forex market time zone

Currency pair
A currency pair depicts a quotation of two different currencies. The first currency in the pair is the base currency. The second currency in the pair is labelled quote currency or counter currency. Such a quotation depicts how many units of the counter currency are needed to buy one unit of the base currency.

For example the quotation EUR/USD 1.2500 means that one euro is exchanged for 1.25 US dollar. If the quote moves from EUR/USD 1.2500 to EUR/USD 1.2510, the euro is getting stronger and the dollar weaker. On the other hand if the EUR/USD quote moves from 1.2500 to 1.2490 the euro is getting weaker while the dollar is getting stronger.
Majors are the most liquid and widely traded currency pairs in the world. Trades involving majors make up about 90% of total Forex trading.

The Majors are: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD and USD/CAD.

GBP/USD is the only currency pair with its own name. It is known as "Cable", which has its origins from the days when a cable under the Atlantic synchronized the GBP/USD rate between the London and New York markets. But also there is lots of abbreviation's for other the currency pairs such as,
AUD/USD ... "Aussie"
EUR/USD ... "Euro"
GBP/JPY ... "Geppy"
GBP/USD ... "Cable"
NZD/USD ... "Kiwi"
USD/CAD ... "Loonie"
USD/CHF ... "Swissy"
USD/JPY ... "Gopher"
Technical analysis
Line Chart
All charts are plotted with time on the x-axis and the currency pair on the y-axis. Each time period on our real time charts can range from a tick by tick to a weekly interval (the tick refers to each individual pip movement). This gives traders the flexibility to view currencies with closer examination while also allowing them to spot the trends most suitable for their time-sensitive trading strategy.
A line chart's strength comes from its simple design; it provides an uncluttered, easy to understand view of a currency's price. Line charts display the currency's closing price.

A line chart is simply a graph of the value of a currency taken at regular time intervals based on current prices.
Graphical methods
Forex trend lines
Channel and Trading range
Support and resistance levels
Candlestick terms
Candlestick patterns
Figures
Online Forex Trading Bar Charts
Forex trading bar charts are the most popular method for Forex trading technical analysis worldwide. They have reached their popularity because they are useful and easy to understand. The activities of the hour/day/week/month is seen as a vertical bar in the chart. Horizontal marks account for Opening and closing prices. Every time you trade in online Forex, it is recommended that you use these bar chart patterns and indicators to help you invest properly.

Recognizing Trend Lines
A trend line is drawn in the bar chart to indicate the price of online Forex trends. An ascending trend line connects between the daily highs of the market. A descending trend line connects the day's low prices. If the downward trend line crosses the most recent prices - a buy signal is generated. If an ascending trend line crosses through the most recent prices, a sell option s generated.

Support and Resistance
If you look at an online Forex trading bar chart that details the change in the currency over time, you will notice that after the graph goes up and down for a few times, there is a horizontal line you can draw at the lowest place the graph arrives to, and also at the highest place the graph goes. This means that after the graph has dropped several times, it never drops more than a specific place - called the support level, and after the graph rises a few times, it stops also at regular places, called resistance levels.

An example of a support level is if the graph goes down to $4, then rises to $6, then goes down again to $4, and rises to $5, goes on to $4, etc. This means the support level for that graph is $4.

support levels are the places on the bar chart where online Forex traders feel the stock will move higher, and buy the currency more than sell it. Resistance levels are when there are more sellers than buyers.

When support levels are penetrated, and the price drops bellow the support levels, then the support level turns into a resistance level that will be the highest place the chart goes to. This is because the traders will sell that currency when it reaches the former support level in order to limit their losses and regain the former price they had.

Reading Online Forex trading Bar Chart Patterns
When you look at a bar chart, you can sometimes recognize patterns that can help you make the next trading decisions by anticipating how the online Forex market is going to behave. After you practice recognizing these patterns you will be able to see them automatically when you see a certain bar chart.

Analyzing Reversal Patterns in Bar Charts
Reversal patterns are recognized in the online Forex trading market with short and close drops and rises in the graph.

