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Affected by international holidays, the trading hours of some VT Markets products will be adjusted. Please check the following link for the remaining affected products:

Notification of Trading Adjustment in Holiday (Updated)

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Analyzing USD Stability and Stock Market Trends

CURRENCIES:

• Stagnant US Dollar: The US dollar remains relatively unchanged in today’s opening trade, leading to a state of uncertainty for USD pairs.
• Consolidation Phase: The US dollar index is currently consolidating its recent upward movement. The lack of direction from the rates market is expected to persist until the release of the upcoming US inflation report on Thursday at 13:30 UK time.
• Market Expectations: Financial markets are currently factoring in a total of 150 basis points in US interest rate cuts for the year. The initial 25 basis point adjustment is anticipated at the March 20th FOMC meeting.
• Chart Analysis: The US dollar index chart illustrates a short-term consolidation, with last Friday’s jobs report candle acting as a constraining factor. Conflicting moving averages, including the 20-day sma supporting the dollar index and the 50-/200-day sma forming a potential negative ‘death cross,’ present a mixed outlook.
• Fibonacci Retracement: The dollar index is positioned on the 61.8% Fibonacci retracement of the mid-July to early-October movement.

Financial Markets Analysis:

STOCK MARKET:

• Market Turbulence: The crypto community experienced a surge in Bitcoin’s price to nearly $48,000 following an apparent announcement on X (formerly Twitter) by the Securities and Exchange Commission (SEC) regarding the approval of spot Bitcoin exchange-traded funds (ETFs).
• SEC Chair’s Clarification: Within fifteen minutes, SEC Chair Gary Gensler declared the message as “unauthorized” and inaccurate, stating that the SEC’s X account had been “compromised,” and the tweet was unauthorized. He emphasized that the SEC had not approved spot Bitcoin ETFs.
• Price Fluctuation: Bitcoin’s value retreated to $45,500 after Gensler’s clarification, resulting in a loss of $63 billion in market value within minutes.
• Official Statement: The SEC, through a spokesperson, clarified that the unauthorized message on X was not made by the SEC or its staff. The agency confirmed unauthorized access to its X account and pledged to investigate the incident.
• ETF Approval Speculation: The incident added to the market frenzy around the potential approval of Bitcoin ETFs, seen as a significant development for widespread acceptance of the cryptocurrency.
• Market Expectations: Some applicants anticipated SEC approval on Wednesday, with trading potentially commencing on Thursday. However, Gensler’s statement contradicted these expectations.
• Notable Applicants: Major names on Wall Street, including BlackRock and Franklin Templeton, applied for spot Bitcoin ETFs. JPMorgan Chase and Goldman Sachs offered assistance to these money managers.
• Industry Impact: Stakeholders believe that spot Bitcoin ETFs could attract substantial capital into Bitcoin, potentially elevating its price.
• Price Prediction: Analysts estimate that financial products related to spot Bitcoin ETFs could attract $10 billion or more in investment flows by the end of 2024, potentially pushing Bitcoin’s price higher.
• Crypto Risks Warning: Gensler, in a recent statement, reiterated the risks associated with crypto investments, emphasizing their volatility and susceptibility to insolvency.
• Optimistic Outlook: Despite past challenges, the crypto industry anticipates wider acceptance and regulatory clarity, with optimism surrounding Bitcoin’s “halving” in April and potential interest rate cuts in 2024.
• Long-Term Prediction: Analysts predict Bitcoin reaching $150,000 by 2025, considering various factors, including regulatory developments and industry changes.

Learn more about CFD Shares with VT Markets here.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Daily Forex Analysis: 9 Jan 2024

CURRENCIES:

• Gold Price Forecast Overview:
  • Gold prices displayed a downward trend in early 2024 after a robust performance in late 2023.
  • Traders are cautious about entering new bullish positions, seeking more clarity on the Federal Reserve’s monetary policy outlook.
• Concerns and Market Behavior:
  • Traders hesitate due to the fear of a potential bearish reversal if anticipated deep interest rate cuts for 2024 do not materialize.
  • The Federal Open Market Committee (FOMC) signals potential borrowing cost cuts, but market expectations may be overly dovish given the current economic conditions.
• Key Focus on December U.S. Inflation Report:
  • Gold market attention shifts to the upcoming release of the December U.S. inflation report, a high-impact event.
• FedWatch Tool and Probabilities:
  • The FedWatch Tool indicates market probabilities for the FOMC meeting outcomes.
  • The tool provides insights into market expectations regarding the Federal Reserve’s actions.
• US Inflation Data Insights:
  • Focus on the core Consumer Price Index (CPI) yearly reading, expected to moderate slightly.
  • The headline CPI is forecasted to reaccelerate, posing challenges for policymakers.
• Potential Outcomes for Gold:
  • Gold’s upward trajectory is favored by weak inflation numbers.
  • A CPI report in line with or above forecasts may lead to a hawkish policy repricing, contributing to gold’s recent corrective decline.

