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Vlad RF

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Aug 5, 2019
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How to Trade EUR/JPY

Author: Victor Gryazin

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Dear Clients and Partners,

This overview shares with you some important and useful information about the EUR/JPY currency pair: what it is, what trading characteristics it has, and how to trade it.

What is EUR/JPY currency pair

This currency pair is a cross rate of two popular Forex majors – EUR/USD and USD/JPY. They have already been described in our blog.

A cross rate is the price of a country’s currency expressed in the currency of another country and defined via the currency of a third one. As the latter, the US dollar is used, which is the main international reserve currency.

EUR/JPY represents the dynamics of the EU currency through the Japanese yen. The euro is the base currency of the pair, so the current price represents for how many yens one can buy or sell one euro. If the quotes of the pair go up, this means the European currency gets stronger. If the quotes go down, the euro gets cheaper against the yen.

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Ways of trading EUR/JPY

EUR/JPY is quite a universal pair, so various trading strategies are applicable to it. The most widespread ways of trading it are technical and fundamental analyses and indicator trading.

How to trade EUR/JPY by fundamental analysis

This approach means fundamental factors are analysed. Both short-term trading on important news and long-term trading on expectations of changes in the CB’s policy are possible.

Here is an example. At the beginning of 2022, due to the growing inflation the US and EU started winding up their QE programmes and gradually increasing interest rates to counter inflation. The US have already started increasing the rates, while the EU is getting ready for toughening the monetary policy.

Unlike these two, the Japanese economy has long rested in the state of deflation (the opposite to inflation), so the BoJ does not plan to increase the interest rate anywhere soon. Hence, the Carry Trade strategy has become popular again: it implies making a profit on the difference of interest rates, when a currency with a high interest rate is bought against one with a low interest rate.

Investors and traders started buying the USD and EUR against the JPY actively, hence, since the beginning of the year there has been a strong uptrend in the USD/JPY and EUR/JPY.

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Closing thoughts

EUR/JPY is the relationship of two very popular international currencies — the euro and the yen. Thanks to good volatility and a small spread, this currency pair is popular among traders. It can be traded by fundamental or tech analysis and with the help of indicators.

Beginners need to practice on a demo account first and switch to real trading only when they get a stable positive result.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Active Trader
Aug 5, 2019
309
0
37
42
How to Use Accumulative Swing Index in Trading

Author: Victor Gryazin

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Dear Clients and Partners,

This article explains what Accumulative Swing Index is, what signals it gives, how it is calculated and set up in a trading terminal, and, naturally, how it is used in trading.

What Accumulative Swing Index shows

Accumulative Swing Index (ASI) was invented and made popular by a famous trader, financial analyst, and creator of several other indicators Wells Wilder. He described the work of ASI in detail in his book New Concepts in Technical Trading Systems, published in 1978.

For calculating ASI, prices of the current and preceding timeframes are used – Close, Open, High, Low. The results help to assess current price dynamics of the instrument in question. The indicator appears in a separate window under the price chart and looks like one main line.

The line allows seeing the direction of the current market trend and confirms (or not) breakaways and bounces off the support/resistance levels on the chart. Growing ASI confirms an actual uptrend and falling ASI indicates a downtrend.

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How to install Accumulative Swing Index to trading terminal

Accumulative Swing Index is not among standard indicators in most trading terminals, which means to use it in MetaTrader 4, one needs to download the installation file and install the indicator. The file can be found on, for example, MetaQuotes Ltd.

This is how ASI is installed on MetaTrader 4: Main Menu – File – Open data catalogue – MQL4 – Indicators – paste the file to the folder – restart the terminal.

This is how ASI is added to the price chart: Main Menu – Insert – Indicators – User – ASI.

Accumulative Swing Index is normally used with preset parameters (variable T = 300).

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Closing thoughts

Accumulative Swing Index is a price change indicator created by a famous market guru Wells Wilder. ASI helps to determine the direction of the current market trend and can become a good support to complex technical analysis.