A Double Top - Here you see a long rise in the bar chart, then a short drop, another rise and a drop. The prediction says the next drop will be long, and the investor can predict the currency will drop. The shape of the double top looks like the letter "M".
A Double Bottom - The bar chart for this case is a long drop, then a short rise, a short drop and a rise. The final rise is predicted to raise more by the investor. The shape of the chart resembles a "W".
A Head-and-Shoulders Top - This bar chart has one larger top separating the two smaller tops that are similar to the double top. The larger top is called "the head", and the two smaller tops are called "the shoulders".
Head-and-Shoulders Bottom - This bar chart is the same as the previous chart only upside-down.
How to Read Continuation Patterns on Bar Charts
The continuation pattern indicates a certain direction that the online Forex graph follows, that is interrupted by a shot change in direction, and sonly after continues with the previous direction.

The Flag - In this bar chart continuation pattern, the change in direction of the online Forex currency consists of the same difference between the lows and the highs, and a continuing downward or upward slope of the graph.
A Symmetrical Triangle - In this case in the change of direction area the line of the bar chart becomes closer as the previous direction of the chart approaches.
An Ascending Triangle - This graph interruption indicates the unchanging of the high price, while the low price keeps getting closer to the high until the pattern continues.
A Descending triangle - The same as the ascending triangle only with the opposite roles, here the low price is the one that stays the same.
Rectangle - This is a pattern when the high and low prices stay almost the same for some time.
Gaps in the Bar Chart
Gaps occur when the bar chart leaps and leaves a gap between the former price of the online Forex currency and the next price. The breakaway gap continues the former trend in a different place, with a change in direction. An exhaustion gap comes right before a drop indicating the currency's exhaustion. An island reversal gap occurs when the chart suddenly breaks from the previous trend and immediately breaks again to another location. Some Economic Indicators are the causes for such gaps, but sometimes they occur spontaneously by themselves for no apparent reason.

Trudy Bates - Market Expert


Ascending trend
If currency demand exceeds the currency offer the exchange rate grows on Forex. On the contrary if the volume of currency which participants of the market wish to sell under the given concrete price more than volume of currency which other participants of the market wish to buy the rate falls.

If demand exceeds the offer long time and causes growth of a rate sooner or later it is saturated. Since some moment the offer starts to exceed demand. It leads to sale of currency that is expressed in some decrease of its rate - trend correction.

Trend correction: the movement directed against a direction of the previous trend. The given movement does not surpass the previous trend. If to consider a trend is the phenomenon which returns the prices in "a correct channel" and does not allow market movement to deviate fundamental factors.

On an ascending trend a part of participants open long positions, satisfied by growth of an exchange rate and start to close positions - to sell currency with the purpose to fix the profit quickly. However if the principal causes causing increased currency demand, have not changed, currency buying renews, and the rate increases. Then movement of a rate gets a direction, or a trend.

There are two kinds of trend: ascending and descending trend

Ascending trend - each time in exchange rate achieves higher value in comparison with previous rate - price movement at which each subsequent local maximum and local minimum above previous.

The bottom points of waves (local minima) join a direct line
Descending trend
Descending trend - each time Forex rate achieves lower value - price movement, at which each subsequent local maximum and local minimum below previous.

Trend line is drawn by joining of the top points of local maxima
The more points of Forex rate values get on a straight line, the more trend is especially confirmed. One of the trend force criteria is its reaction to support and resistance levels. Break of support/resistance level means, that the dominating trend keeps the force. The more trend encounters the resistance or support, being unable to overcomes them, the more strong signal about weakness of a trend we receive, and the more probability of a turn in the future.

There is a number of the general rules of trend force definition:

- The longer the trend is kept, the stronger it is, however it has a limit;
- The more abruptly and more quickly trend, the stronger it is;
- The long flat trend has an every prospect of the continuation;
- Very abrupt trend can abruptly turn over also;
- Any trend slackens, however probability of continuation of a trend in its any point above probability of its turn.
Reversal trend

Change of a trend (reversal) is expressed in change of a rate movement direction after a break point (penetration point). However it should be distinguished from a simple non-standard rate deviation which doesn't lead to change of a trend.

The break point forms a sell signal for the confirmed change of an ascending trend, the confirmed change of a descending trend forms a buy signal on Forex.

The best confirmation of change of a trend can be received when the former resistance line becomes a support line of a trend and on the contrary.