Discover Precious Metal Trading with VT Markets here.

STOCK MARKET:

• Fed Officials Caution Against Early Rate Cuts:
  • Two Federal Reserve officials expressed their belief on Monday that maintaining current interest rates for an extended period could help bring inflation back to the central bank’s target.
  • This stance contradicts Wall Street expectations of potential rate cuts in the first quarter of the year.
• Fed Governor Michelle Bowman’s Perspective:
  • Fed Governor Michelle Bowman, while keeping the option of interest rate hikes open, suggested the possibility of a further decline in inflation with the current policy rate.
  • She moderated her previous view, stating that raising rates might not be necessary to achieve the central bank’s 2% inflation target.
• Evolution of Views:
  • Bowman, speaking in Columbia, S.C., noted that her perspective evolved, considering the potential for inflation to decrease while keeping the policy rate steady.
  • While acknowledging the eventual need to lower rates to prevent excessive restrictiveness, she emphasized that such a move is not yet warranted.
• Divergence from Investor Expectations:
  • Bowman’s comments do not align with the aggressive expectations of investors, who have priced in six rate cuts this year, double the median projection of three cuts by all Fed officials. The anticipated timeline for these cuts is March.
• Atlanta Fed President Raphael Bostic’s Position:
  • Atlanta Fed President Raphael Bostic, in separate remarks, echoed a cautious approach, emphasizing the inclination to keep rates steady until confirming the return of inflation to target.
  • Bostic previously predicted the possibility of two cuts in the second half of the year, maintaining a restrictive stance.
• Concerns and Risks:
  • Bowman expressed concerns about potential upside risks to inflation, citing geopolitical tensions affecting food and energy prices.
  • Financial conditions easing could lead to a growth reescalation, hindering progress in lowering inflation or causing a reacceleration.
  • The risk of a strong job market keeping the services portion of inflation persistently high was also highlighted, especially given the recent robust job gains and wage growth.
• Future Policy Decisions:
  • While the current policy stance aims to bring inflation down over time, Bowman remains open to raising the federal funds rate in the future if incoming data indicates a stall or reversal in progress on inflation.

Test out your Forex Trading Strategies with our VT Markets Demo Trading Account.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

The Winning Strategy for Effective Position Sizing

Renowned investor Warren Buffett, ranked as the fourth wealthiest person globally, boasts a net worth of approximately $120 billion. 

His strategic prowess lies in his distinctive position sizing approach, emphasising concentration within a margin of safety. 

Unlike conventional diversification, Buffett’s strategy involves substantial investments in a select few stocks with robust fundamentals—a testament to his confidence in their quality. 

While this approach thrives in stable markets, the dynamics shift when engaging in faster-moving arenas like day trading or currency trading. For investors navigating these volatile markets, the question becomes: What position sizing strategy best aligns with the rapid pace and unpredictability of dynamic trading? 

In this article, we’ll unravel the intricacies of position sizing tailored for such scenarios, offering practical insights to empower traders in the dynamic world of Forex. 

What is Position Sizing? 

Think of position sizing as deciding how much of your money to put into a single trade. It’s like choosing the right portion size for your meal – not too much that it overwhelms you, but enough to satisfy your appetite. In trading, it’s about finding the sweet spot that balances making gains and avoiding big losses, all based on your comfort level with risk. 

Now, let’s clear up a common mix-up between position sizing and leverage. Position sizing is about determining how much of a particular asset you’re buying or selling, usually as a percentage of your total funds. 

On the other hand, leverage involves borrowing money to increase the size of your trade. They’re related but different – it’s like deciding how much dessert (position sizing) you want, versus sharing it with a friend (leverage). 

How position sizing shapes your strategy? 

1. Risk Control: Position sizing helps you control how much you’re willing to risk on each trade. It’s like setting a limit on your spending to avoid blowing your budget. 

2. Portfolio Management: Just like you diversify your meals for a balanced diet, position sizing lets you spread your money across different trades, reducing the impact of a bad outcome on your overall portfolio. 

3. Psychological Impact: Imagine if your plate is too full – overwhelming, right? Well-sized positions relieve stress, helping you stay cool-headed and stick to your plan, avoiding impulsive decisions. 

