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On Monday, West Texas Intermediate (WTI) oil climbed above the critical 70 USD, while the European Brent benchmark advanced toward 74 USD. Oil continued to rise amid Hurricane Ida’s impact on US output. About three-quarters – or about 1.4 million barrels per day – of the offshore oil production in the Gulf of Mexico has remained halted since late August.
“Hurricane Ida was unique in having a net bullish impact on US and global oil balances – with the impact on demand smaller than on production,” Goldman Sachs analysts said in a note from last Friday.
We could say that USD had affected this changes in oil price, but that is not quite correct. However, the EURUSD pair managed to get back above its 50-day average at 1.18, and if it produces a rally, oil might be further supported.
The WTI is now near 69.60 USD and it managed to push above the 50-day moving average, confirming the bullish bias and setting the short-term outlook to bullish. Additionally, staying above the psychological level of 70 USD is also supporting the bullish case. Lastly, the price managed to rise strongly above the bearish trend line, which had been limiting oil since July, ending the medium-term downtrend.
Oil is now trying to close above the resistance of 70.55 USD, possibly leading to another leg higher, targeting the 74 USD zone. Alternatively, there are several strong support zones – the psychological barrier at 70 USD, the 50-day average at 69.60 USD, and the broken trend line at 69 USD.
The answer to this question is pretty simple to understand. The main difference has to do with time.
When it comes to stock trading, you’re buying and selling shares in companies within a short window of time with the goal of making a profit in the shorter term. To do that, traders jump in and out of stocks within weeks, days, even minutes. Swing traders hold a trade for days or weeks. Day traders are focused on trading that stock within a day and scalp traders may hold a position for just a few minutes before selling.
However, it takes a bit more time with investors. Stock investing is more about buying and holding shares for longer-term gain. That means months, years, even decades. You might buy a small percentage of shares, or a larger number of shares, or the entire company for that matter. With investing, it matters not how much you buy, but how long you wait.
But how do they know how long to wait? It depends on the Investor’s analysis, and the valuation they’ve gleaned from research they’ve done on the company’s valuation over time.
The Benefits of Trading Stocks
With the help of the technical analysis traders try to predict the direction of the stock and the possible profit and based on this analysis they buy and sell stocks and they can do it as often as they like. They buy at a specific price and at a certain time, and then that stock is theirs to trade. Some stocks will be bought and held a bit longer than others, because they may generate a steady stream of income for a short window of time. While other stocks are bought and sold within a few hours, and sometimes minutes, because that’s what their analysis has indicated will generate the most profits.
The Benefits of Buying Stocks
Stocks present an investment opportunity that can appreciate significantly in value. The first thing to note about investing in stocks is that shares are not backed by any government or company, but actually represent ownership in a company or a business. If a company’s stock rises in value, it’s because of the company’s own merit and its ability to make money through sound management. The only risk with stock investment is that shares could depreciate over time.
So, the main thing that helps to differentiate investing and trading in stocks is timing. Short-term gains are more for the traders, while investors buy shares for a longer-term reward. Investors and traders also have a different focus. Investors study a company’s longer-term valuation, while traders are keyed in on shorter-term events that could make a dramatic impact on the stock’s price.
Last Friday the monthly non-farm payrolls were released and they showed the US economy created only 235,000 new jobs in August, way below the expected 750,000. However, this helped traders to sell the USD. The unemployment rate slid (improved) to 5.2% from 5.4% previously, while average hourly earnings (wage growth) rose to 4.3% from 4.1% previously.
Weaker than expected Non-Farm Payroll (NFP) numbers have affected the sell-oof of the USD. But there is always a winner in all situations and in this case it’s gold and silver that are flourishing because of the weaker dollar. Gold jumped above 1,830 USD, and silver tested its 50-day moving average near 24.85 USD. It really looks like some bullish momentum has finally returned to these markets.
The Jackson Hole so much expected speech didn’t bring any news about changes in Feds plans. Powell didn’t even provide any details on when the Fed might taper its 120 billion USD Quantitative Easing (QA) program; he simply stated that the Fed plans to do it if the economy continues to strengthen – which, again, is what he has been saying for months now.
It looks like after the weakened NFP numbers for last month the investors are sure that the Fed is going to again delay its tapering decision. It was expected to happen in November, but now it seems like December it is, or with some analysts already calling for a 2022 start.
Therefore, gold surged, along with silver and other commodities. As a result, gold is on track to jump above the critical resistance of 1,835 USD, where the metal has already failed many times. Silver is staging a similar comeback, currently capped by the 50-day average at 24.85 USD. Once that is cleared, a powerful rally toward previous highs/ lows in the 25.60 USD zone is expected.
