 pips each trading day.

A trading plan is also important as it explains why you are acting as you are; it explains also your goals and if you have reached them; in connection to positive psychology should it have influences on your well-being as you know why you are entering a trade and why you are closing a trade.

Writing your goals

Writing a trading plan makes you more conscious about the goals you want to achieve and how to achieve them. Your conscious about your goals makes it also easier to reach them.

More about psychology trading

In the articles;

·    Forex Online Trading? How to ImproveYour Forex Trading With Visualization Techniques 

·    Forex Online Trading? HowVisualization Techniques Can Improve Skills To Enter A Trade 

are written about visualization techniques that might be helpful in growing your well-being in trading CFD.

CFD Trading: The Risk and the Reward Fraction

CFD trading has large potential rewards and potential risks. In this post is the purpose to write about the risk and the reward in a trade.

Risk and reward

A risk in a trade is the possibility to lose money on a trade. A reward is the possibility to earn a profit in a trade.

The fraction between the risk and the reward should be 1:3 or more for new traders. If the risk is 25 dollars is the expected reward 75 dollars. The 25 dollars is the stop loss level and the 75 dollars are the profit takes level.

The fraction for experienced traders could be set to 1:2.

How to use the risk and the reward fraction?

The risk and reward fraction is an overall fraction in a trading plan; if the fraction is set to 1:3 in each trade during a trading day is the overall fraction also 1:3.

Example: The trades

The trading day consists of 6 trades; the profit takes are set to 60 dollars; as the risk and the reward fraction is set to 1:3 is the stop Loss level set to 20 dollars.

Three of the trades are closed due to the profit takes and two of them are closed due to the stop loss level.

The profit is 120 dollars; 3 times 60 dollars minus 3 times 20 dollars.

Example: A trade is added to the trading day

The trader adds a trade in his trading plan but the trade is closed due to the stop loss level.

The profit is 100 dollars; 3 times 60 dollars minus 4 times 20 dollars.

Example: Conclusion

In the example are the risk and the reward fraction as planned but shrink as the trader adds a trade.

The trader’s planned fraction is lower than expected as he added an extra trade in his trading plan; but he still has a surplus.

Stop Loss

It is difficult for both new traders and more experienced traders to set a stop loss level.

Examples of how to set a stop loss level is in the article “Trading Forex Online? How to Define an Exit Point, AlsoCalled a Stop/Loss?” .

CFD Trading: Correlation between USDCAD and GBPUSD

In the last post was the correlation between the EURUSD and USDCHF illustrated.

In this post is the correlation between the USDCAD and the GBPUSD illustrated. The purpose is only illustrative and inspirational in trading the USDCAD and GBPUSD.

Correlation between USDCAD and GBPUSD

I was watching the USDCAD and the GBPUSD on the charts and the visual correlation is that if the USDCAD is going sideways is the GBPUSD often in and uptrend or in a downtrend.

The trend of the GBPUSD should not affect the USDCAD if it is going sideways.

An Example

The charts are the USDCAD and the GBPUSD; the USDCAD is going sideways and the GBPUSD is in an uptrend; the GBPUSD trend does not affect the currency rate on the USDCAD as it is going sideways.

Another example

The first example was over a longer time period; this example is over a shorter time period.

The currency pair is the USDCAD and the GPBUSD: the USDCAD is going sideways and the GBPUSD is in an uptrend; the GBPUSD trend does not affect the currency rate on the USDCAD as it is going sideways.

Comment

Please leave a comment if you have some interesting correlation between currency pairs. 

CFD Trading: Correlation between Currency Pairs Part 2

In the post CFD Trading: Correlation between Currency Pairs is written about the correlation between the currency pairs.

In this post is illustrated the correlation between the EURUSD and the USDCHF; the correlation between the EURUSD and the USDJYP is also illustrated.

Correlation between EUR/USD and USD/CHF

The chart illustrates the EURUSD and the USDCHF; the EURUSD starts to fall around 3 o’clock and the USDCHF starts to rise around 3 o’clock; the 4, 9 and 18 period moving averages are also crossing each other around 3 o’clock; they are reverse; at the EURUSD chart are the 18 period line above the 4 and 9 period lines; at the USDCHF chart are the 18 period line below the 4 and 9 period lines.

Correlation between EUR/USD and USD/JYP

The chart illustrates the EURUSD and the USDJYP; the EURUSD starts to fall around 3 o’clock and the USDJYP starts to rise around 3 o’clock; the 4, 9 and 18 period moving averages are also crossing each other around 3 o’clock; they are reverse; at the EURUSD chart are the 18 period line above the 4 and 9 period lines; at the USDJYP chart are the 18 period line below the 4 and 9 period lines. 

The charts are illustrative but the print is from a real chart; the correlation between currency pairs is stronger or weaker over a time period.