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What are Indices?

In the financial market, an index is used as a standard to measure asset class performance.  
  1. Indices are most commonly used to measure a basket of securities to reflect designated market performance, i.e. the S&P 500 Index is widely used for the US;
  2. Indices can also used to measure sector performance or an asset type, like the Property Index and the China Enterprise Index within the Hang Seng Index Family.

In the FX Market, the US Dollar Index is the most well-known index reflecting US dollar performance relative to a basket of currencies. When market volatility increases, market participants will pay close attention to the CBOE Volatility Index a.k.a VIX Index. The CRB Index is also used to reflected commodity performances. Different parties including the government, universities, large research institutions construct different types of indices to measure economic performances including CPIs, the University of Michigan Consumer Sentiment Index, the Caixin Manufacturing PMI.

What is Energies?

Energies consist of mainly 2 types: Renewable and Non-Renewable.

Notwithstanding that Ethanol and Electricity are widely traded, the most well-developed commodities market mainly consist of Non-renewable energy. Energy commodities consist of Crude Oil, Heating Oil, Gasoline, Coal, Natural Gas, Electricity, Ethanol and Uranium. In between, Crude oil is the most popular traded commodity in the world, Global Economy, Geopolitical risk and Oil supply are among the main factors driving oil prices.

What are Precious Metals?

Precious Metals are among a group of commodities which mainly consist of 4 types of expensive, attractive, chemically stable and valuable metals including Gold, Silver, Platinum and Palladium. Within these 4, spot gold trading is considert the most popular and it is quoted in US dollar per ounce and a standard lot of Gold/ USD is 100 ounce.

What is Foreign Exchange (Forex/ FX)?

Foreign Exchange is currency relative to domestic currency. The price is in relative terms (i.e. EURUSD denotes how much US Dollars would be exchange per Euro terms. It can also be calculated in terms of Japanese Yen, aka EUR/ JPY). FX consists of a pair of currencies, and buying one currency represents selling the other. Going long EURUSD means buying Euros while selling US Dollar. In the Forex market, US Dollar related pairs are the most frequently traded, like EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USDCAD. The Foreign Exchange Market is open 24/7 and traders can enter the market and frequently fine-tune their strategies.

What is support level?

It is a technical analysis jargon. By using historical price and technical analysis theories to predict price levels which would hinder prices to decline further.

What is resistance level?

It is a technical analysis jargon. By using historical price and technical analysis theories to predict price levels which would hinder prices to advance further.

What are Fundamental Analysis and Technical Analysis?

There are mainly 2 types of market analysis: 1) Fundamental analysis and 2) Technical analysis.
  1. Fundamental analysis analyze political and economic factors to perform market forecast.
  2. Technical analysis uses statistical methods, indicators and theories to analyze historical prices and charts to predict future price movements.

What are Longs and Shorts?

If you are bullish in an instrument and think that prices will rise, you can buy the instrument and gain from price appreciation. If you are bearish in an instrument and think that its price will decline, you can short the instrument and gain from fall in prices.

What is a Stop Order?

It is a risk control method. If one has an existing holding position, one would set such order at a time interval to close their position when price reversals happens to control losses.

What is a Limit Order?

It is the prevailing price to buy or sell an financial instrument in a designated time interval. For Buy orders, the limit order is lower than the market price at that time. For Sell orders, the limit order is higher than the market price at that time. If one already has an existing position, one would use limit orders for stop-gain purpose.

What is a Market Order?

It is the price to buy or sell at market.

What is Margin Level?

Margin Level = (Equity/(Margin Utilized) x 100%.

You need to have a minimum margin level to continue trading your account. In EMXpro, if the margin level falls below 50% (100% for Overnight trading), the system will force close your position.

How to calculate Equity Balance?

Equity Balance = Balance + Unrealized profit/loss from unclosed positions

How to calculate the Balance?

Balance = Fund Deposit + Fund Withdrawal + Realized Profit/ Loss from closed positions

What is Initial Margin?

It is the minimum deposit needed to open a trading position.

What are Basis Points/Pips?

A pip is the smallest unit of price movement for a currency pair. They are usually quoted in 4 decimal places. A pip for EUR/USD, GBP/USD. USD/CHF is 0.0001 while a pip for USDJPY is 0.01.

What is Lot size?

A lot size is a designated trading quantity. The common size for a FX contract unit is 100,000 of its base currency. EURUSD means the contract is in 100,000 Euros.

What is Leverage?

