investment,forex,business

Fibo Conveter

2012-01-10T02:28:00.000-08:00

2011-09-08T04:45:00.001-07:00

Pin Bar Method of Forex

2011-06-07T04:30:00.000-07:00

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The pin bar - MACD forex strategy can be used as a standalone system for trading1 hour and 4 hour currency charts. It requires the use of only one technical indicator and candlestick pin bars. This strategy is very useful for beginners because it does not include a huge number of rules and trading conditions and therefore very easy to understand.

Trading Setup

Time Frame: 15 min,30 min,1hour,4 hour
Currency Pairs: Any
Trading Indicator: MACD - default settings 12,26,9 (More info)
Pin Bars

Pin Bars Defined

A bearish pin bar represents a candlestick composed of a long upper wick, small body and small lower wick. (sellers control the market)
A bullish pin bar represents a candlestick composed of a long lower wick, small body and small upper wick. (buyers control the market)

More info about pin bars ...

Rules For A Sell Trade

1) 15 min ,30 min ,1 hour ,4 Hour MACD below 0
2) A bearish pin bar appears on the chart.
3) Sell the currency pair at market price on the close of the bearish pin bar.
4) Set safety stop at one pip above the high of the pin bar.
5) Trade objective: 1:2 risk-to-reward ratio or better.
6) Move stop loss to break even at risk-to-reward ratio 1:1

Example: Pin Bar MACD Forex Trading Strategy, EUR/USD 4 Hour Chart

The chart above shows two short trade entries in a bearish market (MACD < 0). The first
trade was successfully closed for 116 pips of profit. The second trade was stopped out at break even.

Rules For A Buy Trade

1) 1 hour ,4 Hour MACD above 0
2) A bullish pin bar appears on the chart.
3) Buy the currency pair at market price on the close of the bullish pin bar.
4) Set safety stop at one pip below the low of the pin bar.
5) Trade objective: 1:2 risk-to-reward ratio or better.
6) Move stop loss to break even at risk-to-reward ratio 1:1

The Flip and Go forex trading strategy follows the overall trend and is easy to apply. All you need on your charts is the MACD indicator with default settings and the 25-period exponential moving average.

Forex Chart Setup

Preferred Time Frame's: 15 min and above
Trading Indicators: MACD (12, 26, 9), 25-period EMA
Recommended Trading Sessions: Euro and US
Currency Pairs: Any

Rules for a Long Trade

1) Look for a currency pair that crosses and closes above the 25-period EMA from below.
2 Wait for the MACD to turn positive (above the zero line).
3) Go long at the candle's close.
4) Place stop loss 3 pips below the most recent support low.
5) Trade objective: risk-to-reward 1:2 or better.

USDCAD DAILY ANALYSIS

2010-10-20T16:27:00.000-07:00

Free Forex Signals

2008-12-09T16:19:00.000-08:00

2008-05-24T03:23:00.001-07:00

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The Fibonacci numbers Golden ratio

2008-04-13T17:36:00.000-07:00

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The Fibonacci numbers Golden ratio can be used to describe the proportions of everything from nature to smallest building blocks. This is used by many successful investors to pick trends in the charts.

The Fibonacci numbers Golden ratio can be used to describe the proportions of everything from nature to the smallest building blocks, such as atoms, to the most advanced patterns in the universe, such as unimaginably large celestial bodies. Nature relies on this innate proportion to maintain balance, but the financial markets also seem to conform to the Fibonacci Numbers "golden ratio." Here we take a look at some technical analysis tools that have been developed to take advantage of the Fibonacci Numbers Golden Ratio.

The Mathematics
Mathematicians, scientists, and naturalists have known the Fibonacci Numbers Golden ratio for years. It is derived from something known as the Fibonacci sequence, named after its Italian founder, Leonardo Fibonacci (whose birth is assumed to be around 1175 AD and death around 1250 AD). Each term in this sequence is simply the sum of the two preceding terms (1, 1, 2, 3, 5, 8, 13, etc.).

But this sequence is not all that important; rather, it is the quotient of the adjacent terms that possesses an amazing proportion, roughly 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, PHI, and the divine proportion, among others. So, why is this number so important? Well, almost everything has dimensional properties that adhere to the ratio of 1.618, so it seems to have a fundamental function for the building blocks of nature.

