Tag: forex

Stock Market Psychology: Keys Tips for Traders
The capacity to recognize and control emotions and behaviors that may surface during trading is referred to as stock market psychology. The stock market is a leading predictor of expectations for corporate profits performance. Still, variables that impact individual and group trading psychology often influence it.

3 FACTORS TO TAKE INTO ACCOUNT ARE:
- The mood of investors
- Market sentiment
- Feelings like fear or greed
This article aims to discuss the significance of trading psychology in the stock market and provide more information and advice on how to control it. See our article on stock trading for beginners for a quick introduction to the stock market.

THE IMPORTANCE OF PSYCHOLOGY IN STOCK MARKET TRADING

Although psychology in the stock market is sometimes underrated, recognizing and controlling these psychological elements may be pretty helpful for a trader. Individually, irrational investing choices are often motivated by fear, greed, and the desire to avoid missing out (FOMO in trading). Large market fluctuations may also be attributed to crowd psychology, which may cause emotions and fear-based trading.

This is shown during a pandemic on a worldwide scale. Volatility in the stock market will often escalate as panic does. A rise in volatility is often accompanied by one of two emotions: dread or FOMO. Volatility is more influenced by pessimism than by optimism. When anxiety levels rise, traders may panic-sell positions to limit losses.

Market sentiment, a method used to gauge how investors currently feel about a market, indicates volatility. When traders believe the market is bearish, there will be more sellers than buyers, indicating that crowd psychology is terrible.

Stock indexes provide the best insight into investor sentiment for equities. A stock index keeps track of a group of stocks in a particular nation or market. The performance of the major stock indexes is used to monitor the economy generally and compare returns on various assets.

After gaining a personal and communal understanding of psychology, a trader should be able to regulate their emotions appropriately. Even if certain emotions should be welcomed, negative trade psychology impacts often have a more significant influence on investment choices than good ones.

The impulsive behavior of traders might have detrimental impacts from emotions like fear and greed. An instance of fear-based trading is when a trader prematurely terminates a position. When traders stick to losing positions for an extended time out of fear of incurring a loss, fear may also convert to greed.

A trader should embrace the suitable psychological components while seeking to control the bad ones to gain from stock market psychology.

5 Strategies for Managing Psychology When Trading Stocks

1. Create a trading plan

Traders utilise a trading strategy as a roadmap for the whole trading process. It is a set of guidelines that spells out when to exit deals, which markets should be traded on, and under what circumstances a trade should be launched. A trading plan’s primary goal is to ensure the trader stays responsible and follows the strategy.

2. Create a checklist

A trading strategy is one thing, but adhering to it when your transactions go against you is quite another. A quick checklist ensures that the trader is always following the instructions in the trading strategy.

3. Maintain a journal

Traders must evaluate their development and pinpoint areas for growth. Keeping note of all deals in a diary makes it possible to determine which trades were successful and which were unsuccessful. Sometimes a diary may point up weaknesses in a trading strategy or plan that may need to be fixed.

4. Establish reasonable expectations and boost confidence

Building confidence may be challenging, mainly when a method is still being evaluated. As a confident trader is more inclined to take calculated risks and accept the results of those risks, confidence is essential. This is because confident traders often have protocols to control these elements and are aware of their trading psyche. Trading on a demo account might increase your trading confidence while learning about trading psychology. The two main objectives are setting reasonable expectations and treating the demo account like real money.

5. Use risk management techniques

An investor cannot afford to disregard risk management. A successful risk management plan should include setting risk/reward ratios, trading using stop losses, and using suitable transaction sizes.
December 2, 2022
USD/JPY hits multi-month low, bears eye 200-day SMA at 134.00s

On Friday, USD/JPY plunges to a new multi-month low amid persistent USD selling bias. The US dollar is still under pressure due to the Fed’s dovish shift and falling US bond rates. The downward trend is further aided by technical selling below the 135.00 level. Before the US NFP, oversold circumstances on short-term charts may help minimize losses.

In the early hours of the European session on Friday, the USD/JPY pair, which has been under considerable selling pressure for five days running, reaches its lowest point since August 17. The pair is now down more than 0.50% daily and trading slightly around the mid-134.00s. Bears are watching for a decisive break of the crucial 200-day SMA.

The USD/JPY pair is falling due to the solid adverse sentiment around the US Dollar, which is present amid anticipation that the Fed may ease its stance on monetary policy. Dovish-sounding comments by Fed Chair Jerome Powell and indications of diminishing inflationary pressures reinforced the likelihood of the Fed’s less aggressive tightening of policy. The US dollar continues to suffer, and US Treasury bond rates remain low.

