AlfaTrade: All You Need To Know About Tunnel Trading

AlfaTrade explains tunnel tradingin ForexTunnel trades are a type of binary trades that allow a trader to make money by predicting whether an underlying asset’s price will remain within a given price range or break out from that range. These trades derive their name from the resemblance of the given price range to a tunnel. They are also called In/Out binary options or Boundary options. Tunnel trading provides traders already familiar with binary options opportunity to achieve more returns from their trades. Thanks to these potential high returns, tunnel trading is increasingly becoming popular with traders who want to maximize their returns. Unfortunately, some have lost a lot of money because they started trading without fully understanding tunnel trades and how to make consistent profits trading in them. To help you avoid such unfavorable outcomes here is a simple explanation of the basics of tunnel trading and how you can make lots of money as a tunnel trader.

Variants

A broker usually gives the market price of an asset and specifies its lower and upper price range. These two prices form the ‘boundary’ of the tunnel. These boundaries are the basis of the two main variants of tunnel trading – stays between/goes outside and ends between/ends outside. For the first variant, the trader can choose either ‘stay between’ or ‘goes outside’. When traders choose ‘stay between’ they are predicting that throughout the trade’s duration, the price of the asset will remain in the tunnel without touching the price barriers marking the tunnel’s boundaries. If the trader thinks the price of the asset will touch one of the barriers before the expiration of the trade they select ‘goes outside’. For the second variant, a trader selects the ‘ends between’ option if they believe that upon expiration of the trade the price of the asset will fall within the price range specified by the broker. A choice of ‘ends outside’ shows the trader believes the price of the asset will be outside the trade’s price barriers when the trade expires. Most brokers only provide traders with the second variant where they are required to decide whether the asset’s price ends within the specified price range (in) or outside the price range (out).

How tunnel trading is done

There are 3 key choices that one makes before placing a tunnel trade. These are:

  • Asset to trade in

It is important that the trader chooses an asset they are familiar with or one they can easily access information on. Whether it is a commodity such oil or currencies, the trader should get as much information as possible on the market factors that determine the asset’s value. Choosing an asset you are unfamiliar with is the surest way of losing money in tunnel trading.

  • Dollar amount of the trade

Like all bets the amount of profits you make depends on how much you are willing to risk. Different brokers have a specified minimum amount you can place for a trade. It is always advisable to place an amount you can lose comfortably.

  • Whether you believe the asset’s price will finish within or outside the range of the broker

Brokers usually give the market price of the asset and its price range (the tunnel’s boundaries). You are required to decide whether the price of asset you have chosen to trade in will remain inside the given range upon expiration of the trade’s duration or will break out of that range at the time the trade expires. The broker also specifies the amount of returns (in percentage terms) you should expect to get if the trade’s outcome follows your prediction.

An example of a trade

Assume the EUR/USD trades at 1.32 just before a scheduled announcement by the Federal Reserve Chair announces whether to continue or stop quantitative easing (QE). Suppose your broker is offering a range option of EUR/USD at 1.325 to 1.328. If the Chair of Federal Reserve announces the continuation of quantitative easing the Euro’s value against the dollar will increase and most likely fall within your broker’s price range. If you bet on ‘in range’ you will make profits. If the Federal Reserve Chair announces stoppage of QE, the Euro will weaken against the dollar and the final price is likely to fall outside the range option offered by your broker. In that case you lose money if you had selected ‘in range’ option.

As this example shows, a trader can make a lot of money through tunnel trading. However, it is important that a tunnel trader conducts thorough research before placing a bet on any asset. Only when you are well-informed about an asset and factors that influence movements of its price can you make a successful bet. It is also important that you choose a reliable broker such as AlfaTrade to guide you as you learn and grow into a successful tunnel trader.

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Focusing on success: The best way to get there

Forex TradingBeing a good trader is not about making a lot of perfect trades, it’s about earning consistent and increasing process. Trying to reach perfection and makes the mind stressed unnecessarily, while we can perform way better under high confidence levels, based on consistency and hard work.

Predicting Forex exchanges rates can be very tricky and there are many factors involved, that are very hard to be aware of them all, even if they trade with Forex no deposit bonuses. This reasons give traders the necessity to be emotionally prepared to make wrong calls, and be at peace with it. Of course we aim to keep such calls to a bare minimum, but it is very important to learn how to handle them. A key element in order to meet this end is to develop the capacity to recognise a wrong way quickly, so we can afford to correct mistakes timely.