Prove It
Take honeybees, for example. If you divide the female bees by the male bees in any given hive, you will get 1.618. Sunflowers, which have opposing spirals of seeds, have a 1.618 ratio between the diameters of each rotation. This same ratio can be seen in relationships between different components throughout nature.

Try measuring from your shoulder to your fingertips, and then divide this number by the length from your elbow to your fingertips. Or try measuring from your head to your feet, and divide that by the length from your belly button to your feet. The results the same, somewhere in the area of 1.618. The fibonacci numbers golden ratio is seemingly unavoidable.

So we then transalate this to finance and stocks. The markets have the very same mathematical base as these natural phenomena. Below we will examine some ways in which this ratio can be applied to finance, and we'll show you some charts to prove it.

The Fibonacci Numbers Golden Ratio Studies and Finance
When used in technical analysis, the fibonacci numbers golden ratio is typically translated into three percentages: 38.2%, 50%, and 61.8%. However, more multiples can be used when needed, such as 23.6%, 161.8%, 423%, and so on. There are four primary methods for applying the Fibonacci sequence to finance: retracements, arcs, fans, and time zones.

1. Fibonacci Retracements
Fibonacci retracements use horizontal lines to indicate areas of support or resistance. They are calculated by first locating the high and low of the chart. Then five lines are drawn: the first at 100% (the high on the chart), the second at 61.8%, the third at 50%, the fourth at 38.2%, and the last one at 0% (the low on the chart). After a significant price movement up or down, the new support and resistance levels are often at or near these lines.

2. Fibonacci Arcs
Finding the high and low of a chart is the first step to composing Fibonacci arcs. Then, with a compass-like movement, three curved lines are drawn at 38.2%, 50%, and 61.8%, from the desired point. These lines anticipate the support and resistance levels, and areas of ranging.

3. Fibonacci Fans
Fibonacci fans are composed of diagonal lines. After the high and low of the chart is located, an invisible vertical line is drawn though the rightmost point. This invisible line is then divided into 38.2%, 50%, and 61.8%, and lines are drawn from the leftmost point through each of these points. These lines indicate areas of support and resistance.

4. Fibonacci Time Zones
Unlike the other Fibonacci methods, time zones are a series of vertical lines. They are composed by dividing a chart into segments with vertical lines spaced apart in increments that conform to the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, etc.). These lines indicate areas in which major price movement can be expected.

Conclusion
Fibonacci Numbers Golden Ratio studies are not intended to provide the primary indications for timing the entry and exit of a stock; however, they are useful for estimating areas of support and resistance. Many people use combinations of Fibonacci Numbers Golden Ratio to obtain a more accurate forecast. For example, a trader may observe the intersecting points in a combination of the Fibonacci arcs and resistances. Many more use the Fibonacci studies in conjunction with other forms of technical analysis. For example, the Fibonacci studies are often used with Elliott Waves to predict the extent of the retracements after different waves. Hopefully you can find your own niche use for the Fibonacci Numbers Golden Ratio, and add it to your set of investment tools.

Article Source: http://www.articlesarea.com/

2008-04-12T22:55:00.000-07:00

Forex Day Trading Technical Indicators

2008-04-12T22:40:00.000-07:00

Forex Day Trading Technical Indicators are tools used by the traders to make a prediction for various factors involved in their day-to-day trading. These technical indicators may prove to be profitable if used in proper context.

For example, a technical indicator may make forecasts on the direction at which a particular currency pair may head next. They can also help you to determine where to enter or exit the trades. If these indicators are used correctly, they can make you earn a lot of money.

Moving Averages are probably the most commonly used Forex Day Trading Technical Indicator. Other popular indicators are, Bollinger Bands, Pivot Points, MACD, etc.

Many forex traders may think that by simply downloading the indicators and then mechanically applying them it into their trading will ensure the profitability, which is just a myth. You must realize that there is a lot more to using indicators than just asking them to generate buy/sell signals or pin-point exact entry points.

For example, the moving average methods are to show the direction of the trend. The most common are the simple 200day ma, 100day ma, 50day ma, 35day ma and 21day ma. But don’t forget, they are only valid on daily graphs. According to the experts, a signal can be considered to be good when the 50day ma is crossed by the 13day ma.

