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The two most important character traits to succeed in forex trading: Discipline and patience | London Business News |

The forex market is such a complex and a vast space, where traders deal with massive volumes of information every day in an effort to make profitable trades. Some of the information propagated across media and training webinars include identifying a good forex broker and having a sound trading strategy accompanied by stop loss for…

The forex market is such a complex and a vast space, where traders deal with massive volumes of information every day in an effort to make profitable trades. Some of the information propagated across media and training webinars include identifying a good forex broker and having a sound trading strategy accompanied by stop loss for every trade executed.

Unfortunately, rarely is trading psychology, patience and discipline, allocated enough time when training new traders because many do not recognise its importance in their trading career. But since the financial market is a double-edged sword, it justly slams any trader who is either indisciplined or impatient. This explains why over 90% of forex traders fail to manoeuvre successfully in the market despite having both a good strategy and forex broker.

Before we dive into the details here, we recommend reading this report of the top U.K. forex brokers by The Tokenist, and signing up for one that meets your criteria. As we walk through the steps to becoming a successful FX trader, you’ll want to have your account open in a separate tab to follow along.

In this article, we will learn the importance of two virtues, patience and discipline regarding the execution of trades. The information in this article helps nullify the idea of forex being a get-rich-quick scheme adopted by many traders.

How essential is patience when trading?

First, developing the right strategy and skills takes time. But the act of waiting for the excellent trading opportunities to pop up, entering and exiting trades requires a lot of patience. Therefore, it helps traders eliminate FOMO (fear of missing out), an emotional turmoil experienced by traders when they haven’t taken a trade.

Although everyone wants to increase their gains, maximise any potential price movement and volatility, being calm is vital to avoid overtrading. Patience assumes the role of keeping you at peace until the appearance of the right trading opportunity.

Second, despite the strategy or the broker adopted, losses are part of the trading arena, and traders should handle them appropriately. We all agree that a sequence of losses can drain confidence and ultimately quitting the trading hassles. But this should not be the case for any trader who wishes to thrive in the market. Instead, patience helps one to learn from their mistakes instead of sweeping them under the carpet. Patiently, a trader distinguishes what worked from what didn’t, regain trading momentum and get back into the game.

Forex trading involves two vital facets: research and making decisions. Understanding the working of the market takes time to know the best currencies to trade and which setups to take. This process helps a trader develop a plan and stick to it despite unexpected market movements which would sway the impatient traders to make spontaneous decisions.

Understanding technical and fundamental analysis helps a trader make informed decisions and remain calm instead of exiting trades early or missing out on excellent opportunities because of an emotional rollercoaster.

Why should you be a disciplined trader?

To succeed in the trading business, every trader should develop a sound strategy taking care of risk-reward ratio. Indiscipline and impatience manifest in overleveraging and changing of strategies with each trader. A disciplined trader takes note of risks versus rewards, account balance, trading sessions and market fundamentals.

This level of discipline can be developed in demo accounts used to test strategies without losing real money. By so doing, one develops a risk management lifestyle, governing the stop-loss and take-profit for every trade. Disciplined traders also overcome greedy emotions characterised by using huge lot sizes.

As we said earlier, losses and backfiring of trades are normal when trading. No matter the causes of a drawdown in a trader, disciplined traders keep a journal which helps them track and learn from past traders; hence, improving their strategies. The best definition of discipline is doing what is expected and anticipating improvement. Therefore, staying focused is the character of any successful trader, no matter the failures encountered on the way.

Although patience and discipline are essential, success in forex comes about through learning and experience reaped over time. Apart from having a good strategy and the right trading psychology, having the right broker such as Etoro and Oanda, is essential due to its tolerable spreads. Check out this link to learn more about brokers.

The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.

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Daily Financial News

Don’t Count On JPY Correction; Staying Long GBP/JPY

The path of the potential pace of the JPY decline may still be underestimated by markets, which continue trading the JPY long.

While the 10% USDJPY advance from September lows looks impressive from a momentum point of view, it may no thave been driven by Japan’s institutional investors reducing their hedging ratios or Japan’s household sector reestablishing carry trades.

Instead, investors seemed to have been caught on the wrong foot, concerned about a sudden decline of risk appetite or the incoming US administration being focused on trade issues and not on spending. Spending requires funding and indeed the President-elect Trump’s team appears to be focused on funding. Here are a few examples: Reducing corporate taxation may pave the way for US corporates repatriating some of their USD2.6trn accumulated foreign profits. Cutting bank regulation could increase the risk-absorbing capacity within bank balance sheets. Hence, funding conditions – including for the sovereign – might generally ease. De-regulating the oil sector would help the trade balance, slowing the anticipated increase in the US current account deficit. The US current account deficit presently runs at 2.6% of GDP, which is below worrisome levels. Should the incoming government push for early trade restrictions, reaction (including Asian sovereigns reducing their holdings) could increase US funding costs, which runs against the interest of the Trump team.