For trading with the indicator, divergences and confirmations of support/resistance lines breakaways can be used. Before applying the signals for real, practising on a demo account is highly advisable.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

RoboForex Contest

Active Trader
Jun 1, 2020
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www.contestfx.com
Dear traders!

This week, the ContestFX project, as usual, will continue with the following competitions:

The 135th competition of "Demo Forex" started last week.
The 365th competition of "Week with CFD" has just kicked off.
The 499th competition of "Trade Day" will start on 15.06.2022, at 12:00.
The 413th competition of "KingSize MT5" will start on 16.06.2022, at 20:00.

If you haven't participated in our contests yet, trust me, there is nothing easier: go through a simple registration procedure on our website and get access to any of the competitons you like in just a couple of mouse clicks. If fortune smiles upon you and makes you a winner, then your well-deserved prize will be transferred to your real account and you'll be able to use it to enter the Forex market and to perform effective trading operations without investing your own funds.

Good luck!

Sincerely,
RoboForex Contest
 

Vlad RF

Active Trader
Aug 5, 2019
309
0
37
42
Fiat Currency: All One Needs to Know

Author: Andrey Goilov

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Dear Clients and Partners,

This article is devoted to the idea of fiat currency and everything behind this notion. What is fiat money? When and what for it appeared? What value does it have? Which advantages and drawbacks does it have? Answers to these questions and more are in the article below.

What is fiat money

Fiat money is the banknotes we keep in the wallet and the sums we look at happily, logging in the mobile app of our bank on the smartphone. It is not suported by the country’s gold reserves or other precious metals. It does not have any internal cost, and its face value is set and guaranteed by the state.

Today almost all popular currencies, such as the dollar and euro, are fiat. Their value is based on the opportunity to exchange them for goods and services, to be used as means of saving and account unit of the country’s economy.

Some think that as long as fiat money is not bound to any goods, a risk of inflation emerges, which, in turn, makes goods and services pricier. For example, in the times of gold standard, the amount of money depended on the amount of assets in the country’s reserves: more gold – more money.

Fiat money is substantilly influenced by the demand and trust of local people. If they stop believing in the national currency, they will reject it, and the demand for other assets and currencies will increase.

Advantages of fiat currencies
  • Fiat money is used for exchanging and storing value, which is essential for the functioning of the national economy;
  • Making fiat money is more economic than making currencies bound to certain assets;
  • Fiat money lets the government and Central bank stimulate the economy in times of crises and smooth out the aftermaths of sky-rocketing;
  • Fiat money is not a scarce or limited resource: the government can print as much as needed;
  • Central banks have full control over the supply of fiat money, which lets them manage liquidity and interest rates.
Drawbacks of fiat money

The strong economic crisis of 2008 demonstrated that Central banks cannot always hold back serious consequences of recession by directly regulating the money mass. Hence, global crises will come back from time to time, having absolutely different nature.

A currency bound to gold looks more stable compared to fiat money because of limited gold supply. Fiat money, on the contrary, has value as long as the government supports it. Tiniest problems in either economy or politics can provoke a surge of inflation.

There are examples of trying to get out of economic trouble by active money printing that le to hyperinflation and the national currency fully losing value.

Bottom line

Fiat money is not perfect as it has serious drawbacks, yet it has no better alternative that would fast and smoothly replace it as a means of exchange, payment, and value storage.

One could bring up cryptocurrencies that has been acquiring popularity recently. They are limited in quantity, its cost must be growing until the last coin is mined, and this is a victory over the inflation of fiat money. However, due to high volatility and virtuality this type of money has not yet become a full replacement for the “normal” one.

Experiments with tightly binding money to gold have not yet yielded satisfactory results either; and hyperinflation may occur to any printed currency. With all the drawbacks, however, fiat money lets the government and Central banks react timely to the changes of the economic environment and keep markets stable and makes it easier for consumers to buy and sell goods and services.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Active Trader
Aug 5, 2019
309
0
37
42
RoboForex: upcoming changes to the trading schedule in view of the Juneteenth Holiday

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Dear Clients and Partners,

We are informing you that changes will be made to the trading schedule due to the Juneteenth Holiday in the US.

