Investors of all stripes use hedging as a strategy to protect one position from adverse price movements. Typically, hedging involves the opening of a second position that is likely to have a negative correlation with the primary asset being held, meaning that if the primary asset’s price makes an adverse movement, the second position will experience a complementary and opposite movement that offsets those losses.

In forex trading, investors can use a second pair as a hedge for an existing position they’re reluctant to close out. Although hedging reduces risk at the expense of profits, it can be a valuable tool to protect profits and stave off losses in forex trading.

As the third-most popular currency trading pair in the world, GBP/USD offers one of the most liquid forex tradings you can expect to find. That comes with many of the expected characteristics of a pairing traded at a high volume, including narrow spreads, high volatility, and opportunity to carve out strong profits with well-timed positions.

If you’re new to contract-for-difference (CFD) trading, one of the biggest decisions you can make is choosing where to put your money.

As forex traders seek out stable investments that can hedge against inflation, market instability, and other geopolitical factors affecting currency prices, gold has grown in popularity over the past few years. Traders can use gold as a way to hedge against other investments, or as a safe haven that provides greater consistency over time and is more resistant to dramatic swings in valuation than many other currencies are.

XAU/USD is one of a number of gold pairings forex brokers now offer, making it easier than ever to incorporate gold as part of your forex trading strategy. If you’re eager to make better use of gold and capitalize on potential profit opportunities, here are five trading tips to keep in mind.

The bottom line is that money management will make or break you as a trader. This is a widely accepted fact.  Proper money management rules have been proven over long periods of time and are not secrets to anyone. The rules of ‘keeping your trades small’ and ‘cutting losses’ for example, have worked for hundreds of years, yet many people ignore them. 

No matter what aims you may identify when first determining what you are setting out to achieve with your trading, all aims are secondary to your primary goal — preserving your trading capital. This is by far the most important aspect of successful trading. Simply stated, you need capital to trade.

For any trader, a critical step in developing effective trading strategies is choosing an analysis method that evaluates charts and potential trade opportunities.

Chart patterns and indicators offer different approaches to evaluating markets, with each presenting its own relative strengths and weaknesses. Although some trading experts are staunch advocates of one over the other, many traders do use a combination of these methods to create their own customized trading strategy.

Here’s a look at the benefits and drawbacks of each school of thought.

As the two largest currency markets in the world, the EUR/USD pairing offers excellent liquidity for forex traders of all types. While the pairing has seen periods of high volatility—most notably in 2010 and 2011, due in part to Greece’s economic crisis—the recent trading history for this pair has seen lower volatility and tight spreads.

This lack of volatility can be a challenge for day traders, since stable prices for the pair can limit a trader’s potential profit margin. The risk is lower, but so is the potential reward. Despite this overall stability, there are still opportunities to capitalize on EUR/USD volatility by paying attention to price movements and tracking potential market triggers.

Here’s a look at some possible day trading strategies to deploy with the EUR/USD currency pair.

Contract-for-difference trading is a popular alternative to traditional investing because of its ability to maximize capital investments and, in turn, increase your potential profits or losses. This approach to forex trading has grown in popularity over the past decade, especially with some brokerage firms offering negative balance protection to limit heavy losses that would put your trading account into debt.

Here’s a look at some of the other key benefits of CFD trading.

With high liquidity and low bid-ask spreads, USD/JPY is a popular currency pair for experienced traders as well as beginners. Since the financial crisis in 2008, Japan’s yen has demonstrated itself as a reliable reserve currency, becoming the world’s third-largest safe-haven currency in recent years. The USD/JPY pairing also plays an important role in trading activity throughout Asian markets, since JPY is often bought or sold as a substitute for more unpredictable currencies in the region.

Because JPY is the leading reserve currency in the Asian market, its high liquidity is a benefit to traders looking to capitalize on market movement in countries whose currencies would otherwise be tougher to trade—especially at a large volume. Even though the USD/JPY pairing offers greater stability and liquidity than other pairings, traders should still study the market factors that can affect price movements.

Here’s some insight into the timing considerations and other market influences to watch when trading USD/JPY.

Trading Indices with Valutrades is a great alternative to stock trading and we are happy to announce that you can now trade with a minimum of 0.01 lots giving you much more flexibility in your positions.