Instead of counting on risk aversion to stop the JPY depreciation, we expect nominal yield differentials and the Fed moderately hiking rates to unleash capital outflows from Japan.The yield differential argumenthas become more compelling with the BoJ turning into yield curve managers. Via this policy move, rising inflation rates push JPY real rates and yields lower, which will weaken the JPY. Exhibit 12 shows how much Japan’s labor market conditions have tightened. A minor surge in corporate profitability may now be sufficient, pushing Japan wages up and implicity real yields lower.

JPY dynamics are diametrical to last year . Last year, the JGB’s “exhausted”yield curve left the BoJ without a tool to push real yields low enough to adequately address the weakened nominal GDP outlook. JPY remained artificially high at a time when the US opted for sharply lower real yields. USDJPY had to decline, triggering JPY bullish secondround effects via JPY-based financial institutions increasing their FX hedge ratios and Japan’s retail sector cutting its carry trade exposures. Now the opposite seems to be happening. The managed JGB curve suggests rising inflation expectations are driving Japan’s real yield lower. The Fed reluctantly hiking rates may keep risk appetite supported but increase USD hedging costs.Financial institutions reducinghedge ratios and Japan’s household sector piling back into the carry trade could provide secondround JPY weakening effects

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Daily Financial News

Mexico raises interest rates, cites Trump as risk

The head of Mexico’s central bank says U.S. Republican candidate Donald Trump represents a “hurricane” sized threat to Mexico.

Banco de Mexico Gov. Agustin Carstens told the Radio Formula network Friday that a Trump presidency “would be a hurricane and a particularly intense one if he fulfills what he has been saying in his campaign.”

Trump has proposed building a wall along the border and re-negotiating the North American Free Trade Agreement.

Mexico’s central bank raised its prime lending rate by half a percent to 4.75 percent Thursday, citing “nervousness surrounding the possible consequences of the U.S. elections, whose implications for Mexico could be particularly significant.”

Mexico’s peso had lost about 6 percent in value against the dollar since mid-August. It recovered slightly after the rate hike

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Financial News

Africa’s first Fairtrade certified gold co-operative offers hope to gold miners living in poverty

Syanyonja Artisan Miners’ Alliance (SAMA) has become the first artisanal small scale mining co-operative in Africa to become Fairtrade certified, bringing much needed hope to impoverished communities who risk their lives to mine the rich gold seam that runs around Lake Victoria.

SAMA is one of nine previously informal groups from Uganda, Kenya and Tanzania which has benefitted from a pilot project launched by Fairtrade in 2013. This innovative program aims to extend the benefits of Fairtrade gold to artisanal miners across East Africa.

In that short time, SAMA has undergone training in business and entrepreneurship, as well as safe use of mercury, internal control systems, labour rights and better working conditions, health and safety and more. Previously, daily contact with toxic chemicals used to process gold meant members risked disease, premature births and even death.  Fairtrade gold was first launched in 2011, and SAMA now joins Fairtrade certified gold mines MACDESA, AURELSA and SOTRAMI in Peru.

The co-operative produces just 5 kg gold per year, but nevertheless has the potential to significantly benefit many people in the local community through better conditions through certification. It is expected that Fairtrade and organizations like Cred Jewellery will support the miners, ensuring their gold can be refined and made available to jewellers in the UK and other markets.

Gonzaga Mungai, Gold Manager at Fairtrade Africa said: “This is a truly momentous and historical achievement and the realisation of a dream that is many years in the making. Gold production is an important source of income for people in rural economies. Congratulations to SAMA, it sets a precedent which shows that if groups like this can achieve certification, then it can work for others right across the African continent.”

The Fairtrade Gold Standard encourages better practice and changes to come in line with international regulation around the production and trade of so-called ‘conflict minerals’. Under the Standard, miners are required to:

  • Uphold a human rights policy preventing war crimes, bribery, money laundering and child labour
  • Clearly represent where the minerals were mined
  • Minimise the risks of conflict minerals through robust risk assessments and collaboration across supply chains
  • Report to buyers and trading partners regarding the risks of conflict minerals

Now in its second phase, the programme will focus on supporting other mining groups in the region to access affordable loans and explore a phased approach to accessing the Fairtrade market, allowing more mining co-operatives across Africa to participate in the programme.

Gonzaga added: “Sourcing African metals from smallscale miners in the Great Lakes Region is the responsible thing to do. For a long time companies have avoided buying gold from this region, with devastating consequences for impoverished communities who were already struggling. It has driven trade deeper underground, as unscrupulous buyers pay lower prices and launder illegal gold into legitimate supply chains. That’s why we have chosen to work with these groups to help them earn more from their gold within a robust compliance system that offers social, environmental, and economic protections.”

The Fairtrade gold programme offers a small but scalable solution to sustainable sourcing of gold from the region in line with Section 1502 of the Dodd-Frank Act in the US, OECD Due Diligence Guidance and recent EU Supply-Chain Due Diligence proposals which could come into effect in 2016. This means that up to 880,000 EU firms that use tin, tungsten, tantalum and gold in manufacturing consumer products could be obliged to provide information on steps they have taken to identify and address risks in their supply chains for so-called ‘conflict minerals’.

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