Transition of a support line to a resistance line.

hammer pattern

The Art of Candlestick Charting

The Art of Candlestick Charting

The candlestick techniques we use today originated in the style of technical charting used by the Japanese for over 100 years before the West developed the bar and point-and-figure analysis systems. In the 1700s a Japanese man named Homma, a trader in the futures market, discovered that, although there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of the traders. He understood that when emotions played into the equation a vast difference between the value and the price of rice occurred. This difference between the value and the price is as applicable to stocks today as it was to rice in Japan centuries ago. The principles established by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions towards a stock.
This charting technique has become very popular among traders. One reason is that the charts reflect only short-term outlooks--sometimes lasting less than eight to 10 trading sessions. Candlestick charting is a very complex and sometimes difficult system to understand, but in this four-part series, we take go inside the more common ways to construct and read candlestick patterns. (For our other candlestick charting articles, see our Technical Analysis 101 archives.)

Candlestick Components
When first looking at a candlestick chart, the student of the more common bar charts may be confused; however, just like a bar chart, the daily candlestick line contains the market's open, high, low and close of a specific day. Now this is where the system takes on a whole new look: the candlestick has a wide part, which is called the "real body". This real body represents the range between the open and close of that day's trading. When the real body is filled in or black, it means the close was lower than the open. If the real body is empty, it means the opposite: the close was higher than the open.

Just above and below the real body are the "shadows". Chartists have always thought of these as the wicks of the candle, and it is the shadows that show the high and low prices of that day's trading. If the upper shadow on the filled-in body is short, it indicates that the open that day was closer to the high of the day. And a short upper shadow on a white or unfilled body dictates that the close was near the high. The relationship between the day's open, high, low, and close determine the look of the daily candlestick. Real bodies can be either long or short and either black or white. Shadows can also be either long or short.

Comparing Candlestick to Bar Charts
A big difference between the bar charts common in North America and the Japanese candlestick line is the relationship between opening and closing prices. We place more emphasis on the progression of today's closing price from yesterday's close. In Japan, chartists are more interested in the relationship between the closing price and the opening price of the same trading day.

In the two charts below I am showing the exact same daily charts of IBM to illustrate the difference between the bar chart and the candlestick chart. In both charts you can see the overall trend of the stock price; however, you can see how much easier looking at the change in body color of the candlestick chart is for interpreting the day-to-day sentiment.
Basic Candlestick Patterns
In the chart below of EBAY, you see the 'long black body', or 'long black line'. The long black line represents a bearish period in the marketplace. During the trading session, the price of the stock was up and down in a wide range and it opened near the high and closed near the low of the day.

By representing a bullish period, the 'long white body', or 'long white line'--(in the EBAY chart below, the white is actually gray because of the white background) is the exact opposite of the long black line. Prices were all over the map during the day, but the stock opened near the low of the day and closed near the high.

'Spinning tops' are very small bodies and can be either black or white. This pattern shows a very tight trading range between the open and the close, and it is considered somewhat neutral.

candlestick chart pattern

Principles behind the Art
Before learning how to analyze them, we need to understand that candle patterns, for all intents and purposes, are merely reactions of traders at a particular time in the marketplace. The fact that human beings often react en masse to situations allows candlestick chart analysis to work.

Many of the investors who rushed to the marketplace in the fall and winter of 1999-2000 had, before that time, never bought a single share in a public company. The volumes at the top were record breaking and the smart money was starting to leave the stock market. Hundreds of thousands of new investors, armed with computers and new online trading accounts, were sitting at their desks buying and selling the dotcom flavor of the moment. Like lemmings, these new players took greed to a level never seen before, and, before long, they saw the market crash around their feet.
Lets have a look at what was a favorite of many investors during that time. This presentation of JDS Uniphase (JDSU) on the chart above is a lesson in how to recognize long bullish candles, which formed as the company's stock price moved from the $25 area in late Aug 1999 to an outstanding $140 plus in Mar 2000. Just look at the number of long green candles that occurred during a seven-month ride.

Analyzing Patterns
Traders must remember that a pattern may consist of only one candlestick but could also contain a number or series of candlesticks over a number of trading days.

A reversal candle pattern is a number or series of candlesticks that normally show a trend reversal in a stock or commodity being analyzed; however, determining trends can be very difficult. Perhaps this is best explained by Gregory L. Morris in the chapter her wrote for John J. Murphy's classic "Technical Analysis of the Financial Markets" (1999):


"One serious consideration that must be used to identify patterns as being either bullish or bearish is the trend of the market preceding the pattern. You cannot have a bullish reversal pattern in an uptrend. You can have a series of candlesticks that resemble the bullish pattern, but if the trend is up it is not a bullish Japanese candle pattern. Likewise, you cannot have a bearish reversal candle pattern in a downtrend."
The reader who takes Japanese candlestick charting to the next level will read that there could be as many as 40 or more patterns that will indicate reversals. One-day reversals form candlesticks such as 'hammers' and 'hanging men'. A hammer is an umbrella that appears after a price decline, and, according to candlestick pros, comes from the action of "hammering" out a bottom. If a stock or commodity opens down and the price drops throughout the session only to come back near the opening price at close, the pros call this a hammer.