This schedule is for informational purposes only and may be subject to further change.

MetaTrader 4 / MetaTrader 5 platforms

Schedule for trading on Metals (XAUUSD and XAGUSD), US indices (US30Cash, US500Cash, and USTECHCash), the Japanese index J225Cash, and CFDs on oil (Brent and WTI)
  • 20 June 2022 – trading stops at 7:40 PM server time.
  • 21 June 2022 – trading starts as usual.
Schedule for trading on CFDs on US stocks
  • 20 June 2022 – no trading.
  • 21 June 2022 – trading starts as usual.
R StocksTrader platform

Schedule for trading on US stocks and ETFs
  • 20 June 2022 – no trading.
  • 21 June 2022 – trading starts as usual.
Schedule for trading on CFDs on US stocks and ETFs
  • 20 June 2022 – no trading.
  • 21 June 2022 – trading starts as usual.
Schedule for trading on CFDs on US indices (US500, US30, and NAS100) and the Japanese index JPY225
  • 20 June 2022 – no trading.
  • 21 June 2022 – trading starts as usual.
Schedule for trading on Metals (XAUUSD and XAGUSD) and CFDs on oil (WTI.oil, BRENT.oil)
  • 20 June 2022 – trading stops at 7:40 PM server time.
  • 21 June 2022 – trading starts as usual.
cTrader platform

Schedule for trading on Metals (XAUUSD and XAGUSD)
  • 20 June 2022 – trading stops at 7:40 PM server time.
  • 21 June 2022 – trading starts as usual.
Please take note of the above trading schedule changes when planning your trading activity.

Sincerely,
RoboForex team
 

RoboForex Contest

Active Trader
Jun 1, 2020
106
0
32
52
www.contestfx.com
Dear traders!

This week, the ContestFX project is waiting for everyone in the following competitions:

The 135th competition of "Demo Forex" has gained "cruising speed".
The 366th competition of "Week with CFD" has just started.
500th competition of "Trade Day" will start on 22.06.2022 at 12:00.
414th competition of "KingSize MT5" will start on 23.06.2022 at 20:00.

Participation in our contests does not require any complicated actions - all you have to do is to go through the registration procedure just once and then any competitions will be available to you in just a couple of mouse clicks.

Do not miss your chance!

Sincerely,
RoboForex Contest
 

Vlad RF

Active Trader
Aug 5, 2019
309
0
37
42
How to Calculate Cost of Goods Sold: Formula and Examples

Author: Victor Gryazin

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Dear Clients and Partners,

This article is devoted to an economic index called Cost of Goods Sold: what it is, what it is used for, how it is calculated, and what accounting methods it has.

What is Cost of Goods Sold

Cost of Goods Sold (COGS) is an index that assesses the primary cost of sold goods. It accounts for the expenses on production of goods and services. Primary cost is often the second line in the profit and loss report that goes right after the earnings line. COGS helps to calculate the gross profit of a company.

Primary cost includes the main spending that have directly to do with production of goods and services:
  • expenses on crude materials and accessory, freight included;
  • expenses on wages for employees, including insurance and pension payments;
  • production expenses;
  • storage expenses.
In essense, the COGS is the cost of everything that needs to be done and bought to sell the product. However, the index does not account for indirect spending, such as on sales and marketing. Moreover, the COGS depends on the calculation method.

What COGS is used for

COGS is one of the most important indices in financial reports used for calculating gross profits. Gross profit is the difference between the earnings and primary costs and is one of the main profitability indices of the company. Thus, the COGS allows for assessing the dynamics of production spending and helps the management make well-weighted decisions.

Companies that are able to manage their spending on crude materials and workforce reasonably over the whole production cycle and to decrease the COGS when necessary, will have higher gross profits. Whereas if the company spends too much on production of their goods and services, and the COGS is too high, its gross profit will be falling.