By using Leverage, investors can use a small amount of funds to trade a large nominal amount of an assets. A Leverage of 100 means an investor deposits 10 USD as margin and trades 100 times the nominal amount of assets or 1000 US Dollars. Investor should note that their profit/ loss will also be magnified when they use leverage to invest.

What are Cross rates/Crosses?

Cross rates such as EUR/JPY or GBP/AUD are exchange rates which do not include US dollars.

What is Bid and Ask Price?

All Financial instruments in the Financial market have Bid and Ask Price. The difference is called a "Bid-Ask" spread.

If the EURUSD quote is 1.17222/31, then the Bid-Ask spread is 0.9 pips. The spread is denominated in the 1st Currency from left to right. The Higher value on the right is your price to purchase Euros, the lower value on the left is the price for you to sell Euros. If the quote of USD/JPY is 105.064/74, the bid-ask spread is 1 pips. The spread is denominated in the 1st Currency from left to right. If you want to Buy US Dollars (Sell Yen), then the price is equal to the higher number on the right or 105.074. On the other hand, if you would like to sell US Dollars (Buy Yen), the purchase price is equal to the lower value on the left or 105.064.

How to read price quotes?

A quote is a reflection of an investment instruments' price. In the case of FX, its value is represented by another currency, like EUR/USD and USD/JPY. There is a sequence for a FX quote.

The currency quote for EURUSD = 1.12683 and it represents how much 1 Euro would be exchanged for how much US Dollars in which 1 Euro for 1.12683 US Dollars. A higher number means the Euro strengthens while the US Dollar weakens and vice versa. If the price quote of USDJPY is 107.501, the figure represents 1 US dollar would be exchanged for 107.501 Japanese Yen. A higher number means the USD becomes stronger while the Japanese Yen is becoming weak and vice versa. 

As for Gold, its price would be quoted against any currency but the norm for quoting gold is still using the US dollar. If XAU/USD = 1,800.12 USD/ ounce, it means 1 ounce of gold is worth 1,800.12 US dollars.

What are the pros and cons of Fundamental Analysis?

Pros:
Able to provide an investor with a deeper and more comprehensive analysis on an asset

Cons:
Longer time of the customer will be consumed 
Analysis results may not reflect instantly in the market
Analysis would ignore market sentiments and the asset's demand and supply

In times of global uncertainty, how does it affect the FX market?

In times of global economic and political uncertainty, investors will intend to lower their risk appetite and purchase assets of relative strong countries, e.g. US Dollar, Swiss Francs and Gold. These currencies and assets are also called safe haven assets.

What is Interest Rate and how does it affect foreign exchange trading?

Interest Rate denotes the Investor's cost of borrowing. Borrower's cost of capital will rise if Interest rate increases. When trading currencies, investor will borrowing Currency A to purchase Currency B. If an investor chooses to hold their currency position overnight, depends on the currency rate differentials, the investors maybe paid or need to pay the interest rate differential for the 2 currencies traded.

Which economic indicators should be beware of?

Economic indicators or release depends on different regions. Below are some important regional economic figures to note:

Asian region
China
  1. Caixin Purchasing Managers' Index
  2. Consumer Price Index (CPI)
  3. Chinese trade statistics
  4. GDP Growth

Japan
  1. Tankan Index
  2. Japanese Household Spendig
  3. Bank of Japan Interest rate decisions and meeting minutes
  4. Japan trade statistics

Australia
  1. Consumer Price Index (CPI)
  2. NAB Business Condition Index
  3. Reserve Bank of Australia interest rate decisions and meeting minutes
  4. Australian trade statistics

Europe
United Kingdom
  1. Purchasing Managers' Index
  2. Consumer Price Index
  3. Bank of England Interest Rate Decision
  4. GDP Growth
  5. Industrial production growth
  6. Employment Change

Eurozone
  1. Purchasing Managers' Index
  2. Consumer Price Index
  3. European Central Bank Interest Rate Decision
  4. GDP Growth
  5. ZEW Economic Sentiment Index
  6. Employment Change

Americas
Canada
  1. Ivey Purchasing Managers' Index 
  2. Employment Change
  3. Bank of Canada Interest Rate decision
  4. Consumer Price Index
  5. GDP Growth

United States
  1. Federal Reserve Interest Rate decision and Minutes
  2. ADP Non-Farm Payroll
  3. ISM Purchasing Managers' Index
  4. Markit Purchasing Managers' Index
  5. Number of Initial Jobless Claims初领失业救济金人数
  6. Trade Statistics
  7. Trade Balances
  8. Non-Farm Payroll Change
  9. Consumer Price Index
  10. GDP Growth
  11. Core Retail Sales Growth
  12. University of Michigan confidence Index

What kind of fundamental analysis factors one should note?