The current situation seems to be bullish for the metals market. The Fed will remain dovish as long as it can. Inflation is already raging in all parts of the economy. As a result, real yields continue to decline, supporting precious metals and sinking the USD.
Australia-based, award-winning CFD broker Eightcap, has launched over 250 Cryptocurrency derivatives. This update allows its clients to diversify their crypto portfolio via the MT4 and MT5 platforms. The addition of this new positions makes the broker the largest one within the CFD sector.
Eightcap has decided to step in in the current situation with crypto exchanges where the withdrawal limits are being reduced due to regulatory issues. Not only will clients be able to buy or sell a wide range of Cryptocurrency CFDs, including crypto-crosses and crypto indices, but its clients will also have multiple funding options and be able to make quick withdrawals.
“Our vision at Eightcap is to provide a new home for Crypto derivative traders by providing an unparalleled offering that includes the largest crypto derivative library paired with ultra-low spreads and fast withdrawal options,” said Joel Murphy, CEO, Eightcap. “The regulatory issues crypto exchanges such as Binance are facing means traders are left with unnecessary worries about their funds and if they can withdraw them. With us, Crypto derivative traders can have a seamless experience from the moment they open an account to when they want to withdraw their funds.”
Marcus Fetherston, Director of Operations at Eightcap added, “The Eightcap offering focuses solely on creating regulated leveraged derivative trading opportunities for Cryptocurrency traders, that offers more security than traditional offshore exchange platforms. We are thrilled to provide a solution that meets the needs of crypto derivative traders so that they can gain the best possible trading experience.”
Crypto derivative traders that are currently with other Crypto exchanges and brokers have access to a limited range of Crypto derivatives with wide spreads. When switching to Eightcap, Crypto derivative traders will be able to choose from the largest Cryptocurrency offering, experience tight spreads, and also deposit and withdraw with ease, with a regulated broker.
To find out more about Eightcap’s comprehensive new offering, click here.
The veteran fundamental analyst and Head of Investment Research at BDSwiss Marshall Gittler has shared his insights, views and projections on the upcoming German Elections Report and its impact on the EUR forex pairs. As the German Elections are getting closer, traders are already attempting to identify the biggest potential winners and losers in the forex and EU stock markets.
German Election in the Focus
The German federal election will take place on Sep. 26th. This is the first such election in 16 years that won’t have Angela Merkel on the ballot. As Germany is the pivotal economy in Europe its future strongly influences the continent and the currency. So everyone wants to know if there will be a drastic change after 16 years under Merkel.
Due to specifics of the Germany’s electoral system, it is difficult for any one party to form a government on its own, meaning that coalition governments tend to be the rule.
The polls show the CDU/CSU is leading, but with the Greens, rather than the SPD, in second place. As usual, no party is likely to be in a position to govern by itself. The focus, therefore, is on what parties might form a coalition and how they need to compromise in a coalition that might affect their policies.
Currently, the only two-party coalition possible seems to be the CDU/CSU and the Greens (the so-called “black/green” coalition). Gittler believes that it is the most likely outcome of the election now.
According to Gittler, these two parties have similar views on infrastructure investment, social policies, and climate change, although the Greens are more aggressive on the latter issue. But there are also big differences in some of the aspects of the parties. The CDU/CSU doesn’t want any tax hikes and wants to keep the debt brake and balanced budget target, while the Greens on the other hand want a wealth tax, higher taxes for the top income earners, want to make the debt break more flexible, and support a common EU fiscal policy and reform of the SGP.
At the moment, US fiscal policy is making a bigger contribution to growth there than EU fiscal policy is, but in coming years as the US winds down its extraordinary policies and the EU’s NGEU fund continues to disburse funds, the EU’s fiscal contraction should be less acute than the US’. That may be one-factor supporting EUR/USD. If however, Germany goes back to ploughing the furrow of Teutonic rectitude, EU growth could slow and EUR/USD move still lower.
The global broker of choice now offers clients that reside in specific countries a 50% Welcome Bonus on their first deposit of at least $50 into a new MT4 Micro Account.
Multi-asset forex and commodities broker HotForex has announced about the bonus offer for its new and existing clients. The broker offers traders to kickstart their trading journey with a 50% Welcome Bonus on their first deposit of at least $50 into a new MT4 Micro Account.
Commenting on the addition, a HotForex spokesperson said: “We are thrilled to be able to provide our clients with another generous bonus offering that will boost their first deposit and allow them to start their trading journey with 50% more trading power..”
