Gross Domestic Products (GDP)

Gross Domestic Products (GDP)

What Is Gross Domestic Products (GDP)

Gross Domestic Products (GDP) is one leading economic indicator that gauges the country’s overall economic performance. It measures the country’s economic health. The stats are released quarterly and some are released monthly. What it measures is the market value of all financial goods and services produced within the country.

What Is The Importance Of GDP?

  • It tracks the economic health of the country.
  • It measures the value of all goods produced within country’s borders.
  • Economists uses GDP to determine whether the economy is growing or experiencing recession.
  • Investors uses GDP to make investments decisions. Good economy leads to higher earnings and higher stock prices, while bad economy leads to lower earnings and stock prices.

Which GDP Stats Do I Trade?

  • United States GDP
  • United Kingdom GDP
  • Canada GDP
  • Australia GDP
  • New Zealand GDP

Why Do We (traders) Care?

Since GDP measures the economic health of the country, it has a direct impact on currencies and stocks. As traders, we can benefit from the short term moves of stocks and currencies whether GDP is higher or lower. I published an episode on my podcast about why you shouldn’t ignore fundamentals in your trading. You can listen to this episode HERE. Understanding what moves the markets allows you to plan for your trades and also spend less time in the markets. It also makes sense to understand the markets where you have invested your money.

Thank you for stopping by. Please kindly share this post with your peers who may benefit from this content. To have my blogs at your fingertips and read on the go, download my App on Google PlayStore. To learn how to incorporate fundamentals into your trading, WhatsApp+27 78 144 6851 for a quotation.

The year is almost over and most countries have released their GDP stats. Below are the remaining dates for GDP stats for the year 2022.

Central Banks And Interest Rates 2022

Central Banks And Interest Rates 2022

What Is A Central Bank?

Central bank is a national bank that provides financial and banking services for its country’s government and commercial banking system. Central banks play a major role in the markets. Interest rates are the most important event of the Forex markets and any discussions that take place in the central banks can cause huge volatility in the markets within seconds.

What is the role and function of a Central Bank?

  • To set official bank rates used to manage inflation and exchange rates
  • To issue a country’s currency
  • To set targets and monitor economic data while they implement special tools.

One of the special tools that is used by the central bank is Interest/bank rates adjustments. When the Central Bank sees a need to hike or cut their rates, they simply do so.

Why Do Central Banks Cut Interest Rates?

  • To encourage borrowing : When the Interest Rates of a country are cut, it also means that the people who are borrowing from the banks will be paying less Interest on their loans. That will then encourage consumers and even big companies to borrow for spending and bigger investments.
  • To make saving less attractive: When the return on savings are lower, most people would opt for spending money than holding on to it.
  • To weaken the currency: When the currency is weak, the country’s exports become more competitive and their imports more expensive which also encourages consumers to buy local because of the exchange rates.
  • To lower Mortgage loans: When mortgage loan holders pay less interest on their existing loans, they may be left with more money and that should increase consumer spending in the country.

Why Do Central Banks Hike Their Interest Rates?

  • When the economy is growing at a rate that may lead to hyperinflation (monetary inflation occurring at a very high rate) that is when the Central Bank hikes the county’s interest rate.
  • To make saving and investing more attractive: When the returns on savings and investments are higher, it encourages more people to save or invest.
  • To increase the value of the country’s currency: When the country’s currency value is higher, it attracts foreign investors to invest in the country.

When the pandemic (Covid 19) hit global economies, all Central Banks embarked on a rate cutting spree. Now that all economies are recovering, Central Banks are on a rate hiking spree. Every country is trying to secure investors. The sad thing about all these rate hikes is that whose who qualified and took loans during rate cuts are now paying more interest due to current higher Interest Rates.

Why Do We (Traders) Care?

The biggest factor that shifts the price in the Forex markets is the Interest Rate changes set by the Central Banks. The changes made by the Central Banks in their rates are the indirect response to other indicators/economic data released right throughout the month. As a trader, it is very important to understand what moves the markets and how to take advantage of that.

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Check out the latest episode on my Podcast titled “Why you should not ignore fundamentals in trading“. To read this content on the GO, download the App on Google PlayStore. Below is the table of 8 major central bank’s current Interest Rates. There’s still more rate hikes expected and these figures will change soon. These are the ones that I personally trade. I have excluded emerging markets.

Should you wish to learn how to trade interest rates, read a monetary policy statement and understand what it means to the economy and how it affects currencies and stocks, send me a WhatsApp on +27 78 144 6851 to request a quote on this course. Thank you for stopping by, I hope you found value in this post. If you did, please kindly share with as many people as possible.

3 Reasons To Not Increase Lot Size

3 Reasons To Not Increase Lot Size

How To Choose A Perfect Lot Size.