With the Cost of Goods Sold, economists and investors can assess whether the company can manage its business efficiently. If the index grows, the net profit falls. This can be good for bringing down taxes on profits, yet the business will be less attractive for investors. So, as a rule, companies try to keep the COGS quite low and the net profit – rather high and thus more attractive for investing.

How COGS is calculated

An essential part of exact primary cost calculation is calculation and classification of goods in the inventory. This means the information needs to be updated regularly.

The task of the COGS is to demonstrate the primary cost of sales of a certain timeframe with account of what is left in stock. Indices necessary for calculations:
  • Beginning Inventory (BI) is the goods in stock at the beginning of the TF;
  • Purchases (P) for replenishing the stock;
  • Ending Inventory (EI) is the goods in stock at the end of the TF.
Calculation formula:

COGS = BI + P – EI

Example of calculating COGS


If the company has the BI = $5,000 at the beginning of the month, P = $3,000, and EI = $4,000 at the end of the month, the COGS will be $4,000.

COGS = 5000 (BI) + 3000 (P) – 4000 (EI) = 4000

Then we subtract the result from the monthly earnings and get the gross profit. Nowing the gross profit, we can find out the net profit by subtracting other expenses from the former, such as taxes.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team
 

Vlad RF

Active Trader
Aug 5, 2019
309
0
37
42
What One Needs to Know about REPO

Author: Maks Artemov

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Dear Clients and Partners,

This article is devoted to REPO — Repurchase Agreements — and everything about them: their peculiarities, advantages and drawbacks, risks and how to avoid them.

What are REPOs

REPO, aka Repurchase Agreement, is an agreement on selling securities that presumes their obligatory buyback at a certain price after certain time. Such agreements let the seller loan money quite fast.

A REPO consists of two part:
  • The owner of securities sells them to the buyer for a certain term and takes on the responsibility to buy them back as soon as the term ends. The term and the sum of the buyback are agreed upon by the parties beforehand.
  • When the term ends, the buyer is to give the securities back to the seller, receiving their money plus commission fee is exchange.
As a result, a REPO has two agreements inside: an operation with securities and a forward contract.

Advantages of REPOs
  • The seller can loan money quickly on market conditions without addressing a bank. Moreover, the operation itself does not take long.
  • The buyer can make a profit on short-term placement of free cash without the risk of losing it because they get securities in exchange. If the seller refuses to buy back their assets, the buyer can sell them freely in the stock market and get back their money.
Are there risks in REPOs

One of the risks is falling of the market price of the securities that the buyer has bought. In such a case, the seller can refuse to complete the second part of the agreement and never buy back the asset.

The seller will have to get rid of the securities at a lower price and suffer losses, or leave it in the portfolio and wait for the price to grow.

Another risk is the growth of the security price, so that the buyer can refuse to give them back.

Moreover, it might so happen that at the REPO expiry the buyer will have no necessary securities available. For example, they might have sold them at a better price. The buyer may always refuse to give the asset back to the seller for various reasons including bankruptcy.

Who gets dividends from shares in REPOs

All income from the securities — dividends, coupons, etc. — belongs to the seller because they own the shares. The buyer receives the securities as a temporary guarantee. That is why the buyer must pass all the income from the securities to the seller.

Also, the agreement can have other conditions, such as the buyer can receive dividends instead of the seller but the security price will fall accordingly.

Example of REPO

A market player has 100 shares of a company, 10 USD each. At a certain point, they need money, and they find a buyer ready to buy 100 shares right now but for 8 USD each.

Signing a REPO, the buyer agrees on selling (or returning) 100 shares for 8 USD each plus 10%. When the contract expires, the seller buys their shares back at the said price. As a result they got a loan for 10% a year, and the buyer got their money back and earned 10% of the whole sum.

Read more at R Blog - RoboForex

Sincerely,
RoboForex team