Features | - Part 256

How to make use of compounding in your FX trading

ALBERT Einstein reportedly said that compound interest is “the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” There are examples of compounding in FX. One FXCM client, for instance, invested $14,000 over the last two years and made a $100,000 return. How? First, they held positions for 28 days on average. Second, the trader would only trade in line with strong trends. Finally, they would add to…

Managing Capital Flows: Lessons from Emerging Markets for Frontier Economies

Posted on by The Editorial Team

Capital flows, and their successful management, have long been a focus of the IMF’s work and policy advice. Indeed, when John Maynard Keynes and Harry Dexter White—the principal architects of Bretton Woods—were discussing the IMF’s Articles of Agreement, they clashed on many points, but they were surprisingly in agreement when it came to cross-border capital flows. Both men took as their starting point that, as White said, “the desirability of encouraging the flow of productive…

Managing risk and expectations: Average True Range

Posted on by The Editorial Team

TRADING always involves risks and rewards. Your position has a potential upside (it’s the reason you trade), yet to be able to take advantage of it, you need to accept some risk. One simple way to assess this is to use the Average True Range (ATR) indicator. The indicator gives you the average range over the time frame you are trading. Say that you hold a bearish euro-dollar view. What would be a good profit…

Nigeria’s bank ratings placed on CreditWatch negative

Posted on by The Editorial Team

Standard & Poor’s placed the ‘BB-‘ long-term issuer credit rating on Access Bank, First Bank of Nigeria, Guaranty Trust Bank, Stanbic IBTC Bank and Zenith Bank on CreditWatch with negative implications, following similar action on Nigeria’s sovereign ratings. It expected the Nigerian banking sector to face difficulties in 2015. Also, it said that low global oil prices, the pressure on the Nigerian naira, the upcoming presidential elections and the regulatory changes are raising credit risks,…

Nigeria’s external shocks raise economic vulnerabilities

Posted on by The Editorial Team

Merrill Lynch projected Nigeria’s real GDP growth to decelerate to 3.5% in 2015 from an average annual growth rate of 5% between 2011 and 2014, due to the large terms of trade shock that has resulted from lower global oil prices. It said that the depreciation of the Nigerian naira would increase inflationary pressure and would weigh on domestic consumption that is heavily dependent on imports. In addition, it forecast the inflation rate to average…

CFA franc peg to Euro sustainable

Posted on by The Editorial Team

Standard Chartered Bank considered that a devaluation of the West African CFA franc and the Central African CFA franc, which are both pegged to the Euro, is not likely in the near term. The CFA franc is the common currency of the West African Economic & Monetary Union and the Central African Economic & Monetary Community. First, it anticipated that the depreciation of the Euro against the US dollar would benefit the CFA franc zones…

Why it’s crucial to know your trading environment

Posted on by The Editorial Team

MARKETS will usually experience three types of market condition: downtrend, uptrend or ranging. Knowing which trading environment you are in can save you money and time. This is because the technical analysis tools and systems investors use will act differently depending on the market environment. Working with breakouts, in strong trending markets a sloppy entry might work, as the trend will eventually lift price beyond your entry. Using the same technique in a flat market,…

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