The yield on the standard 10-year US government bond falls to a nearly two-month low, reducing the difference in interest rates between the US and Japan. In addition, the Bank of Japan (BoJ) board member Asahi Noguchi’s overnight hawkish-sounding remarks have continued to support the Japanese Yen and put more downward pressure on the USD/JPY pair. Noguchi suggested that if inflation exceeds expectations, the stimulus may be prematurely withdrawn.

Furthermore, some technical selling below the psychological level of 135.00 may have contributed to the most recent run down. Nevertheless, oversold circumstances on short-term charts may provide temporary support for the USD/JPY pair. Ahead of the much anticipated US employment report, often referred to as the NFP, which is coming later during the early North American session, traders may also choose to avoid making risky bets and instead stay on the sidelines.

December 2, 2022
4 Global Market Updates- 2 December, 2022

In this article, we have covered the highlights of global market news about the GBP/USD, AUD/USD, NZD/USD and EUR/USD.

GBP/USD: A rebound to 1.1500 around the new year would be fair, according to ING

GBP/USD has entered a period of consolidation of around about 1.2250. By year’s end, ING economists predict that the pair will fall near 1.1500.

Is cable getting close to the top?

“US Nonfarm Payrolls may fall short of reversing the Dollar’s negative trend, and GBP/USD may find a little more support between 1.2300-1.2350.”

“Cable, however, is not considering the adverse effects of rising gas costs and dismal economic fundamentals. A return to 1.1500 around the new year would be reasonable.

The AUD/USD is trading around a multi-month high, just over 0.6800, as traders await the US NFP news.

On Friday, the AUD/USD pair resumes its upward trend after an intraday decline below 0.6880. Spot prices rose steadily during the first half of the European session, reaching a high of 0.6835, which brings them back closer to the highest point since September 13, which was reached on Thursday.

Rising odds for a less aggressive Fed tightening policy are continuing the relentless selling of the US dollar, which benefits the AUD/USD pair. Expectations that the US central bank would curtail the rate-hiking cycle were confirmed by Fed Chair Jerome Powell’s dovish-sounding remarks and evidence of diminishing inflationary pressures. The US dollar continues to suffer due to the high US Treasury bond rates.

The Australian Dollar, a proxy for China, also benefits from expectations of greater Chinese stimulus and the loosening of tough COVID-19 regulations in the world’s second-largest economy. Nevertheless, the cautious market atmosphere can operate as a barrier for considered riskier currencies and restrain any further rises for the AUD/USD pair. Additionally, traders hesitated to make risky wagers before the US monthly employment figures were released.

NZD/USD: 0.6450 is the next significant target level – ANZ

Kiwi just made a move that allowed it to pass resistance at 0.6325. According to ANZ Bank experts, 0.6450 is the next goal on the upswing.

The Kiwi has a significant interest rate advantage. “The Kiwi has sharply risen. The leading cause of this is a lower USD (the DXY is at a new cycle low), but the NZD has also stood out versus the AUD, which is likely due to its significant interest rate advantage. That’s unquestionably a rock-solid foundation (particularly in light of the decline in US bond rates).

Technically, the next significant target level is 0.6450, which corresponds to the August high and the 61.8% retracement of the 2022 advance.

EUR/USD eases over 1.0500 as Lagarde, the head of the ECB, expresses caution ahead of the US NFP inquiry.

The EUR/USD currency pair reflects the market’s cautious attitude as it maintains stability at a five-month high above 1.0530 early Friday.

However, the main currency pair’s most recent inactivity may be related to worries about probable negative US job statistics and economic apprehensions mentioned by important US and European authorities.

Christine Lagarde, president of the European Central Bank (ECB), recently emphasized the need for short-term and customized fiscal policy. The policymaker said, “All policies must coordinate for sustainable development.”

Additionally, according to International Monetary Fund (IMF) Managing Director Kristalina Georgieva, the prognosis for the global economy is very unclear and dominated by uncertainties. Recession risks are increasing in many countries. The US Dollar Index (DXY) was able to take a break at its lowest levels since early July due to the same factor challenging the market mood.

Even yet, dovish remarks from the majority of Fed members, including Chairman Jerome Powell, and the bloc’s record-low unemployment rate, help to give EUR/USD purchasers reason for optimism.

The US 10-year Treasury rates posted a corrective recovery off the 10-week low to 3.54% by press time, while the S&P 500 Futures dropped 0.30% intraday to 4,070.

Moving forward, the EUR/USD may stay dormant due to a cautious attitude and a light schedule before the US employment data. The headline Nonfarm Payrolls (NFP) is anticipated to slip to 200K print from 261K before, while the Unemployment Rate may keep the same at 3.7%. Despite this, the bulls will likely maintain their lead in the market.