The proper equation to measure the traders capacities is to take a look at the profits achieved on a certain time, and the risks he or she had to take to earn them. Having a lot, or none absolutely perfect trades will meet nothing over time, consistency will.

The Downside of Perfection

Ignoring the fact that every trader should know how to handle losses and picking only the best forex bonuses in 2016, people are who they are. Since people are what they are, you cannot ask them to change something about who they are. Trying to achieve perfection may be very harmful, or lead you to very cautious and thought decisions.

The main issue when looking for the perfect trade and to analyse deeper and deeper has one of the higher costs there is out there: the cost of time. While study time and time again the same currencies thinking if they are 100% failure proof, a lot of trains pass by the station.

There are perfect trades, but there are definitely no perfect portfolios, and there shouldn’t be, well.. It wouldn’t hurt of course, but a certain part of every portfolio should have a higher risk percentage, looking of course to earn bigger profits.

A perfect trade, or a good trade for that matter, consist in getting in a good time on the correct flow of a determined trade and stepping out before it reverts again, making as big as possible the profit in between. So, focusing on being perfect is highly distant from the path we are encouraged to follow, since we would turn into our own enemies when things go wrong, which is when we need to be the best. It also consumes the time we should be ceasing in finding, spotting and trading new opportunities, which is happening infinitely while the market is open.

We hope this helps and if you thought about yourself while you were reading this. Also, we hope that you will pick the best Forex no deposit bonus in 2016 and trade well! Don’t aim for perfection, aim for constant earnings, it’s better for your present and even better for your future. Good Luck

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The CPI and the Dollar against Other Currencies

Consumer Price IndexMost of the best Forex books often talk about CPI, but are you sure that you know what is it? The Consumer Price Index, also known as CPI, is an indicator that aims to calculate the inflation rate of an economy based on the price of their goods and services. The results this indicator generates can have a big impact on the price of a specific currency when compared to other world’s currencies, which makes savvy investors keep an eye on them as they are released. .

To analyze this data, the CPI uses the regular value of a basket of consumer goods and services, including mobilization, food and energy costs. In order to evaluate the variations in the prices of people’s cost of living, economists use the figures produced by the CPI.

Inflation levels affect directly the interest rates of every country and the prices of their every product as well . When inflation levels are too high, the interest rates are likely to increase as a measure to stabilize market prices; by executing this action, consumers may be prone to put aside money, instead of spend it, because of the interest rate they could receive if the money is left in a bank account. However, if the inflation levels are too low, central banks can reduce the interest rates as a measure to increase economic activities and market transactions overall.

The monthly CPI measure is one of the main indicators checked by traders in the financial markets and highlighted in the best Forex books. When the Bureau of Labor Statistics publishes the CPI figure of the U.S. dollar, the probability of changes in the value of the U.S. dollar in relation to other currencies are very high. Almost sure, since it affects directly the people’s cost of living one way or another.

The importance of CPI to Currency Traders

The CPI indicator is also known as “headline inflation”, and it plays an important role in the currency markets since central banks’ decisions regarding monetary policy are greatly influenced by inflation.

The Central bank’ duties include maintaining inflation at a bearable specific level. The Federal Reserve and the Bank of Japan aims to achieve an annual inflation rate of 2.0%. Policy makers manipulate interest rates accordingly with the goal of making this rate happen. Other mechanisms, such as bond-purchasing agreements and the expansion of the money supply might be suggested and implemented as well in order to meet the end.

Central banks, such as the Federal Reserve, change interest rates if inflation is not within targeted levels, they have the right and even obligation to do it. For example, if inflation is higher than 2.0 %, the Fed may increase interest rates to slow it down. This measure will make the dollar more attractive and strengthen it against other currencies, encouraging saving.

The CPI shows in advance how an economy is doing. If inflation increases at an accelerated rate as Brazil or Venezuela have recently, people will tend to spend more money since their purchasing power is decimated almost daily. Or buying stronger currencies, usually USD or EUR.

People and businesses tend to be less interested in borrowing money from a bank for inventory, services or business growth when a central bank decides to raise interest rates. This factor has an impact on the broader gross domestic product of a nation.

How CPI Data Affects the Dollar on the Forex Market

Now, one of the central bank purposes for this period is to take the economy to full employment, as well as making sure there is a steady and conscious inflation rate during the economy growing process. For this matter, Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, also aims to reach a 2.0% inflation rate on behalf of the Federal Reserve.