A hanging man is very important to recognize and understand. It is an umbrella that develops after a rally. The shadow should be twice as long as the body. Hanging men that appear after a long rally should be taken notice of and acted upon. If a trading range for the hanging day is above the entire trading range of the previous day, a "gap" day may be indicated.

Lets look at two charts, one with a hammer and the other with a hanging man. The first charts Lucent Technologies and shows a classic hanging man. After three days of the stock price rising, the hanging man appears, and on the following day, the stock price drops over 20%. The second chart shows a hammer from a period in 2001 when Nortel Networks was trading in the $55-$70 range. The hammer appears after two days of declining prices and effectively stops the slide, marking the beginning of a nine-day run with the stock price moving up $11.
Basic Patterns
There are some basic candlesticks patterns described in this part. But first of all some candlestick terms.
A long body has a very long body when compared with other recent candles.

A short candle is the opposite of a long candle and usually implies consolidation, as the stock market traded in a narrow range during the trading period.

White bodies show intense buying pressure, where as black bodies show intense selling pressures.

Long Days pattern
These candlesticks indicate the great difference between the open and the close price for a trading day. The shadow are much shorter than the real body.

Short Days pattern
These candlesticks indicate the small difference between the open and the close price for a trading day. Both the body and the shadow lines are very short.

Marubozu pattern
Marubozu means there are no shadows from the bodies.
A White Marubozu is a long white body with no shadows. It indicates a bullish trend and usually becomes the first part of a bullish continuation or a bullish reversal pattern.

A Black Marubozu is a long black body with no shadows. It usually implies bearish continuation or bearish reversal.

Spinning Tops pattern
This pattern has longer shadow than the real body. The color of the real bodies are not very important. The pattern indicates the indecision between the bullish and bearish trends.

Stars and Rain Drops pattern
A Star pattern appears when a small body gaps above the previous day's long body.

A Rain Drop pattern appears when a small body gaps below the previous day's long body. Stars and Rain Drops are the part of the more complicated patterns, such as the reversal patterns.
A Doji is formed when the open and the close are the same or very close. The length of the shadows are not important. The Japanese interpretation is that the bulls and the bears are conflicting. The appearance of a Doji should alert the investor of major indecision.

The Gravestone Doji is formed when the open and the close occur at the low of the day. It is found occasionally at market bottoms, but it's forte is calling market tops. The name, Gravestone Doji, is derived by the formation of the signal looking like a gravestone.

The Long-legged Doji has one or two very long shadows. Long-legged Doji's are often signs of market tops. If the open and the close are in the center of the session's trading range, the signal is referred to as a Rickshaw Man. The Japanese believe these signals to mean that the trend has "lost it's sense of direction."

The Bullish Engulfing Pattern is formed at the end of a downtrend. A white body is formed that opens lower and closes higher than the black candle open and close from the previous day. This complete engulfing of the previous day's body represents overwhelming buying pressure dissipating the selling pressure.

The Bearish Engulfing Pattern is directly opposite to the bullish pattern. It is created at the end of an up-trending market. The black real body completely engulfs the previous day's white body. This shows that the bears are now overwhelming the bulls.

The Dark Cloud Cover is a two-day bearish pattern found at the end of an upturn or at the top of a congested trading area. The first day of the pattern is a strong white real body. The second day's price opens higher than any of the previous day's trading range.

The Piercing Pattern is a bottom reversal. It is a two candle pattern at the end of a declining market. The first day real body is black. The second day is a long white body. The white day opens sharply lower, under the trading range of the previous day. The price comes up to where it closes above the 50% level of the black body.

Hammer and Hanging-man are candlesticks with long lower shadows and small real bodies. The bodies are at the top of the trading session. This pattern at the bottom of the down-trend is called a Hammer. It is hammering out a base. The Japanese word is takuri, meaning "trying to gauge the depth".

The Shooting Star Formation, at the bottom of a trend, is a bullish signal. It is known as an inverted hammer. It is important to wait for the bullish verification. Now that we have seen some of the basic signals, let's take a look at the added power of some of the other formations.