There are also three other bonus programs offered by HotForex – the 100% Supercharged Bonus, 30% Rescue Bonus and 100% Credit Bonus. These bonus programs are intent to give traders a chance to double their deposits protect their funds from drawdowns and even get daily cash rebates to boost their trading.
Please note that the 50% welcome bonus is available to clients that reside in the following countries: India, Mexico, Colombia, Thailand, Philippines, Jordan, Singapore, Morocco, Algeria, Senegal, Tunisia, Japan and South Africa.
Award-winning leading Forex and CFDs broker, Axiory Global, has lowered its leverage to 1:20 on all its Swiss franc (CHF) currency pairs due to uncertainty and potential volatility around the Swiss franc (CHF).
Following these recent developments, Axiory Global CEO Roberto d’Ambrosio said; “Adequately managing risk means to be proactive rather than reactive, by analyzing risks both in terms of impact and likelihood, utilizing specialized expertise in the interest of both the firm and its clients. We at Axiory pride ourselves on prioritizing the stability of our trading environment and the safeguard of our clients’ trading and assets over any other element.”
It seems like Axiory is one of the first global brokers to decide and protect its clients from the potential of greater or extreme volatility around the CHF.
In the beginning of the week, the broker has warned its traders about the potential increase of the volatility in the market and advised them to take all the needed risk-based measures while trading CHF currency pairs.
So, what exactly has cause this volatility? Since 2015, the Swiss National Bank has been purchasing foreign currency-denominated securities to try to curb the rising value of the franc. In July, their reserves surpassed 1 trillion Swiss francs for the first time and their investment portfolio became one of the most expanded balance sheets among Central Banks in terms of foreign currency holdings.
However, the Swiss National Bank is not the first bank to expand its balance sheet in recent years. This situation still stands out because of the bank’s actions when it invested almost a quarter of its reserves in foreign equities rather than government bonds.
In view of this possible increase in volatility, Axiory will continue serving its clients by taking every measure necessary to protect them.
The last week’s correction has gone too fast for this week’s bull market to be resumed with the same speed and record highs. This week is expected to be pretty volatile due to the upcoming Jackson Hole Symposium that will happen this Thursday. The Jackson Hole Symposium is an annual event for the central bankers, where they discuss and announce their plans.
Of course, the most anticipated announcement is about the start of tapering the Fed’s massive Quantitative Easing (QA) program when the inflation is high and kicking in all the economy parts.
However, according to the bank Goldman Sachs, this announcement will happen not earlier than the November Federal Open Market Committee meeting. So, if everything goes well, they will announce the start of tapering and will agree on 15 billion USD per meeting.
There are still some doubts that the formal announcement about the start of taping won’t be delayed till December or even 2022. Goldman puts high odds on a delay beyond November because of the downside risk posed by the Covid Delta variant. It’s difficult to say how much of the actual tapering which has been priced in as volatility has returned to equity indices. Considering all this, the official announcement might be bullish and even a small delay in the taper may cause equities to jump high again.
Another positive side of this is the weakening of the US dollar. The EURUSD pair has failed to drop below its support price of 1.17 which cause a massive falling wedge pattern on the daily chart. This is in fact a strong bullish formation, and it might provide a powerful bullish signal once the pair jumps above 1.18.
It is expected that volatility will be very elevated on Thursday and Friday which is a sign for the conservative traders to stay out of the market until the Fed’s message is clear.
Last week, the OPEC+ group had to start boosting oil production by the request of the White House. It was necessary to slow rising gasoline prices that could affect the economic recovery in the world. It resulted in a problem with oil commodity itself. The boosting of oil production was criticized by the president’s administration as it supports ecology friendly movements and mostly against oil production. However, it didn’t stop them to call for more oil production.
According to the EIA predictions, crude oil production will keep on dropping over the next half a year or so. The demand for OPEC’s oil is expected to exceed production by 1 million barrels per day, but also is expected to drop to 300 thousand in the next quarter. It seems like oil most likely be supported during this inflation period simply because it remains one of the best inflation hedges.
So, the expectation is that short-term declines in prices will be caused by investors while long and medium-term uptrends will stay intact. If oil stays above its support of 65.00 USD it’s going to be alright. But of the bulls push the price above the resistance level, it could increase toward 74 USD.
However, oil needs to break above the short-term bearish trendline from previous highs and post new highs to confirm the bullish momentum. Alternatively, if the price drops below 65 USD, stop losses of long positions will be hit, which might push the black gold toward the 62.50 USD support in the initial reaction.