GOLD – BUY – 21st September 2021

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Afternoon team,

As you know we have been tracking gold for a long trade set-up, and it appears as though the time is right. The FED interest rate meeting and economic projections are due later this week. As the stock market is under pressure we see the FED stepping in to support the financial markets as the most likely scenario. Inflation has missed expectations for the second month in a row which is playing into the FED’s transitory theory. There is a possibility they push back bond tapering whilst they assess the current risks in the financial markets (Covid and China). Therefore this could provide the market something to cheer about and send the DXY lower, resulting in higher gold prices. Kicking the can down the road is the most suitable term.

DXY Daily Chart

Initially, the DXY appeared to be moving towards the 93.70 resistance, but this didn’t occur. Therefore there is still a possibility of the DXY breaking down from the head and shoulders structure.

GOLD – Monthly Chart

Gold’s monthly chart has a very bullish structure. There is a major pin bar at the 1680 support zone. This indicates there was a large amount of buying volume coming into the market at support.

GOLD – Daily Chart

There is a clear inverted head and shoulders setting up on gold. Entry wise, it doesn’t get much better than this for a great risk v reward. IF the inverted head and shoulders formation is in play, it would indicate a breakout above the neckline at 1830 and a new bullish trend. There is a negative trendline resistance coming into play at 1830-1840, so we expect some kind of reaction around this level.

GOLD – 4 Hour Chart

Trade Setup: BUY market execution, current price 1764, stop loss 1740 and take profit target 1 = 1830 and target 2 = 1930.

Stop loss: 240 pips

Take profit: 660 – 1660 pips

The second take profit is obviously a long distance away, and this would need a deep decline on the DXY to take place. Once we start to see some upside coming into play we will look to build into this position further.

 

NZDCAD – SELL – 21st September 2021

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Good morning team,

A nice run on the SP500 which has taken its time breaking down from the rising wedge formation. We are waiting for a short term bounce over the next couple of days, we may consider another short trade depending on the FED announcement later in the week.

Today we are focusing on the NZD. Looking across most NZD pairs it appears as though there is a reversal opportunity. EURNZD, AUDNZD, NZDJPY and the NZDCAD all appear to suggest NZD weakness will come into play over the next couple of weeks.

NZDCAD – Daily Chart

There is a huge head and shoulders formation in play. This is a very big ask, however, the shoulder line is holding steady. Our initial target will be at the neckline of 0.8600.

NZDCAD – 4 Hour Chart

Trade Setup: BUY market execution, current price 0.8972, stop loss 0.9055 and take profit 0.8600

Stop loss: 83 pips

Take profit: 372 pips

This is a swing trade and may take 1-2 weeks to reach our target unless there is negative news coming from NZ which will drive the NZD lower.

 

NZDCAD – Elliott Wave Count

Just FYI this is the Elliott Wave count I have been working on, it appears as though we are in a large corrective phase, which aligns with the AUDNZD bullish wave count.

Those on the Trader X program can copy the analysis onto their own charts and build from there.

 

Leverage X Margin…

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Leverage & Margin Explained

Leverage

An account with 30:1 leverage means you can multiply your account balance by 30.

For example an account size of $500 X 30 = 15,000 (in available volume).

 

This means you can place a maximum of 15,000 AUD in volume which equates to $1.5 AUD per pip.

 

Position size explained:

 

0.05 volume = 5,000 position = $0.50 per pip

0.1 volume = 10,000 position = $1 per pip

0.2 volume = 20,000 position = $2 per pip

0.3 volume = 30,000 position = $3 per pip

0.4 volume = 40,000 position = $4 per pip

0.5 volume = 50,000 position = $5 per pip

However, remember the volume you use in your position is based on the “base” currency. You will need to convert the volume back into AUD.

Trade Example: 

 

EURUSD BUY – Market price 1.2150 (1 pip = 4th decimal place).

Stop loss = 1.2100 (50 pips difference)

 

If you were looking to risk $50 in the market you would be looking to use a volume of 0.1 which is a 10,000 position in the market. 10,000 position = $1 per pip X 50 pip stop loss which is $50 risk. 

 

However, as you are trading in EUR your position size is calculated in EUR, a 0.1 position is 10,000 EUR. Therefore, if you were looking to risk $50 AUD you would need to bring your position size down to roughly 0.06 which is a 6,000 EUR position, which converts to 9,300 AUD in volume. This will roughly take your risk to $50 AUD when converted.

 

Position size calculator

https://www.myfxbook.com/forex-calculators/position-size

 

Margin 

 

Margin is NOT the cost of the trade, nor is it what you will lose if the trade hits your SL. 

The margin is essentially the amount of money you are required to have in your trading account to place the position. 

 

Trade Example: 

Using the same trade example:

 

EURUSD BUY – Market price 1.2150 (1 pip = 4th decimal place).

Stop loss = 1.2100 (50 pips difference)

 

Using the same position as above (0.6 = 6,000 EURO), the margin requirement is roughly $312. This means you are required to have at least $312 AUD in your account to place this position. Again, this is NOT the cost of the trade. 

 

6,000 EURO = Roughly 9,300 AUD. Therefore you have used just under two thirds of your available 15,000 AUD in volume. This is based on a $500 AUD account with a 30:1 leverage (15,000 available).

 

Margin Call

 

Have you ever heard of a margin call? This is where a hedge fund or bank falls beneath the required equity levels to maintain a position. Essentially, their position has moved against them, and they either need to close down the position, or fund their position to bring their account out of margin call. The bottom line is they run the risk of the position being closed out as they have not got enough equity to cover the margin. 

 

This is the same as a retail trader. If a trade moves against you, your account can move into a “margin call”. This CAN happen even if your SL has not been activated. You may only be risking $100 in the market out of your overall balance, however you may not have sufficient equity to cover your margin requirement. This can result in a trade automatically being closed by the broker. 

 

Margin Calculator

 

https://www.myfxbook.com/forex-calculators/margin-calculator

General rule of thumb:

How to calculate the required position size…

Every one has a different amount of $ they are looking to risk per trade, however the formula is always the same.

$ risk / stop loss distance = $ per pip (in AUD).

Example:

$50 / 50 pips = $1 AUD per pip – Then convert into the “base” currency.

If you have any questions please reach out in the live chat!

All New Trading Floor Members CLICK HERE – Important INFO

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Hi trading floor team,

Welcome to the trading floor, Forex Kings wants you to be as successful as we are trading in the Forex Market.

I am sure you have a number of questions, however, please read through these FAQs before asking in the live chat.

Please keep in mind, Forex is a very high-risk investment, you should not trade with equity you can not afford to lose.

We lose trades, that is part of trading. Understand risk management is the key to success in the Forex market. Forex Kings uses anywhere from a 1% risk to a 5% risk of our total balance.

The amount you chose to risk in the Forex market is solely down to your own discretion.

We highly recommend doing a training period on a demo account whilst you learn. It is better to make mistakes on a demo account rather than your real money.

All positions on this page are setups that Forex Kings are currently trading.

Here are a number of FAQs that you should read through.

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