It is not a secret that coffee is considered to be one of the most preferred and refreshing drinks existing in the world. Coffee has become the inseparable part of our daily routines and today, there is hardly anyone who can imagine the start of his day without a fresh and delicious cup of coffee. This delightful drink is consumed and traded everywhere on a daily basis and because of the fact that it has that much popularity, people started to take advantage of the price movements of this commodity without physically owning the asset.
Since 1882, coffee futures have been widely traded in New York, by appearing, firstly, on the New York Cocoa Exchange and later on the New York Board of Trade. The Coffee “C” contract is the world benchmark for Arabica coffee, which prices green beans from one of 19 countries of origin.
Being one of the world’s popular hot drinks, coffee is also an important commodity and nowadays the Coffee “C” contract has undoubtedly become of the leading and the most widely traded instruments by many investors and traders.
Trade Continuous CFD on Coffee | Coffee Futures

http://www.ifcmarkets.com/en/trading-conditions/commodities/coffee

Basics of Online Trading

Online trading is considered to be the easiest way of management of own investments, which allows to trade in the Forex or stock exchange markets independently. The availability, the free choice of investment instruments, the independent management of own funds are the advantages of online trading, but before starting trading on the Forex, Stocks, Futures, CFD markets, it is important to study the terminology of trading.  

What is a quotation?

Quotations are the set prices of foreign currencies, stocks, commodities, and derivatives. In an exchange market, quotations of stocks and commodities are given for a specific period of time and during this period, a dealer can make transactions in accordance with the given bid and ask prices. There are two types of quotes: a one-way quote, when only the ask price is given and a two-way quote, when both the bid and the ask prices are given.          

Currency quote is a unit of the base currency, expressed in the unit of the quoted currency. Currencies are quoted in pairs, where the first currency is the base currency and the second one is the quoted currency: EURUSD, USDJPY, GBPAUD, etc. There exist direct and indirect quotes.                                                    

A direct quote is the amount of national currency expressed in the unit of the foreign currency. The great part of the quotes is considered to be the ratio of the US dollar to the national currencies, for example, USDCHF = 1.01500, which means that 1,015 Swiss franc is needed to purchase one US dollar.                                                                                              

An indirect quote is respectively the single unit of the national currency expressed in foreign currency, for example, GBPUSD = 1.45000, which means that 1.45 US dollar is needed to purchase one British pound.                                                                                                                             Besides, there also exists a cross rate, which is the ratio of two national currencies, calculated on the basis of the rate of each of these currencies against the third currency (usually against the US dollar).

The Bid/Ask prices and the spread

Two values are emerged during trading on exchange markets – the ask price and the bid price, and the difference between them is called spread.

Basically, spread is measured in pips: for example, in the EURUSD quotation the ask price is specified as 1.0818 and the bid price is specified as 1.0820, in other words, the spread is equal to 2 pips and when opening a position you immediately lose some pips. There are fixed and floating spreads.                                                                                                                                    

Fixed spread does not change depending on the volatility of the market and always remains equal to the size declared by the dealing center. As a rule, for popular and liquid instruments, brokers offer tighter spreads, and for the exotic instruments, the difference between ask and bid prices is much higher.                                                                            

Floating spread may constantly change depending on the market situation. For example, during a stable situation on the market it can make up 2 pips, but during sharp fluctuations of quotations it may reach 50 pips. Generally, floating spreads are typical for bank quotes.

Lot and pip:

Lot is the standardized volume of trading operations, that is to say, the standard amount of the base instrument, which is set in various volumes for various instruments (the standard lot provided by  most of the Forex brokers offering MetaTrader trading terminal is equal to 100 000 units of base currency). Thus, if you want to make a transaction with a currency in 10,000 volume, you will need to choose 0.1 lot. Most of the trading platforms do not allow to make transactions with the volume less than 0.01 lot, that is to say, 1000 units of base currency, but NetTradeX platform offered by IFC Markets allows to trade not in lots, but in units of base currency (or in units of asset for other instruments), which allows to open positions of any volume.              

 Pip is the minimum change of the quotation – the last number in the quotation (usually the fourth or the fifth number after the comma – as a rule, 0.01. 0.0001 or 0.00001).

What is leverage?

Leverage or margin trading is the provision of credits by a broker for trading on the financial market. These funds give traders the opportunity to open positions of much higher volumes without having enough funds. Depending on the broker, the own fund may have different ratios to the credit: from 1:1 to 1:000. The large size of the leverage may increase both the amount of the profit and the amount of the losses.

