Trading news

2019 is here do you have the right paln of action?

Firstly, let us once again to take this opportunity to wish you a happy and a prosperous new year from behalf of all the team here at Ice Fx. To help you on your way we will help getting you fully organised to make sure that you are prepared and ready for any opportunities that the market may present.

Having a routine that you can stick to and orientate your trading around tends to be overlooked or disregarded by many amateur traders, but those who are consistently profitable are consistent with a trading plan! So to help you along, Ice Fx has created a simple three step blueprint that you can use to help navigate the road to success in 2019.

Step 1 create your watchlist:

Even before you start trading either in an end of day, (EoD), or an intra-day format it is vital that you are prepared prior to the start of the trading week. A watchlist of tradable instruments that you will ONLY trade sets you up being totally focused on a day to day basis. This watchlist will be composed of instruments after doing your technical analysis on respective currency pairs and other tradable instruments during the market close over the weekend.

This will allow a relaxed and composed approach to your analysis ideally taking a top down approach on your analysis, (starting with the larger time frames and understanding respective movements filtering down to the time frame of execution), without being drawn into the movement of a live market. Keep a journal of this watchlist noting down the intended movement of each instrument, including key levels or price action zones. It is also very important that you note all key announcements such as economic data releases or speeches that will have a direct impact on the tradable instrument. Note them down setting up an alert if you are prone to forgetting things if need be. This will ensure that you have the option to avoid these times of possible extreme fluctuation if you are not confident of the result of the fundamental data. As a rule of thumb if you are uncertain to what the data may do to the chart allow 45 minutes prior to the announcement and 45 minutes after before the entry/re-entry of the trade.

Step 2, recheck your risk

Once you have compiled your watchlist after dissecting your charts, it is vital that you recheck your risk and intended reward. The questions you must ask yourself here is what is the minimum profit that you will gain by taking the trade? – If you do not have definitive understanding of what the risk to reward ratio is of taking the trade then you must stop immediately, this essentially means that the technical analysis done is not up to scratch, time to go back the charts or visit our forums for a better understanding of what to do. The risk reward should be at least 1:2 to ensure that you are receiving double to what is exposed, the higher the ratio the better. What is the cost of the trade? – have you factored the spread or the cost of holding the trade for more than a day? It is very important to check both as if not considered these could lead to the trade being in the negative even if the trade achieves profit target. As a rule of thumb, the spread should be less than 25% of the profit target, the lower the better. To understand the cost of holding a trade if you are an Eod trader then objectively look at the swap prices for the appropriate long or short position, (try be a smart trader, make money if the swap is rewarding to hold even if the price does not fluctuate to much, to find out more see our article on the carry trade).

Consider all trades, total exposure on the account on any given day and remember that managing your risk will be the difference of a bad month or a good month.

Step 3 stick to the trading plan

Keeping to the watchlist will ensure that you do not take on “impulse trades” or “gut feelings”. These are commonly associated with losses and then the trader must claw back the loss on the account before trying to make money which itself tends to lead to further losses. Avoid the spiral of despair, stick to plan, remember all the work that has been put in over the weekend will pay dividends during the week. It normally takes a professional around 30-45 minutes to complete, but for a novice this may take a few hours. Practice makes perfect and as you improve the time taken to complete will reduce.

At the end of the week be sure to re-analyse the potential trades on the watchlist. If it is a winner loser or did not get triggered, all must be looked at objectively again. Learn from them, take that knowledge into the following week and grow as a more informed and educated trader.

As time passes you will find that you will evolve your trading plan and watchlist to incorporate more safety checks or rules to improve your trading.

For more information and guidance on what to trade and how-to trade be sure to visit our dedicated forums for our clients and stay tuned to all future news and information releases by Ice FX.

ICE Markets Review

Friday, 11 Jan, 2019 / 1:37

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