Is it possible to create a portfolio that is hardly influenced by market fluctuations?

Forex has a trading style aimed at currency profit and loss and a trading style aimed at swap points. A portfolio is a trading method that can distribute risks by having multiple positions, and it is also effective as a method to make money at swap points.

Trading using such a method are one of the reasons to prepare for fluctuations in exchange rates.

Let's learn the factors that causes market fluctuations

Let's learn the factors that causes market fluctuations

The rate of the currency pair is determined by the balance between the selling order and the buying order, and it is normal that the rate fluctuates constantly and the rate fluctuates towards the trend at that time. It depends on the power balance with the currency of other countries.

The biggest risk in Forex trading is the sharp fluctuation in market prices. Until now, there are cases in which a large loss may come out at the timing when the market which came by the upward trend or the downward trend suddenly turns by economic indicator announcement, politics, disaster, terrorism, etc. In ordinary cases, the price movements of the rates are also stable, but it can be said that the Forex fear is not being sure at what timing the market fluctuation will suddenly occur. There is a possibility that huge amounts of funds accumulated over the years may disappear in a blink of an eye.

What is a swap point?

I think the trading aiming for swap points is not related for scalping and day traders. In the first place, the swap point is caused by difference in interest rates by each country. In Forex, swap points can also make leverage advantageous, so you can generate profits more efficiently than do overseas deposits.

The swap point changes whether it becomes negative or positive depending on the selling order and buying order. If the swap point is positive when entering from the buy order, there is a relation that becomes negative when entering from the selling order. If you make a positive order on buying orders, you can secure double profits and swap points from foreign exchange gains and losses by investing in currency pairs of rising trends.

Usually, the interest rate fluctuations are small for swap points even if exchange rate fluctuates and the rate moves greatly. If you are a trader who originally invested for the purpose of swap point, there is not a problem even if the holding position is negative. However, because there is a risk of being cut off due to sudden exchange rate fluctuations, it is possible to prepare for risks if you have a portfolio that possesses some of the vector positions where the swap points become positive. If you are introducing EA and conduct automatic trading, you should choose those that have strengths in mid- to long-term trading and introduce EA, which is an inverse correlation.

How to create a portfolio that is strong against market fluctuations in short-term trading

How to create a portfolio that is strong against market fluctuations in short-term trading

Scalping to trade every few minutes or a method to trade on a profit or loss on a daily basis is called short-term trading. Short-term trading is a style of trading many times within a short span of time. If the market moves as you think by concentrating on a single pair of currencies, you can make a big profit, but if the market moves, the loss will expand.

Therefore, you can measure risks by holding orders to multiple currency pairs rather than investing in one currency pair. In this case, it is a point to hold a pair of currencies that are inversely correlated, but if the relationship is perfectly inverse correlation, the loss also increases in proportion to the increase in profits, so offsetting as a result is done. You can prepare for market fluctuations and make a profit by holding a lot of inverse correlation positions with not only a perfectly inverse correlated currency pair but also of different degrees.

Selection of EA to be incorporated into the portfolio

When doing automatic trading, how to incorporate EA into the portfolio is the key point. Some EA place emphasis on preparation for exchange rate fluctuations, so they can create a portfolio that is strong in market fluctuations that incorporate the results of back tests.

As a point to be aware of, the evaluation of EA is a possibility that it may change depending on the situation at that time. Even if the value of EA is high, there is a possibility that the value will decline in the future. Therefore, if you prepare for fluctuations in the market price of multiple EAs, you must periodically review the EA.

What should be conscious of in Forex to prepare for exchange fluctuation are investing in different currency pairs, investing on different time axes and to invest in several methods. Consider a currency pair that is inversely correlated, as the loss may expand if there is a positive correlation even if different currency pairs and time axes are different.

There are market fluctuations that can be predicted and those that cannot be predicted. Automatic trading transactions are also ineffective against market fluctuations that cannot be predicted, so the possibility of large losses will remain even in EA, which has strength in market fluctuations. As it is said that risk diversification is fundamental to Forex, it is important to have multiple currency pairs to prepare for the worst.

Prepare for market fluctuations in portfolio using Mirror trade

There is the use of Mirror Trade as a method to form a portfolio that is robust against fluctuations in market prices through automatic trading. Since it is a tool of automatic transaction which can copy and use a professional trade, logic to prepare against market fluctuation is also assembled to some extent from the beginning.

Mirror trade is costly to operate in many places, but in GEMFOREX, the use mirror trade is unlimited for free. Since it is also possible to see the performance by incorporating multiple logic into My List, you can incorporate logic into a well-performing Mirror trade and build a portfolio that is hardly influenced by market fluctuations.