Technical Analysis #C-CORN : 2016-10-28

Healthy demand for ethanol production supports corn

Corn prices advance with managed funds building long positions and ethanol production providing additional support. Will the price of corn continue rising?

On the daily timeframe CORN:D1 has been rising after hitting multi-year low at the end of August. The price has closed above the 200-day moving average MA(200).

• The Donchian channel is flat: no trend is indicated.
• The Parabolic indicator gives a buy signal.
• The MACD indicator is above the signal line and the gap is rising, which is a bullish signal.
• The stochastic oscillator is rising and but hasn’t reached the overbought zone yet.

We believe breaching above the last fractal high at 364.2, confirmed also by the upper Donchian boundary, will signify continuation of the bullish momentum. It can be used as an entry point and a pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low at 351.8. After placing the pending order the stop loss is to be moved every day following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (351.8) without reaching the order (364.2), we recommend cancelling the position: the market sustains internal changes which were not taken into account.

The 5 Best Films About Trading

  Trading is one of the greatest and the most efficient ways of building wealth. In order to have success and reach the desired results, traders spend much time and effort, develop various trading strategies, etc. But sometimes, there comes a time when each trader needs to take a break from the daily charts and just have a rest. One of the best ways to relax is to watch good movies. Moreover, those, who cannot simply imagine a single day of their lives without trading can mix “business” with pleasure by watching various movies about trading. These movies will motivate and help traders to find some useful points, which they may later use in their trading strategies. Now let us have a look at the best and most famous trading films of all time.

1. The Big Short

The Big Short is a story of 4 guys who predicted the US financial crisis of the 2000’s and became fabulously rich. The movie, which gained much popularity and was a real success, is based on the best – selling book of Michael Lewis, “The Big Short”. The film is full of interesting and exciting scenes, and those who have not watched the movie yet are highly recommended to. 

2. The Wolf of Wall Street

The Wolf of Wall Street is a story of charismatic stockbroker Jordan Belfort, who made millions of dollars and lived the high life. The movie presents the rise and fall of Jordan Belfort, who finally ends up in prison for money laundering and securities fraud.

3. Boiler Room

The Boiler Room is a story of a 19-year- old Queens College dropout, whose only dream was to make a large amount of money. The movie perfectly presents the rise of a 19-year- old college dropout, who becomes a highly successful stockbroker by working at a boiler room. Those, who have ever had work experience in sales or telemarketing will, for sure, come across with many familiar situations.

4. Margin Call

Margin Call is one of the best movies ever created about the financial crisis. Margin Call takes place at a fictional investment bank at the beginning of the 2008 financial crisis. A junior analyst finds out that the bank’s holdings in worthless mortgage backed securities could bankrupt the whole company, and for being able to save everything, the firm goes into emergency mode.

5. Wall Street

Wall Street is one of the most famous films about trading and there is hardly anyone who has never watched it. Wall Street is a story of a young and ambitious stockbroker who wants to earn a lot of money through insider trading. The movie perfectly presents the conflict between greed and ethics in the financial world, and those, who have watched the movie will surely state that one can learn a lot of new things from this movie.

In fact, the list of movies mentioned above is not the complete one, since there are many movies about finance, trading, stock markets, etc. But the movies about trading mentioned above are among the most popular ones. So, what is Your favourite movie about trading?

Technical Analysis GBPUSD : 2016-10-27

Brexit may soften

UK Brexit Minister David Jones said the country’s parliament is planning to review a new law on Brexit. Investors believe is to be soft with most of economic relations remaining the same. Amid this British pound strengthened on Wednesday. Will the trend persist?

On the daily chart GBPUSD: D1 is consolidated in a narrow range after its slump. Upward correction is probable in case British pound remains one of settlement currencies in common-European market, soft Brexit and steady growth of British economy.

• Parabolic is giving bullish signals. It may serve the additional level of support.
• Bollinger bands have widened which means higher volatility.
• RSI is below 50 close to the oversold zone. It has formed positive divergence.
• MACD is giving bullish signals.

The bullish momentum may develop in case the British pound surpasses the last fractal high at 1.233. This level may serve the point of entry. The initial stop-loss may be placed below the support of the sideways trend at 1.195. The most risk-averse traders may place stop-loss at the level of Parabolic signal or lower Bollinger band at 1.165. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1.195 or 1.165 without reaching the order at 1.233, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Everything you need to know about Swiss franc shock

On January 15the SwissNationalBank shocked the world with its announcement to remove the cap it had to prevent the Swiss franc from rising too high against the euro.