Please click here for the Market News Updates from 1 December, 2022.

December 2, 2022
4 Global Market Updates- 1 December, 2022

In this article, we have covered the highlights of global market news about the USD/JPY, NZD/USD, EUR/USD and GBP/USD.

USD/JPY has recovered from its lowest level since August, although upward potential seems limited.

The USD/JPY pair makes a minor recovery from the lows it reached on August 23 early on Thursday in the European session, rising back above mid-136.00s in the last hour.

The US Dollar is seeking a comeback from close to a multi-month low hit on November 15 after displaying some resistance below a theoretically crucial 200-day SMA. This crucial element is giving the USD/JPY pair some support. However, any significant gain seems elusive after the overnight comments made by Federal Reserve Chair Jerome Powell, who sounded dovish.

Powell said it was time to slow down the rate of interest rate increases and offered a clear signal that the US central bank would soften its attitude. This causes the current significant decline in US Treasury bond rates to continue. The benchmark 10-year US Treasury note’s yield lingered close to a two-month low and should continue to work against the dollar.

NZD/USD: There is room for more gains – UOB

NZD/USD may retest 0.6355 before 0.6400 shortly, according to UOB Group economists Lee Sue Ann and Quek Ser Leang.

24-hour perspective: “There has been a significant increase in the New Zealand dollar, reaching a high of 0.6312. The danger is still elevated, approaching 0.6355. It seems doubtful that the significant barrier of 0.6400 will be reached today. In a retreat, slight support around 0.6280 (0.6250 on the downside) is strong enough to retain it.

Within the next one to three weeks: “The way the NZD rocketed higher implies it is likely to continue to climb. Monitoring points are at 0.6355 and 0.6400. A break of 0.6220 would signify that the upward pressure is lessening from a support perspective.

EUR/USD: As good as it gets for the Euro in December is 1.05/1.06 – ING

EUR/USD is much over 1.04. The risk for the most popular currency pair in the world is 1.05/1.06, according to experts at ING.

The world’s weak demand does not help the pro-cyclical Euro.
“The 1.0480/1.0500 level is the point of resistance; above it, we can see a spike to the 1.0600/0620 region. Although it differs from what we believe, it cannot be completely ruled out given the seasonal Dollar weakness and thinned December markets.

The bigger picture, however, shows that the pro-cyclical Euro is not doing well due to sluggish global demand. The pressure on the eurozone trade balance is also being maintained by the winter weather approaching northern Europe.

GBP/USD: Additional increases are anticipated over 1.2155 – UOB

According to UOB Group economist Lee Sue Ann and markets strategist Quek Ser Leang, additional gains in the GBP/USD pair must pass the 1.2155 zone shortly.

GBP fell to a low of 1.1900 yesterday before soaring to a high of 1.2086, according to the 24-hour view. Despite being overbought, there is room for the surge to continue over 1.2120. The overbought circumstances may prevent GBP from maintaining above this level. It seems doubtful that the next resistance at 1.2155 will be reached. 1.2010 is the next level of support after 1.2040.

Within the next three weeks: “On Monday (November 29, spot at 1.1965), we predicted that the pound would likely stabilize between 1.1850 and 1.2080. GBP jumped in NY trading yesterday and rose a few ticks over 1.2080. (high of 1.2086). Additional GBP gain is possible, but to maintain the momentum, GBP has to keep moving higher and above the main barrier, around 1.2155, during the next one to two days. At 1.2300, the next significant barrier is some ways away. On the negative side, breaking the “strong support” level at 1.1960 would suggest that the pound is not yet prepared to rise.

Please click here for the Market News Updates from 30 November, 2022.

December 1, 2022
Employment: The Primary Engine of Economic Growth and Prosperity

EMPLOYMENT: WHAT IS IT?

It is a major economic engine and a vital indicator of economic expansion. According to the International Labor Organization, “people of working age who are without work, available for work, and actively seeking job” are considered unemployed. As a result, those who are employed are those who hold down jobs, while those who do not but are actively seeking jobs are considered unemployed. Although not perfect, the unemployment rate is a crucial consideration when doing fundamental analysis and is comparable to the fundamental economic concept of supply and demand.

Because changes in labor supply and demand directly affect economic growth and consumer spending, policymakers often see unemployment, the GDP, and inflation as interconnected and part of their primary macroeconomic goals. The publication of data, including employment statistics, is one of the most significant events on the economic calendar. Both central banks and market investors pay great attention to these announcements.