In a nutshell, understanding position sizing is like being a smart eater in the trading world. It’s about choosing your portions wisely, avoiding unnecessary risks, and making sure your overall trading strategy stays healthy and satisfying. 

Calculating Position Size 

Understanding how to calculate the right position size involves a straightforward formula that considers two crucial factors: 

• _{Risk per Trade: This is like deciding how much you’re willing to spend on a single item during your shopping spree. It sets a limit on how much you’re willing to lose in a single trade.} 
• _{Stop-Loss Placement: Think of this as a safety net. Just like placing fragile items securely in your shopping cart, setting a stop-loss helps protect your investment by defining the point at which you’ll exit a trade to limit losses.} 

Let’s delve into a real-world scenario to bring the position sizing formula to life. Suppose you have $1,000 as your trading capital, and you’ve decided to risk 2% of that on a single trade. 

1. Risk per Trade Calculation: 2% of $1,000 is $20. This means you’re willing to risk $20 on this particular trade. 

2. Stop-Loss Placement: With your $20 risk in mind, you set a stop-loss order at a level that, if reached, would result in a $20 loss. 

3. Optimal Position Size Calculation: Now, considering the risk and your stop-loss, you can calculate the optimal position size. Let’s say your chosen currency pair has a pip value of $0.10. With a $20 risk and a $0.10 pip value, your optimal position size would be $20 / $0.10 = 200 pips. 

This practical example demonstrates how the formula translates into actionable steps. By aligning your risk tolerance (2% of your capital) with a well-placed stop-loss, you can precisely determine the position size (200 pips) that ensures your trade aligns with your overall strategy. 

Much like adjusting your shopping budget based on your available funds, adapting your position size to your account size is key. As your account balance fluctuates, so should your position size. This dynamic approach ensures that you’re not overcommitting when funds are limited or missing out on opportunities when your account size grows. 

Risk Tolerance and Position Sizing 

Forex trading requires a clear understanding of your individual comfort level with risk. Similar to gauging the thrill you seek during an adventurous activity, assessing your personal risk tolerance is about evaluating the financial excitement you can comfortably navigate without losing sleep at night. 

It involves a thoughtful examination of your willingness to embrace risk, ensuring that your trading endeavours align with your financial and emotional well-being. 

Once you’ve gauged your risk tolerance, the next step is to align your position size with it. Well-calibrated position sizes help you maintain composure, make rational decisions, and avoid emotional reactions to market fluctuations. 

Utilising the 1-2% Rule 

Exploring the dynamics of Forex trading requires implementing robust risk management strategies. Among these strategies, the 1-2% rule stands out as a widely acknowledged approach designed to safeguard your capital amidst market uncertainties. Understanding the 1-2% rule is fundamental for traders seeking stability in their financial endeavours. 

Once introduced to the 1-2% rule, the logical next step is applying it to position sizing. Imagine it as incorporating safety protocols into your adventure gear – ensuring your equipment is in sync with the demands of your journey. 

In Forex trading, aligning your position size with the 1-2% rule becomes a fundamental practice, allowing you to control risk while positioning yourself for potential growth. 

Let’s put theory into practice with real-world examples to illustrate the impact of the 1-2% rule. Consider a scenario where your trading capital is $5,000. Following the rule, you’d limit your risk to 1-2%, translating to a risk of $50 to $100 per trade. These examples provide tangible insights into how the 1-2% rule can be applied, demonstrating its practicality in preserving capital and fostering a disciplined trading approach. 

Practical Tips for Effective Position Sizing 

• _{Regularly Reassess Your Risk Tolerance: Keep your trading strategy in sync with your risk tolerance by regularly reassessing it. Think of it as checking your financial health before diving into the market – a crucial step to align your positions with your comfort level.} 
• _{Stay Informed About Market Conditions: Position sizing isn’t static; it adapts to market shifts. Stay informed about market dynamics, just like checking the weather before planning an event. This awareness allows you to adjust your positions, ensuring they match the evolving market landscape.} 
• _{Harness Risk Management Tools: Trading platforms offer tools for a reason. Use them as your safety net in the unpredictable trading world. These tools provide insights, help control risk, and maintain discipline. Integrating them into your strategy enhances your risk management capabilities, ensuring a resilient and controlled trading experience.} 

In conclusion, mastering position sizing is essential for success in Forex trading. Understanding its principles, aligning with risk tolerance, and implementing practical strategies empowers investors to confidently navigate the dynamic Forex market. Consider it your indispensable guide to manoeuvring the complexities and achieving success in your trading journey.