Forex Candlestick Chart Patterns

Once the basics of the Forex candlestick charts have been mastered, the Forex trader will find out that there is a great deal that can be learned from a candlestick chart that has been well put together.

With the rectangle that indicates the opening and closing prices (also known as the the "candle") and the wicks that represent the highs and lows, a trader can find out a great deal about the foreign exchange market and make wise trading decisions.

The color of the rectangle representing the candle can also provide a great deal of information.

If the currency price in question goes up, the body is white, with the opening price at the bottom and the closing price at the top. If however, the body of the candle is black, this indicates that currency price went down and the closing price is found at the bottom and the opening price at the top.

As long as the vertical axis of the candlestick chart is in proportion, a trader can tell a lot about the Forex market at a glance!

When the coloring and size of the candle and the height of the wicks are understood, a Forex trader will be better able to read the charts quite quickly.

Within the color and the length of the wick is a lot of information that is presented. With a little bit of practice, a trader will be able to tell quite a bit about the selected time frame of the Forex market with a single look at one of these highly useful charts.

When the lower wick is at least the size of the body, this signals a bullish market, where investor confidence is high. This condition is called a long lower shadow.

Conversely, a long upper shadow occurs when the upper wick is at least as long as the body of the candle, and signals a bearish market. The longer the wicks are in their respective positions, the greater the sentiment expressed.

When a hammer configuration is observed, which is a candle with only one wick, this is also significant.

With a long lower wick and a small candle, this indicates a bullish market. An inverted hammer, with no lower wick and a tall upper wick, signals a bearish market.

It is important that the trader remember to take into account the color of the body of the candle as well, for the most accurate reading.

With its Japanese roots, the Forex candlestick chart system will have several names in Japanese. For instance, Marubozu white, when there is no wick at all the body is white, indicates a dominant bullish trade, while Marubozu black indicates dominant bearish trades.

When the trader has learned to read the Forex candlestick charts accurately, he will be able to get good, comparative information in a glance. Once a little experience at reading these charts has been gained, it becomes quite easy to effectively use them in a trading plan.

About Author:
Dave Hikade began trading over 10 years ago and provides a FREE Forex Trading Newsletter: http://www.forex-trader-basics.info More information on Forex Candlestick Charts may be found here: http://dachsales.com/rec/candlesticks

Source: Arkilite.com Finance Free Articles Directory

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Successful In Forex Trading

A forex fundamental analysis is made up of strategic assessments in which a particular currency is traded on the basis of various criteria with the exception of the price action. To these criteria belong current economic conditions in the state that this currency represents and a great deal of other elements essential for the subject. Macroeconomic indicators, such as economic growth rates, inflation, interest rates, level of unemployment and other issues – all that is relevant for a good forex fundamental analysis.


There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know a little bit of both. It's important to get a birds-eye view of the currency markets and learn how news affects prices. This is why you must follow and understand the daily Forex news and market analysis of the professional currency analysts - that is forex analytics.


Trading forex works remarkably easy. Everything you need to realize your forex trading practice can be found in broker firm. In the forex trading market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade with forex.


We put forex professional forex articles of our readers to this part. They wrote interesting, useful and high-professional materials using their experience and being real forex traders or other forex market participants. There are articles about forex trading practice, fundamental and technical analysis.


There are the bank holidays of the USA, Japan and United Kingdom on the 2006 and 2007. Each holiday has their own recommended early close date and time. There is the information about currencies codes. The main descriptions of each currency are their Alphabetic code, Numeric code, Symbol and Subdivision.


Forex for beginners: forex history from The Bretton Woods Accord to Free-floating currencies and fixed exchange rates, forex psychology with trading psychology's rules, trading examples, forex glossary from A to Z, forex FAQ's and many other.

Forex signal trading
One of the important terms in forex trading is the forex signal trading.
After getting some education and practicing with a "demo" account forex beginner can make his own forex signal trading system. Most websites with trading platforms offer daily newsletters from a professional trader, broker or market analyst. They are very helpful because the main purpose of forex trader is to make profitable trades by using all available information.

Signal trading deals with identifying trends by using many varied and subtle indicators. These indicators help to indicate a good time to buy or sell, though these Forex brokers and analysts do charge a fee for their services.