As Joe Ross, the creator of best Forex books bestsellers, highlighted: for this reason, many forex traders see inflation and unemployment index as indicators of how the central bank takes its decisions, whether it is to keep, increase or reduce the interest rate levels. Why? Because traders can predict the effects of both the central bank decisions and the behavior of the dollar in relation to other currency pairs and the global economy. When evaluating how an interest rate affects a currency pair, having the CPI nearby definitely gives us a hand when predicting future movements.

Forex traders see the CPI and Core CPI figures are two of the most reliable indicators to predict the behavior of a specific economy. The Core CPI figures is the one that offers more useful information, because of the values it takes into account when evaluating data. For example, when publishing the CPI and Core CPI figures, the Labor Department skips adding to the account the energy and food costs in the Core CPI figures, as their volatility makes them unpredictable over time.

 

The effect of this indicators is not only restricted to monthly reports. Economists actively analyze these figures, since this type of changes can make a lot of difference in the international market on both short and long term trades.

Conclusion

The CPI is an invaluable indicator for the economies and the inflation material, which is a great aid for traders. Both Forex traders and companies highly rely on the changes the CPI figures, because of the benefits that this information brings to the table in order to make accurate predictions.

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How to Effectively Manage Late Payments – and Avoid Cashflow Issues – Once and for All

Late PaymentsYou may have heard it all before – to avoid late payments (and other issues that stem from it, such as a lack of cash or a weak cashflow), you should make sure your clients understand your payment terms from the start and make sure your invoices include all the relevant details so you can eliminate the risk of disputes.

But, needless to say, if late payments are an even bigger issue for you now than ever, there are certain additional things you can do to tackle the issue once and for all. This not only includes sending your invoices way before the due date, offering discounts for early payments, and the solutions mentioned above – this also includes keeping track of your invoices, protecting yourself against a bad debt, and knowing the proper way of asking for or collecting payment.

Keep track of your invoices, especially those from customers who regularly pay late
One of the alternative things you can do to obliterate late payments is to keep track of all your invoices – especially from those customers who have a history of paying late. This means making sure you have confirmed that they have been received by your debtors. What you can do to augment the process is to contact your customer before the date the payment is due just to make certain that there are no questions or disputes and that the payment will still come through. But, if your debtor’s payment has still not arrived on the due date, contact them again on the day itself and remind them about the consequences they can face for late payment.

To help you keep better track of your clients and their debts, make use of software specially-designed for financial management which can help you manage your debtors’ accounts and which you can also use as a central system through which you can make and send out invoices electronically. Additionally, when choosing software, choose one that can list as well as track any invoices that are already past the payment date and that can also do an assessment of which customers regularly pay late.

Protect yourself from a bad debt
If late payments have become an issue that is really affecting your business cashflow, you can protect yourself from these kinds of bad debts by getting trade insurance coverage. This is especially useful if a customer has already gone insolvent and can no longer pay you for your goods or services.

Know how to properly ask for – or chase – payments
If you have done all that you can to get paid – including contacting your customer numerous times – to no avail, then you have no other recourse but to use other modes of collecting payment. The first thing you can do is charge your customer for late payment. You have the right to do this because there is a specific law or legislation that allows businesses to charge penalties for late payment or to charge their customers for the costs of debt recovery. If this method still does not work, then you can ask for help from a debt collection agency. If this does not work, either, then you can think about taking the case to court. This, however, is considered an extreme and worst case scenario as it may end up costing you money and time in the end.

If you are tired of dealing with late payments and have had your cashflow affected more than a few times, you can make use of the cashflow solutions offered by Ultimate Finance (learn more by visiting www.ultimatefinance.co.uk), which include invoice discounting, factoring, asset finance, construction finance, and transport finance, among others.

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What if my PPI provider won’t help?

PPI providerIf you’ve been turned down by your lender, then the next point of call should be the independent consumer complaints organisation: the Financial Ombudsman Service.

It will step in and formally investigate any claim that the loan provider hasn’t resolved, within six to eight weeks. The service is free and they will independently assess the merits of your case and is then the final say on the matter.

Many will be tempted to use a PPI claims management company who will offer to do all the leg work to reclaim your money, but will claim as much as 30% from your refund, which is an exceptionally large amount for something that you can do yourself for free.

What should I say in my complaint letter?

If you’re going it alone, then you will need to draft up a complaint letter. If you’re going to write your own and not use a template, it is important to avoid angry undertones. Instead the focus should clearly and concisely list, why you believe you’re owed.

Include copies of any relevant documentation that supports your claim.

Also ensure that you send your letter by recorded deliver to ensure you’re aware when the bank received the letter, and that they respond within the required eight weeks.

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