Note that since September 6, 2011 the Swiss National Bank had adopted the ceiling of franc against euro at the level of 1.20. The main defender of the Swiss currency Philipp Hildebrand (at that time the head of the Swiss National Bank) promised by all means to prevent the euro to cost less than 1.20 francs.

What has happened?
The Swiss National Bank has announced that the cap (1.20) of EURCHF currency pair is no longer justified and cut the interest rate from -0.25% to -0.75%, after which the most unexpected happened: within half an hour franc increased by dozens of percent against major currencies. Although the cancelation of the cap had been talked about for a long time, the majority of financial institutions and companies were not prepared for such an event and suffered serious losses. EUR / CHF currency pair decreased from 1.2 to 0.86 and then reached about 1.00 within half an hour. Other currency pairs with Swiss franc behaved similarly. Because of provision of high leverage this development hurt Forex brokers hard, even resulting in the bankruptcy of some of them.

Why the leading forex brokers failed to protect their risks?
All the suffered brokers have one explanation – not enough liquidity on the market with strong volatility. Brokers with limited (intermediary) license (which is indicated in their customer agreement indicating the broker responsible for the transactions), are not under our consideration.

Let us explain the situation. At any time customers have long and short positions opened at different times and with different volumes – this forms the summed position of clients. When the price moves the summed position changes, Limit and Stop orders of clients can be performed, as well as the positions can be closed automatically due to the lack of funds. Brokers are oriented by the prices they receive from the interbank, i.e. from ECN systems, where the participants are banks and other large financial institutions.

Regardless how a broker arranges transferring of clients’ orders to the interbank, whether the orders are transferred seperately or summed, according to what business model the broker operates, only brokers carry the responsibility for clients’ trading activities.

Let us consider the shocking event on the example of the EUR / CHF currency pair. The situation with clients with short positions before the collapse of the rate is more or less clear. They either have profits by the current rate or have taken profit on their limit orders. The clients with long positions either have losses by the current rate or have suffered losses by their stop orders.

You may now ask: “Then what’s the problem?” It’s very simple. Clients trading with leverage less than 1: 3 did not cause any problems to brokers. The situation is different with the customers trading with high leverage – the funds on their accounts will cover only a small part of the losses and much more they will be obliged to pay.
On January 15 a number of companies found themselves in a situation where they did not have enough funds to provide their clients buying franc with profits. According to the regulation of “capital adequacy” they are not allowed to continue providing services any longer. “Huge debts” of loser clients are not considered by the regulation.

Source : analysis-forex.com

Weak corporate reports undermine market sentiment

US stocks fall as reports disappoint

US stocks retreated on Tuesday after weaker than expected economic reports and earnings undermined investor confidence. The dollar ended little changed underpinned by Fed rate hike expectations. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed at 97.820 Tuesday.

The Dow Jones industrial average declined 0.3% to 18169.27 led by shares of Home Depot and 3M, down 3.2% and 2.9% respectively. The S&P 500 lost 0.4% settling at 2143.16 weighed by consumer-discretionary and materials stocks. The Nasdaq index dropped 0.5% to 5283.40. Corporate earnings have been better than expected with 75.3% percent of the 150 companies that have reported so far beating analyst expectations, above the long-term average of 63.5%. At the same time lowered annual outlooks by a number of companies have raised concerns about prolonged earnings decline after 4 quarterly declines in a row. Bigger than expected decline in consumer confidence in October also weighed on market sentiment: consumer confidence dropped to 98.6 from 103.5 in September as reported by the Conference Board. In other economic news US home prices rose in August 5.1% over year according to the S&P Case-Shiller 20-City index. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Associations in US. At 15:45 CET October preliminary Services and Composite PMIs will be released by Markit. The tentative outlook is positive. At 16:00 CET September New Home Sales will come out. The tentative outlook is negative.

Is our world really that small or the theory of six degrees of separation really exists?

We are all probably familiar with the theory of six degrees of separation which suggests that each person living in this world can be connected with other person through the chain of acquaintances that has no more than six intermediaries.

The theory of six degrees of separation was first explored by Stanley Milgram, an American sociologist, in 1967. He randomly selected 300 people who were instructed to send a letter to a stockbroker living in Boston. No one was familiar with the target person and knew his address. They were asked to send the letter to someone they knew on a first-name basis who they thought was most likely, among all their friends, to know the target personally and that friend in his turn was instructed to do the same, and the procedure continued until the letter was personally delivered to the target person.