Hello readers and subscribers, welcome to today’s post. Choosing a lot size should be based on the size of the account which is the trading capital. When you have decided on the lot size/volume, your next step is to ensure that you stick to it as long as your trading capital is still the same. It is much easier to implement these principles when you view your trading account as a business and not just a cash cow. I have published an episode on my podcast on this topic, you can listen to it HERE. Below are the 3 reasons why you should not increase your lot size.

1. You Are Too Confident.

I used to do this one a lot. I would increase my lot size when I felt more confident about a particular trade. A lot of traders do this as well. One would increase the lot size when they feel that they are sure that the market would go a certain way. That is a very dangerous way of thinking because when it comes to the markets, we are never sure and we cannot control what happens in the markets. The good thing though is that we can always control ourselves. By all means, never increase your lot size based on how you feel.

2. Your Account Has A Draw-Down.

A Draw-Down means you have lost some money in your account. Say you started your account with $1 000 and you have lost $100 and you are now left with $900, you account has a 10% draw-down. You have no business increasing your lot size when you have lost some money. Revenge trading is very dangerous. Never trade with the aim of regaining your lost money.

If your increase your lot size after a draw-down, you are not different from someone who just lost an income but instead of moving to a smaller house while they find ways to make an income, they instead plan to move to a bigger house where they will be required to pay more, it really doesn’t make sense. You do not upgrade until your finances are upgraded. By all means, never increase your lot size after a draw-down.

3. You Have Reached Your Daily Target.

Reaching daily targets is very nice but should not be a reason to increase your lot size. As much as minding your daily target is good, try not to focus more on what you can achieve daily but rather pay more attention on closing your books on a monthly basis because days are not the same and sometimes there are days when there won’t be any trading opportunities, you don’t want to be discouraged because of that. It also doesn’t mean that you will never reach your monthly target if you don’t reach your daily targets. The best way to measure your progress is at the end of the month. By all means, never increase your lot size just because you have reached your daily target.

When Exactly Should You Increase Your Lot Size?

You can only increase your lot size when your trading account has grown. Only then, does it make sense to adjust your lot size. Even when you do, try not to increase by a lot but just a little bit. I have published a more detailed audio version of this post on my podcast and you can listen to it HERE.

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How To Trade Dax40 Index

How To Trade Dax40 Index

What Is Dax40 Index?

The Dax40/Ger40 formerly known as Dax30/Ger30 is an index that consists of the 40 major German blue chip companies that are listed on the Frankfurt Stock Exchange and it measures their performances. The Dax was founded on the 1st of July 1988. It had 30 companies hence it was called Dax30/Ger30. It has since expanded to 40 companies in 2021 and now called the Dax40/Ger40. The addition will give traders and investors an opportunity to gain more exposure to the German financial markets. The Dax40 is considered a strong measure of German and European economic health.

What Is Stock Index Trading?

Stock index trading is when you are trading a basket of stocks which makes up an Index. Stock Index trading is less time consuming as you are not required to study each company. You can trade the Index on your Forex trading platform and do it through an instrument such as the Dax40. I have published blogposts on how to trade Ftse100 and Nasdaq.

Some Of The Companies On Dax40

  • BMW.
  • Adidas.
  • Porsche.
  • Puma.
  • Airbus.
  • Deutsche Bank.
  • Siemens.
  • Volkswagen.
  • Continental.
  • Mercedes-Benz Group.

What Economic Factors Influence Dax40?

  • Monetary Policy, performance of the companies on the index and geopolitics.

The change in Interest Rates plays a big role in currency valuation. The Release of Interest Rates and Monetary Policy statement by the European Central Bank (ECB) affect the price of Euro. When Euro weakens against USD, Dax40 strengthens because German exports are paid for in USD and they cost more because of the exchange rate. When Euro strengthens, Dax40 falls, they have a negative correlation.

It is very crucial to understand that all financial instruments do not just weaken or strengthen, there’s always a fundamental reason why they react in a certain way. When you have decided to invest your money in the Forex markets, understanding how the markets work should be your priority.

Thank you for stopping by, please kindly share this post with your peers and help me reach out to as many traders as possible. To read my blog posts on the go, DOWNLOAD the app on Google Play Store. For notifications on future publications, feel free to subscribe. You can also check out this episode on my podcast titled “Do not invest in the markets blindly”.

How To Trade FTSE 100

How To Trade FTSE 100

What Is FTSE 100?

FTSE 100 (pronounced “Footsie”) or UK100 is an index that comprises of 100 largest companies by market cap that are listed on the London Stock Exchange. London Stock Exchange (LSE) opens from Monday to Friday at 8am-12pm and they take a lunch break and continue until 4:30pm. FTSE 100 was launched on the 3rd of January 1984. Many of these companies are international and are affected by the exchange rate of the British Pound.

What Is Stock Index Trading?

Stock index trading is when you are trading a basket of stocks which makes up an Index. You can do that on your Forex trading platform and do it through an instrument such as FTSE 100.