A lot of times in signal trade brokers only monitor the most popular currencies such as EUR/USD, USD/JPY, GBP/USD and USD/CHF. But if you are interested you may find Forex signal services for the less common currencies and pairs. These however may charge a higher fee for their services.

There are some individual services included in Forex signal trading that are generally offered. A lot of basic subscriptions to these services will email alerts for the best times to buy and sell. A little bit higher level of subscription though will alert you about these via cell phone or pager. Some levels of subscription for Forex signal trade will provide the subscriber with live charts. Usually the minimum subscription fee is one hundred dollars a month.

A short-term trader capitalizes on very small changes in rates that they expect each day. The forex system
for the short term trader will focus on the study of daily charts, indicators and even time of day. A long term trader needs large amounts of capital to cover daily fluctuations. So his forex system will focus on long-term (fundamental) factors. Thus a long-term forex trading system will be quite different from a short term forex trading system.

The majority of traders are the medium-term traders who have the least risk and generally need less capital than the other types, but their trading opportunities are limited.

There is however a warning about signal trade being used alone, without any other indicators, especially if you are only looking at indicators over a short period of time. Instead when using this service you should use it in combination with other indicators.

In the meantime, use other indicators, trust yourself. Whether using the Forex market or another one, using any signal trade company or the signal trading company in particular, in the end it is up to you how and when you decide to use them.

Why forex signal trading is so important for successful forex trading?

One of the FOREX disadvantages is the time investment needed to monitor the markets for advantageous entry and exit points.

If you don't have the time to watch your computer screen and still wish to achieve as much profit as possible, sign up for a forex signal service. These services monitor and investigate the market for you and send their answer directly to your computer desktop, email, or SMS on your cell phone or pager.

Make sure that the sgnal service provide you with chronological data. Bear in mind that like any trader, Forex trading signals services also have loosing trades. You should not expect a signal service to be a certain ticket to immediate forex wealth, but rather look at them as another device in your trading toolbox.

If you want to get forex trading signals you have to sign up and give a monthly or yearly fee because companies that offer FOREX signals do on a paid basis. Some brokers may provide this service as an additional one that integrates into their trading software.

The charges for these services may vary from analyst to analyst, depending upon the choice of services the trader offers.

The biggest advantage of Forex trading signals services is that they help the traders from the bother of analyzing data. But, this does not mean that the traders should rely upon them completely to exploit their profits or minimize their losses. The traders should use their own decision and market grapevine to choose the trades.
Forex - Trading With The Stop Loss And Trailing Stop
By Sandy Robinson, J.D.
There are various risk management tools available to the trader in the foreign exchange (FOREX) market. Two of the most common ones are the stop loss and the trailing stop. What are they and what are they used for? Are they necessary for successful trading? This article will help you to understand these concepts and provide answers to these questions.

Stop Loss
The platforms provided by many online FOREX brokers contain built-in features such as the stop loss and the trailing stop to help manage certain risks inherent in trading. A stop loss is a feature which allows the trader to pre-determine the price level at which the position will be automatically closed should the market move unfavorably against the open position. The primary benefit of the stop loss is to put a cap on the amount of loss a trader is willing to suffer. A well-placed stop loss is an essential component of an effective trading strategy. There are, however, traders who trade without a stop loss or trade with the stop loss set improperly. Both of these approaches are courting disaster.

Day traders will typically have a different approach to setting a stop loss than those who take long-term positions. Because they are more interested in making quick profits resulting from small market movements, the day traders will typically utilize a smaller stop loss. In contrast, the wider stop is favored by long-term traders who are less concerned with the smaller moves of currency prices, including the temporary reversals present in the trend. Such price reversals would normally trigger the smaller stop loss of the short-term or day trader. Positions taken by long-term traders may be open for several days or longer, experiencing a fair number of reversals on the way to the take-profit target. Consequently, the wider stops would be preferable to this breed.

Trailing Stop
A trailing stop is often utilized in connection with the stop loss. Indeed, it would be futile to attempt the trailing stop without first setting the stop loss. That is because the main purpose of the trailing stop is to move the stop loss incrementally in the direction of the profit target as the currency price moves way. Such has the effect of incrementally bagging profits while the position remains open. The original stop loss level cannot be reached by the price reversal without the trader’s position having first been closed automatically at the new stop loss level made possible by the trailing stop.