In fact, very few of his letters (only 64) reached the target. Form the very beginning, participants thought that it would take at least a hundred intermediaries to accomplish the task, but on average it took only 5, 2 intermediaries to get each letter delivered to its destination. With the help of his study Milgram proved that we do live in a small world!

Milgram’s experiment increased the desire to learn more about the probability that two randomly selected people would know each other and since then there have been various studies which have tried to validate or on the contrary refuse the theory.

In 2011, the Facebook’s data team and the researchers of the University of Milan announced that 92% of people living in this world are connected with each other by only 5 intermediaries. Today, this number is 4.74 and this is closely connected with the increasing number of people using social networks. Let me explain.

Nowadays, there is hardly anyone who does not use Facebook and we all have at least one mutual friend with most Facebook users, which means that instead of 6 people, we can easily get in touch with any person via fewer intermediaries.

So, it possible to connect with any person living on this planet in case you use your connections properly and turn to right people for help.

Q3 corporate earnings forecast revised up significantly

Technical Analysis OIL : 2016-10-25

Iraq opposes oil production freeze by OPEC

The cost of US WTI fell after Iraq said it is unwilling to cut of freeze oil production. Will WTI prices continue falling?

In the end of September OPEC countries have reached the preliminary agreement on oil output freeze. The final decision shall be taken at the official OPEC meeting on November 30, 2016. Meanwhile, Oil minister of Iraq Jabbar al-Luaibi said on Sunday the country needs more funds to finance military costs. In theory, Iraq may increase oil production to 9mln barrels a day from 4.77mln in September. This contradicts the OPEC plans to cut production to 33-32.5mln barrels a day as early as in December from current 33.4mln barrels a day. Iraq ranks 2nd after Saudi Arabia by oil output volumes among OPEC members. Its position may hinder the output cuts in OPEC. WTI prices fell moderately on Monday on expectations of further 1mln barrel decline in oil stockpiles in US Cushing terminal in a week to October 21, according to Genscape consultancy. The official data on US stockpiles will come out on Wednesday. If the expected decline does not happen, the oil prices may continue falling.

On the daily chart OIL: D1 has been consolidating in a narrow range for 3 weeks already. Last week it hit a fresh year high but now has already come close to the lower boundary of the range. Further decline is possible in case the data on Wednesday show less significant gas decline in US gas stockpiles than markets expect. Moreover, oil prices may decline in case politicians in Iraq express their will to increase or support current level of oil production.

• Parabolic indicator is giving bearish signals.
• Bollinger bands have widened a lot which means higher volatility.
• RSI is above 50 having formed negative divergence.
• MACD is giving bearish signals.

The bearish momentum may develop in case OIL price falls below the two last fractal lows at 49.5. This level may serve the point of entry. The initial stop-loss may be placed above the Parabolic signal, the year high and the last fractal high at 52.2. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 52.2 without reaching the order at 49.5, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Positive euro-zone and US data support markets

US stocks advance on rise in mergers and business activity

US stocks closed higher on Monday with the rise in merger activity lifting market sentiment. The dollar strengthened on positive economic data.

The live dollar index data show the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, added 0.1% to 98.718. The Dow Jones industrial average gained 0.4% to 18222.89 led by Microsoft and Boeing shares. The S&P 500closed 0.5% higher settling at 2151.32 led by technology and consumer staples stocks. The Nasdaq composite ended 1% higher at 5309.83. Investor confidence was boosted by news AT&T Inc. agreed to buy Time Warner Inc for $85 billion in cash and stock, with Rockwell Collins Inc. announcing it would pay $6.4 billion for B/E Aerospace Inc. Investors consider the willingness of companies to spend their cash reserves on mergers and acquisitions bullish for equity market. Markets have been trading sideways recently and earnings reports haven’t shown a reversion of the falling earrings trend yet that could support the breakout higher for equity indexes. Economic news on the other hand were positive with the preliminary reading of Markit’s October purchasing managers’ index rising to 53.7 from 51.5. This was deemed as further indication of strengthening economy supporting Fed’s stated plans for hiking rates if incoming data are strong: the chance for a 25 basis point rise in rates at December meeting rose to 68% from 64% the previous day, according to CME Group’s FedWatch tool. Today at 15:00 CET August Case-Shiller Composite-20 House Price Index will be released. The tentative outlook is positive for the dollar. At 16:00 CET October Consumer Confidence index will be published by the Conference Board. The tentative outlook is positive. At the same time Richmond Fed’s Manufacturing Index for October will come out, it is expected to show a decline in manufacturing activity.