Advantages Of trading Stock Indices

  • Stock indices have generally higher returns than the stock market they represent.
  • The Volatility is reduced as compared to currencies.
  • Stock index trading requires less research as opposed to trading /investing in individual stocks.
  • When trading a stock index e.g. Ftse100 you do not have to spend weeks analyzing all the companies under this umbrella but what you can do is follow the instrument as you would do analyzing your currencies.
  • Stock index trading does not require any traditional stock brokerage where you pay high fees, you can buy and sell on the same Forex trading platform as you would do with your currencies and it is a cheaper alternative to trading the actual stock.

There are different markets that one can focus on. I have published a blogpost on the U.S markets and this one is about the London markets.

Why Is FTSE 100 Important?

Most companies invest their funds in the equity markets. FTSE 100 is used to measure the performance of the overall equity market in the UK because it lists the top 100 companies which affect the stock markets.

Some Of The Companies On FTSE100

  • Anglo American (mining)
  • Avast (software & computer software)
  • Barclays (banks)
  • BP & Shell (oil & gas producers)
  • Coca Cola (Beverages)
  • Mondi (forestry & paper)
  • Unilever (personal goods)
  • Vodafone Group (mobile telecommunications)

What Economic Factors Influence FTSE 100?

The release of UK GDP, Interest Rates and Manufacturing data. CPI also does affect it up to a certain level because CPI influences the Central Banks monetary policy and rate decision. Higher CPI leads to rate hikes while lower CPI may lead to rate cuts which has a direct impact on FTSE 100.

Thank you for reading. I hope you’ve learned something from this post. Should you need lessons on how to trade FTSE 100 and other financial instruments including currencies, feel free to WhatsApp me on +27 78 144 6851.

Spend Less Time In The Markets

Spend Less Time In The Markets

The markets are open for 24 hours and 5 days a week. Most people are introduced to the markets as this one exciting and a very quick way of making money. If you have been trading for a while, you probably know by now that is not the case. It is no lie that as a newbie, looking at the charts can fill you with some sort of an adrenalin rush.

Spend Less Time In The Markets and Live More.

Now let’s be honest, Forex trading can be very addictive and most traders are just addicts. I published an episode on my podcast on this topic, you can check it out HERE. Forex trading is not gambling or similar to a casino, but there’s a very thin line between trading and just gambling. This is all dependent on how you view your trading account. The charts and the constant change in price can keep you glued to your screen and tempted to trade even when there is no reason to.

Life Doesn’t Have To Stop Just Because You Have A Trading Account.

I speak to a lot of people on a daily basis who are struggling with finding balance in their lives. They struggle to find time for themselves, for their families, spouses and even children. They spend all their time checking the charts. Even when they go on family vacations, they can hardly spend time with their loved ones. Their partners feel neglected all the time.

They are constantly checking charts even on their mobile phones. Now their actions have made their loved ones to think that they are loosing their minds and no one take them seriously. They are also very frustrated human beings. Their lives are consumed by charts. Below are the few things that you can do to find that balance so you are able to trade less and live more.

1. Have A Trading Plan

Creating a trading plan is easy, but sticking to it is a bit challenging, you will need a high level of focus. When it comes to creating a trading plan, you must also not ignore your personality and your lifestyle. Listen to the podcast episode on this topic HERE. When you have a 9-5 job, you cannot afford to choose a trading method that will require you to trade at random times. You don’t have time to do so, your time is paid for and you have responsibilities and you certainly don’t want to be fired for neglecting your responsibilities.

You need a trading plan that will allow you to choose your trading time and plan around that. You need to know how much time you will allocate for your trading sessions. Your trading plan should also include when NOT to trade. I am sharing this because I know it is possible to plan your trades as long as you choose a method of trading that will accommodate your lifestyle. In my mentorship program, I do the planning in detail with each mentee.

2. Have A Day Off

Just like you take a day off or leave from work, you have a day off exercising when you just rest, stretch and allow your body to recover from exercise and your muscles to relax, you also need to have your off day as well in the markets. This is another trick that I personally used to overcome the markets addiction. It also helped me to stop treating my trading account as a casino money slot machine and understand that it is OK not to trade everyday.

3. Stay Away From Mobile Trading

From time to time, I take some time off social media to focus on reading more, working on myself more, check in with myself and basically doing personal development away from distractions, we all know how we can be consumed by social media . During such a period, I do not just log out of social media but I also delete the apps so that I don’t get notifications.

In the same manner, having your trading app easily accessible to you may be the reason why you cannot stay away from trading. If you plan your trades and your trading for the day is done, you won’t find yourself fiddling with your app and checking the markets the whole day, people do that even when they are driving. They check the markets even when they are in the bathroom or just bored. These are just a few things that you can do to find that balance that you have wanting all along.

Thank you so much for stopping by. Please kindly share this post with your peers and help me reach out to as many people as possible who need to see this information. You can listen to the audio version HERE.

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