The central bank calendar allows FX traders to keep up with news from the central bank.

UNEMPLOYMENT’S IMPACT ON THE ECONOMY

The Federal Reserve Bank (“The Fed”) in the US uses employment statistics to determine when it may be time to modify monetary policy. For instance, if the unemployment rate in the US is high, the central bank may try to stimulate the economy via expansionary monetary policy, which often involves cutting interest rates. Since rates (opportunity costs) are now lower, investing in growth may become even more appealing.

The graphic below illustrates how an expansionary monetary policy affects economic output:

Source: DailyFX

EMPLOYMENT TO INFLATION

On the other hand, a tighter monetary policy or higher rates are only sometimes necessary when there are high employment and low unemployment rates. When inflation plays a role in that equation, there is another thing to be concerned about.

Businesses will have a more challenging difficulty hiring when the unemployment rate declines. This should result in competition for those employees, which often manifests itself in increased salaries, referred to as inflation.

The need to safeguard the financial system from capital loss caused by negative real rates and runaway inflation often drives central bankers to raise rates and tighten policy.

In terms of “Average Hourly Earnings (AHE),” this is often monitored in the US via the Nonfarm Payrolls report.

NONFARM PAYROLLS EMPLOYMENT REPORTS

One of the most important economic announcements in the US is the Nonfarm Payroll (NFP) report, which is issued by the Bureau of Labor Statistics on the first Friday of every month at 8:00 EST and is seen as a clear indicator of US economic expansion. Due to its early publication, which emphasizes data for the most recent completed month, NFP is closely watched since it’s often one of the first indicators that market players have for that period. The unincorporated self-employed, unpaid volunteers or family employees, agricultural laborers, and domestic workers are all omitted from NFP. Because of the report’s preliminary nature, modifications are often made in subsequent months.

The U.S. Current Employment Statistics (CES) program, which polls over 141,000 employers and government entities, provided the data for the NFP report. To provide precise industry statistics on employment, hours, and incomes of employees on nonfarm payrolls, which account for 80% of the US workforce, this represents over 486,000 unique work sites. The NFP report includes information on workers in the manufacturing, construction, and commodities sectors. This data is even more important since it sets the tone for markets under the careful eye of the Federal Reserve because it is released at the beginning of the month with the US unemployment rate and Average Hourly Earnings (AHE).

November 30, 2022
EUR/USD jumps to daily highs of 1.0380, Powell says

EUR/USD overcomes recent dip and aims towards 1.0400. Prior to data and Powell of the Fed, the dollar seems to be offered.

November is expected to witness a 10% YoY increase in the EMU Flash Inflation Rate. On Wednesday, the single currency regains some equilibrium and pushes the EUR/USD to daily highs in the 1.0380/85 zone.

Before Powell, the EUR/USD seemed stable. After three consecutive days of daily declines, EUR/USD posts a respectable recovery and aims to retake the 1.0400 area as new dollar weakness hurts the currency.

The pair moves upward firmly despite a flat performance in US and German yields and increasing caution ahead of Chief Powell’s address later in the NA session.

Germany’s unemployment rate increased to 5.6% and by 17K individuals, respectively, in November, making for an intriguing calendar in the eurozone. Additionally, according to recent flash statistics, the headline CPI for the larger euro area increased by an annualized 10.0% in November, while the Core CPI increased by 5.0%.

Chair Powell will discuss “Economic Outlook, Inflation and the Labor Market” on the other side of the Atlantic. In contrast, FOMC Governor L. Cook will discuss “The Outlook for Monetary Policy and Observations on the Evolving Economy.”

MBA Mortgage Applications, the ADP Employment Change report, the Goods Trade Balance, an update to the Q3 GDP Growth Rate, Pending Home Sales, and the Fed’s Beige Book are among the other US data points that will be released.

What should I look for in the EUR?

In reaction to more downward pressure on the dollar on Wednesday, the EUR/USD bias is reaffirmed, and anticipation for Powell’s speech is still rising.

The euro is anticipated to closely track dollar fluctuations, the region’s reaction to the oil crisis, and the Fed-ECB gap in the interim. Additionally, for the time being, the only factor influencing the price movement of the pair is the markets’ re-pricing of a prospective Fed policy shift.

In the immediate term, it faces a significant internal headwind due to the growing concern about a possible recession in the euro region.

This week’s important events are in the euro region: Germany Retail Sales, ECB General Council Meeting, Germany/EMU Final Manufacturing PMI, EMU Unemployment Rate (Thursday), ECB Lagarde, and Germany Balance of Trade (Friday).

