EarnForex.com Monthly Newsletter
| | | | Welcome to the latest issue of EarnForex.com newsletter — April 2018. In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates. | | EDITORIAL: Moving from Crypto to Forex Trading 📈 | | For many Forex traders, the appearance of cryptocurrency trading — first, on exchanges, then, as CFDs at FX brokers — seemed like an interesting opportunity to pursue. But now, as the crypto markets have aged, there are many traders who are moving the other way around — they have started in Bitcoin (or altcoin) trading and now get interested in Forex. Some of them mistakenly believe that everything in FX is the same, others are simply overwhelmed by what they get to deal with in the Forex market. There is a number of reasons for traders to transition from crypto to Forex: - Mature markets — liquidity is very high (the highest there is) and volatility is low (1-2% percent daily movement is considered significant).
- No fees or very low fees — normally, traders only pay the spread between Ask and Bid rates. Commission exists only for no-spread or raw spreads accounts. And spreads, even marked up, are much lower than in cryptos.
- Regulated brokers offer another layer of protection for your funds compared to unregulated exchanges. Moreover, hacking episodes of the broker's servers are mostly harmless for traders unlike the havoc caused by hackers at crypto exchanges.
- High leverage is the standard in spot Forex trading. If you are not a resident of some country that restricts FX leverage, you can trade currencies with 1:1000 or even 1:3000 margin ratio.
- Variety of deposit options — unlike crypto exchanges, brokers accept lots of fiat payment systems for deposit and withdrawal. But this advantage probably does not matter much to traders moving from crypto markets as their preference usually lies with Bitcoin and its likes.
- State of the art trading platforms — platforms developed for spot FX (MetaTrader 4, MetaTrader 5, cTrader, NinjaTrader, and so on) are simply superior to everything currently available from the traditional crypto exchanges.
- Community created resources — educational (books, courses, videos, webinars), informational (news, analytics, discussion groups), and tools (EAs, indicators, calculators, etc.). Although crypto community is great and very creative, the number of resources available in Forex trading is astounding.
- No margin funding fees — Forex traders pay or get paid for overnight rollover of their positions based in the interest rates of the currencies in a pair. Crypto traders have to pay hefty margin lending fees.
There are also some downsides when switching from crypto to FX: - Lower volatility means fewer trading opportunities.
- No order book or true volume — it will handicap your analysis if you have used these tools in your trading. This disadvantage can be partially remedied by moving to Forex futures instead of spot.
- Different fundamental background — you can analyze cryptocurrency fundamentals pretty well if you are up-to-date with all the stuff happening in the industry. It is nearly impossible to stay up-to-date with all the relevant FX stories, especially considering that many of them are hidden from general public (for example, there was hardly a trader who could expect SNB's January 2015 end of Swiss franc's capping).
Anyway, even if you are unsure whether switching markets is a good idea, you should not forget that nowadays you could still trade cryptos with your Forex broker if you would suddenly feel the urge to return to where you began. | | Overview of the major currency pairs' performance in March | | EUR/USD — moved mostly sideways with a slight upward bias in March. It was at the maximum at 1.2476 on March 27, at its minimum at 1.2154 on March 1, finishing the month at 1.2320. GBP/USD — rallied strongly before reversing during the final trading week of the month. The highest monthly rate was at 1.4244 on March 27, while the lowest — at 1.3711 on March 1. GBP/USD finished March trading at 1.4016. USD/JPY — moved down in a classic bearish trend with its lower lows and lower highs. The pair rose to as high as 107.29 on March 13, reaching a bottom at 104.63 on March 26 and closing the month with the 106.24 rate. EUR/JPY — traded sideways in March with a bit of a downward slope. The monthly high was at 132.42 on March 13, the monthly low — at 128.94 on March 23. Trading ended at 130.83 for this currency pair. GBP/JPY — soared high in March. The maximum level for this pair was 150.58 on March 28, while the minimum — 144.97 on March 2. The month's trading ended at 148.96 for GBP/JPY. | | Fundamental background of the past month | | The main themes for the US dollar in March were trade wars and the policy meeting of the Federal Reserve. The United States made a surprise announcement of tariffs on metal imports, from China in particular. The Fed raised interest rates, as was expected, but markets still remained disappointed as they were hoping for an announcement of an additional interest rate hike this year. The euro was generally strong on the back of the US dollar's weakness as well as anticipation of eventual policy normalization from the European Central Bank. But markets reacted negatively to the comments of ECB President Mario Draghi after the March policy meeting, as well as to subsequent comments from him and his colleagues. The Brexit remained a major driver for the Great Britain pound, though the spat between Britain and Russia due to the poisoning of the ex-Russian spy was another topic that took the headlines. The outlook for a rate hike from the Bank of England was the third factor influencing the sterling. The Japanese yen was reacting to ebbs and flows of the market sentiment, rising when it was deteriorating, and falling when it was improving. The political scandal with corruption allegations of Prime Minister Shinzo Abe had little impact on the currency. The Canadian dollar was under pressure from fears of trade wars and uncertainty about the NAFTA negotiations, though dovish comments of Bank of Canada Governor Stephen Poloz also weighed on the currency. The Australian dollar also suffered from trade war fears, though it had also its own negative factors, like underwhelming employment growth. The New Zealand dollar was not immune to risk aversion either. Unsurprisingly, gold profited from risk aversion, though the metal retreated a bit by the month's end as the market sentiment improved. | | Interest rate changes in March | | Russian Federation | 7.50% | -0.25% | 7.25% | | South Africa | 6.75% | -0.25% | 6.50% | | United States | 1.25% — 1.50% | +0.25% | 1.50% — 1.75% | You can see the current interest rates by the world's central banks in our interest rate table. | | One new Forex guide has been published on EarnForex.com since the last issue of the newsletter: You can always browse the previously uploaded guides. | | One new Forex broker has been added to EarnForex.com since the last issue of the newsletter: - WiseTrader — a CySEC regulated broker with a custom web-based trading platform. They offer accounts starting from as little as $250 and provide a maximum leverage of 1:400 on the multitude of currency pairs.
You can always view our full list of Forex brokers. | | One new Forex VPS provider has been added to EarnForex.com since the last issue of the newsletter: - NeoServer — a cheap VPS with servers in Russia and the United States.
You can always view our full list of Forex VPS services. | | Top five Forex brokers of the last month | | There was the following important Forex industry news since the last issue of the newsletter: - Chinese government initiated a sort of crackdown on retail foreign exchange companies, issuing warnings about the unlicensed companies and how it is illegal to operate a Forex broker in China.
- The European Securities and Markets Authority (ESMA) has announced a prohibition of binary options and a limit on Forex CFD leverage at 1:30. The new rules will come into play across Europe in the coming months.
| | Until the next newsletter issue! | | That is all for the April issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know. | | |
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