Investors should consider the below factor when doing analysis:

1) A nation's political conditions: whether there are political crisis or elections
2) A nation's economic growth: GDP growth, productivity growth
3) A nation's interest rate trends and change in price levels
4) A nation's job market conditions
5) A nation's budget and trade conditions: for example trade balance
6) A nation's fiscal policies and its Central Bank's policy

How to use Fundamental Analysis in Forex Trading?

A country's currency value is denominated using the other. Therefore, Fundamental analysis for Foreign exchange involves analyzing the two countries' economic conditions.

What is Fundamental Analysis?

This is one of the 2 types of analysis methods. By using Global International relations, political strengths, financial health, economical development, fiscal and monetary policy stance, geopolitical and demand and supply factors to evaluate the valuation of any assets and financial instruments. Also, to forecast its short to long term price trend.

Which analysis should be used - Fundamental or Technical?

The answer differs for everyone with no standard answer. However, it is very important for an investor to have a trading plan, good risk management before trading.

Technical Analysis: Pros and Cons

Pros:
  1. It's easy to understand
  2. Technical Analysis can be used on different assets
  3. Prices reflect the asset's present demand and supply

Cons:
  1. There is no definite standard for Technical analysis theories. Analysis result may vary among different individuals especially Chart Pattern analysis. The amount of data used for analysis would also affect accuracy and could be disadvantegous in assets with low liquidity.

What are Momentum Indicators?

Momentum Indicators are used to evaluate how strong/weak the asset's price trend is. The Relative Strength Index (RSI) is among the most commonly used momentum indicator. A value equal to or above 70 means the asset maybe seriously overbrought, investors should consider selling the asset. If RSI is below or equal to 30, the asset is said to be serious oversold and presents investors a buying opportunity.

What are Trending Indicators?

The main purpose of trending indicators is to tell investors the current price movement of the assets, whether it is 1) up, 2) down or 3) ranging.

The most common trending indicator is moving averages, where as moving average can be calculated in different ways: 1) Simple Moving Average (SMA), 2) Exponential Moving Average (EMA) and 3) Weighted Moving Average (WMA).

Moving Average Convengence Divergence consist of 2 moving averages, usually is EMA 12 AND EMA 26's divergence and intersections. The EMA 26 would be consist as the axis at zero and the MACD has less noise than using moving averages. MACD is a trending indicator. There are 3 ways to trade base on MACD:
1) DIF value and DEM value (Signal Line) intersects
2) DIF value crosses the zero axis or
3) prices and DIF value moves in different directions

What is Technical Analysis?

Technical Analysis is a method to forecast price movements and make invest decisions buy using past financial market information including charts and statistics. Technical analysis considers only the price behaviour of the market or the financial instrument. Its assumes price reflect all information in the market. 

Technical analysis includes:
1) Chart Patterns
2) Trending Indicators
3) Momentum Indicators

How to secure account details and account password?

We strongly recommend clients to follow the below steps to protect their account:

1) Change account password at their first login
2) Change  account password regularly through the respective login website
3) Do not disclose your password to anyone
4) Do not use date of birth, phone number or ID numbers as password
5) Create a password with at least 8 characters, including upper and lower case and numbers

Will transferring funds to brokers or intemediataries be more convenient?

Be noted that we only accept fund deposits from the account holder. We do not accept deposits from the third party and it is not suggested to have any third party to transfer funds on your behalf either.

What is Risk?

Risk equals to potential losses. 

If one choose to trade Gold or Foreign Exchange, they should first consider to trade at a stable, reputable trading platform. Counter-party risk will arise if one chooses companies that are unrealiable, traders can suffer losses if these companies encounters financial problems.

If one is bullish in gold prices and purchase gold, market risk arises when one suffer losses when gold price declines.

Whether buying or selling is easy and whether one would trade at a price close to market price are the key to successful trading. Liquidity risk occurs if one cannot buy or sell easily or they have to use a disadvantagous price to conduct a transaction. 

If one invests in foreign currencies or foreign enterprises, currency fluctuation will create foreign exchange risk.

How to manage risk?

The most common way to manage risk is to set stop gain and stop loss orders. Clients can pre-set stop loss orders based on their risk tolerance. If the market price reaches the set price, the order will be triggered and executed with at the prevailing market price.