The continuation of the ECB’s rate hike cycle vs. rising recession concerns are important topics simmering in the background. Impact of the conflict in Ukraine and the ongoing energy shortage on the prognosis for inflation and growth in the area. Risks of persistent inflation.

Watching the EUR/USD levels

The pair is now up 0.37% at 1.0367 and will next encounter resistance at 1.0496 (a monthly high set on November 28), followed by 1.0500 (round level) and then 1.0614. (weekly high June 27). On the other hand, a break of 1.0330 (the weekly low from November 28) would aim for 1.0222 (the weekly low from November 21) before moving on to 1.0037. (100-day SMA).

November 30, 2022
4 Global Market Updates- 30 November, 2022

In this article, we have covered the highlights of global market news about the USD/CAD, EUR/USD, GBP/USD and USD/JPY.

USD/CAD is still on the defensive around the mid-1.3500s, but the fall seems limited.

On Wednesday, the USD/CAD pair experienced some selling pressure and fell from a three-week high at the 1.3645 level reached the day before. During the early hours of the European day, spot prices are dragged below mid-1.3500s by an intraday decline supported by a slight decline in the US dollar.

The US Dollar bulls are on the defensive due to several issues, which are regarded as applying some negative pressure to the USD/CAD pair. Investors have priced in a comparatively lower 50 bps lift-off in December because they are sure that the Fed would decrease the pace of its policy tightening. A softer tone around US Treasury bond rates and stability in the stock markets put pressure on the safe-haven dollar, which serves as indicators of this.

Despite a slight intraday decline in Crude Oil prices, which tends to weaken the commodity-linked Loonie, the downside for the USD/CAD pair seems muted. The speculation that OPEC may announce more supply cutbacks at its summit on Sunday is overshadowed by worries that increased COVID-19 regulations in China will reduce gasoline consumption. As a result, the black liquid cannot benefit from this week’s strong rebound move from the YTD low.

According to Commerzbank, the EUR/USD is expected to fall around 1.03 due to weak EU inflation statistics.

This morning, the market’s primary concerns will be the Euro and November’s inflation figures. What interpretation of the facts may the FX market make? According to Commerzbank experts, a negative surprise may push the EUR/USD rate as low as 1.03.

“If the statistics come below forecasts, the likelihood of a rate increase in December may decline, which would be harmful to the euro. A decline in the direction of 1.03 is conceivable.

“If the data exceeds market expectations, this is likely to help the hawks on the ECB board who have already been pretty vocal over the previous few days and have prompted the market to trend more towards a 75bp step again, which would strengthen the Euro,” says the author.

“Surprisingly strong European inflation statistics coupled with a US labor market report (ADP index issued today, labor market report on Friday) that may suggest initial indications of a deceleration may push EUR/USD well over 1.04 again.”

GBP/USD may touch 1.1800 as Powell’s speech may boost the US Dollar – ING

Tuesday’s GBP/USD closing rate was below 1.2000. According to ING experts, the pair may attempt to break beyond the 1.1800 mark as Fed Chair Jerome Powell’s speech may strengthen the dollar.

“Bank of England Governor Andrew Bailey’s testimony yesterday didn’t generate any news that affected the market. Chief Economist Huw Pill will speak to us today; his previous opposition to a 75 bps boost may help to temper BoE rate expectations.

As Powell’s speech could bolster the dollar today, the cable is set to test 1.1800.

USD/JPY stays stable above the mid-138.00s, although the upside remains limited due to the weakening USD.

The USD/JPY pair encounters resistance at the 139.00 level and fails to benefit from its slight intraday increase on Wednesday. In the first hour of the European session, spot prices reach a new daily low before rising again over the mid-138.00s.

A major factor operating as a headwind for the USD/JPY pair is the US Dollar, which is still on the back foot despite a slight decline in US Treasury bond rates. Investors are confident that the US central bank would moderate the pace of its policy tightening despite the recent hawkish comments by Federal Reserve governors. A modest 50 bps Fed rate increase in December has already been wholly priced into the markets, which is expected to put pressure on US bond rates and the greenback.

In addition, concerns over the deteriorating COVID-19 scenario cause some haven flows to the Japanese Yen, which helps to limit the USD/JPY pair. The Bank of Japan (BoJ), which continues to weaken the JPY, has taken a more dovish posture, cushioning the downside. BoJ Governor Haruhiko Kuroda said earlier this month that the bank would steadily continue its monetary easing to boost the economy and reach the 2% inflation objective. Contrarily, it is commonly anticipated that the Fed would raise borrowing prices to confront persistently rising inflation.

Please click here for the Market News Updates from 29 November, 2022.

November 30, 2022

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