In a news trading situation—generally characterized by rapid price movement—a trader would ideally utilize the smallest incremental trailing stop allowed. The smaller the trailing stop, the more possibility there is for making and keeping pips without being subjected to the vagaries of whipsaws or other rapid reversals in currency price. As in the case of the stop loss itself, a smaller trailing stop would be favored by the short-term trader. For example, instead of waiting for the price to move 20 pips before the stop loss is moved and the 20-pip profit realized, the trader can realize profits earlier by setting the trailing stop at 10 pips, with the expectation of bagging 10 pips with each 10-pip move in the currency price. Although it would be a trader’s dream to have a trailing stop as low as 1 or 5, the lowest to be found on any broker’s platform is probably 10. Still, by utilizing a well-place stop loss with the appropriate trailing stop, a trader can invest profitably and minimize the inevitable risks while preserving precious trading capital.

If you are ready to change your future by stepping into the exciting world of trading FOREX, go to http://www.winningtradersassociation.com for more information. Author Sandy Robinson, J.D. is part of the Winning Traders Association, an educational organization founded by John Beiler, President. The organization consists of a network of committed trainers and motivated traders willing to provide support to those interested in trading foreign exchange. Many of the members work from home.

Sandy Robinson, J.D.
Copyright 2007

Article Source: http://EzineArticles.com/?expert=Sandy_Robinson,_J.D.
Three Strategies To Trade Forex During News
By Tom Van Geert
In this article, I will discuss three ways how you can take advantage trading forex during economic news releases.

Trading the economic numbers


Straddle setup before the news


Hedge setup before the news


Currency traders try to take advantage of the discrepancy between the forecasted and the actual economic number, you need a very fast news data feed such as Reuters or Bloomberg because you want to get in the trade before the move begins.

Steps to trade the economic data numbers:

1) Trading the economic numbers strategy

1. Purchase a fast news datafeed at Reuters or Bloomberg
2. Track the news consensus and determine the significance of the economic news report being released, if it is not important, do not trade it.

You will be able to find all important data on a good economic data calendar
3. For each important news release you need to know how large a discrepancy has to be in order for you to act on the trade.
4. Finally, watch the news release using your fast datafeed and trade the numbers.





2) Straddle the News strategy





This strategy is very simple and consists of 2 limit orders, one to buy a few pips above the range high and one to sell a few pips below the range low, then wait for the price to breakout triggering one of your orders. Your stop loss order should be placed a few pips below the range low when buying, conversely, a stop loss order should be placed a few pips above the range high when selling.


3) Hedging the News strategy

What is hedging? Hedging enables a currency trader to simultaneously hold Buy and Sell positions in the same currency pair at the same time in one trading account.

1. To hedge, go both long and short at market price 30 min before the news release.
2. Add a protective stop loss order to both long and short positions 30 seconds before the news release.
3. Add a limit order to both long and short positions 30 seconds before the news release.

For more free tutorials, forex tools, free system downloads, news, forex calendar, forex product reviews and articles about forex trading, please visit us at Aboutcurrency.com | Forex
Article Source: http://EzineArticles.com/?expert=Tom_Van_Geert

Forex Trading Tips

Forex Trading Tips
By John Gaines

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

1. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
   
   
   
   
   
   
   
   
2. Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
   
   
   
   

   The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
   

   
   
   
   
   
   
3. Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
   
   
   
   
   
   
   
   
4. Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
   
   
   
   
   
   
   
   
5. Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
   
   
   
   

   Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
   

   
   

   Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.
   

   
   
   
   
   
   
6. Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
   
   
   
   
   
   
   
   
7. No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
   
   
   
   
   
   
   
   
8. Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
   
   
   
   
   
   
   
   
9. The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
   
   
   
   
   
   
   
   
10. Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
    
    
    
    
    
    
    
    
11. Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.
    
    
    
    
    
    
    
    
12. Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
    
    
    
    
    
    
    
    
13. Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.
    
    
    
    
    
    
    
    
14. Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
    
    
    
    
    
    
    
    
15. Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
    
    
    
    
    
    
    
    
16. Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
    
    
    
    
    
    
    
    
17. Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.

Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.

Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.

Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.

Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.

The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.

Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.

Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.

Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.

Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.

Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.

Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.

Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.

Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).

One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.

Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.

Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.

John Gaines
online trading, currency trading, financial service

A veteran of online trading, John Gaines offers the financial services industry his perspectives and expertise on a variety of trading systems and financial instruments, including forex, CFDs, futures, options and stocks. Article Source: http://EzineArticles.com/?expert=John_Gaines

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