The moment it happens, one must trade in the direction of the cross. The problem with this is that these types of ‘crosses’ do not occur often enough for traders to exploit them. This can even lead to a situation where traders are seeing what they thought was a cross now finds to be reverse and uncross. The situation may also force you to chase for trying to anticipate a cross. And all these are required if you wish to be in touch with the live market.

Other problems with forex day trading technical indicators involve issues with the quotes and prices given to you by your broker. Forex brokers are the market makers and different brokers will give you different quotes and prices at a specific point of time. A different price could lead to a situation where different traders, trading the same market have the same indicators giving them different responses.

Finally, you should remember that these indicators were developed when real time information did not exist. Therefore, try to figure out the limitations of day trading technical indicators and realize that technical analysis should incorporate just one part of your trading strategy.

A recent survey showed that a mere 26% of all traders use technical analysis and indicators, compared to 41%, who said they use fundamental analysis. Your trading must be backed with studies and analysis of the market and other resources and not solely by day trading technical indicators.

11 Advantages Of Mini Forex Trading

2007-12-23T21:26:00.000-08:00

Mini Forex Trading
11 Advantages Of Mini Forex Trading
By: Abhishek Agarwal
The forex industry has seen the entry of many traders with limited capital.Traders who are comparatively new to the online forex trading business are also able to sustain the risks involved.

The traders were exposed to the world of currency trading with not that high a risk with the development of Mini forex trading accounts that requires a minimum account size of $300. Also, the mini forex trading account holders can trade 1/10 currency lots instead of the entire currency lots.With smaller lot sizes, the traders are exposed to real life trading with comparitively lesser market and risk exposure because,the value of one mini pip is the same as one dollar.

The traders are exposed to the trading and are made aware of the reliability and the quality maintained in the trade practices and also the stability of the forex trading.Individuals who are wanting to develop their own strategy and build on their confidence in this particular industry will be benefited by mini forex account trading.

The advantage of mini forex trading is that, the traders in this segment have the liberty to enjoy the benefits that are applicable to the full size holders as well.

1. Mini forex trading uses the exact same state of art resources and tools as that of standard account.

2. The traders will continue to be exposed to the world's biggest liquid market.

3. Traders receive a complete free streaming, live and double sided quotes

4. It provides immediate fill reports

5. The trades are not commission based and the traders are able to check their accounts live.

6. Another important advantage in case of mini forex trading is that the traders are able to create a strategy on forex trades and they also improve their discipline and at the same time, not giving more importance to their profits and losses.

7. A trader can fixate on the fluctuations of his equity, if he can trade a full size currency of 100,000 units. This can be done by traders who have small balances.By doing so, the decision making capacity of the trader can get affected, as it is highly based on the emotions of the traders.

8. The traders usually do not close out those trades that do not result in profits, as they continue hoping that the market would infact favour them.It is the instinct of the traders to make immediate profits with the market movement, rather than maximising gains by allowing free flow of profits.

9. The training methods developed in case of mini forex trading, gaining the confidence of a particular trader who is successful, helps one to sustain the distractions, pressure and the anxiety in case of occurrence of any P&L swing.

10. It is not always necessary to use all currency units when starting a mini forex trading account. The lots can be utilized as and when required when a trader builds his confidence level, in order to increase his profits. The lot of 10,000 is available for a trader to customise the size per deal that might suit his needs and requirements.

11. Another good point in case of mini forex trading is that, a trader would not be too stressed out in case of a loss. It depends on the trader's ability to stick to his strategy and to maintain discipline in order to perform well in the future. For example, a loss of 50-pip on a position of 100,000 EUR/USD is the same as $500 loss, however, it would only be $50 in case of a 10,000 EUR/USD with respect to a mini account.

One has to have the guts and the will power to face losses in a forex trading industry;however,if one can perform making use of the platform that is similar to the standard account, why not go for mini forex which gives an individual it's unlimited benefits.

Article Source: http://www.articlestoreprint.com

Abhishek has an uncanny insight into Trading! Visit his website www.Trading-Masters.com and download his FREE Trading Report and learn some amazing Trading tips and tricks for FREE. His tips would save you thousands and make you better at Trading! But hurry, only limited Free copies available! www.Trading-Masters.com

Forex made easy for everyone

2007-12-14T18:41:00.000-08:00

Forex Made Easy for Everyone
Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.

Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.

Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).

Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).

While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.

Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.

by Brian Kolewe

Forex Trend Line Book. Series of Free Forex ebooks

2007-11-09T18:24:00.000-08:00

How to draw a valid Forex trend line? What is it used for..? And many other things Forex traders should know about.

Forex Trend Line book covers rules, purposes and advantages of using trend lines in Forex charts.

Trend line is our guide that helps to identify main price direction during a certain period of time.
If placed correctly it will provide answers to:

Where to enter the market?
What direction to enter: up or down?
When to exit or be prepared to exit?

To start our learning journey, at first let's take a look at the bigger picture of the market using Forex charts. To obtain this bigger market picture, traders would need to simply zoom out their charts a little bit or switch to a larger time frame.

Once done it should become obvious where the market is going: it is either heading up or down. If it is still difficult to tell market direction, and it seems that the market currently moves sideways, traders need to zoom out even more.

Now it is just about common sense. If you are an intra day trader, you will focus on current price direction. Position traders which hold their position for days, weeks, months or longer, will need to obtain a bigger (weekly, monthly, yearly) picture of the market moves.

For example, to trade Forex on intra day basis (hold on to positions throughout a day for few hours, several minutes or so) traders need to look at hourly Forex charts or 30 minute or even smaller charts to get an idea of a current short term market direction.

Let's assume that we saw the market price going up, and the overall picture was telling us that we are in an uptrend. In the uptrend our trend line will be placed below the pattern formation. (In a downtrend our trend line will rest on the top of the pattern formation).

There are several important points on a chart that help us to draw a trend line in Forex.
We call them A-B-C-D points.
So:
1. Find big enough picture to visualize current market move.
2. Look for ABCD points.
3. Draw a trend line through A and C points.
4. The more A, C and following additional points the line will touch — the more accurately it will work.

2007-09-24T15:13:00.000-07:00

2007-08-08T16:58:00.000-07:00

2007-07-21T23:32:00.000-07:00

SUCCESSFUL INVESTMENT
C-A-N-S-L-I-M
C= current quarterly earnings per share
A= annual earnings increase:look for meaningful growth
N= new products,new management ,new highs:buying at the right time
S= supply and demand :small capitalization plus volume demand
L= leader or laggard:which is your stock?
I= institutional sponsorship:a little goes a long way
M= market direction:how to determine it?

10 RULES FOR SUCCESSFUL TRADING

2007-07-20T23:59:00.000-07:00

Traders have developed lots of rules over the years in an attempt to refine the way they make trading decisions. So it’s not hard to come up with a list of 10 trading rules that can be part of a trading plan. Some are generic and general and not exclusive to any particular trader or trading approach. Others can be very precise as traders tweak rules into their trading system. The rules below have been selected for their broad appeal to many types of traders. They are presented in no particular order of importance.

1.Don’t trade markets about which you know very little.This is not to imply that you have to be a fundamental expert on every market you wish to trade. However, you should know about what fundamentals are impacting, or could impact, a market you are contemplating trading. For example, a person who has only traded grains would not want to jump right into a Treasury Bond futures trade without first doing a bit of homework on how the bond market trades – price increments (dollar amount per tick), trading hours, on what exchange the market trades, etc.

A trader could pick up a Wall Street Journal and read the “Credit Markets” section for a week or so to become familiar with fundamental factors that influence the bond market. Also, consider this: Most traders enjoy the process of trading. If they did not, they would likely just hand their money over to a “fund manager” and give the manager discretionary control over their money. Learning and knowing what fundamental factors are impacting or could impact a market that a trader plans to trade is part of the process (enjoyment) of trading.

2. Don’t trade hot “tips.”
You may trade for 20 years and never hear a good trading tip. Reason: There aren’t any . . . at least not any that are any good for regular individual traders. Markets are way too big and too tightly regulated to be impacted by any tips or inside information. Any legitimate “early information” has almost certainly already been factored into the market price structure by the time most individual traders could ever benefit from it.

Don’t confuse tips with rumors. Markets do move on rumors more than just occasionally. Rumors are a part of trading but still fall into the category of “not much use” to off-floor traders. Besides, many rumors are never confirmed as fact and are often self-serving to those who try to start them.

3. Don’t get too fancy with your market orders.Entering a trade “at the market” with a market order may be the best way to enter a trading position, especially in markets that are liquid (have high open interest). It’s certainly the easiest way to enter. Fiddling around with limit or stop-limit or other multi-step orders to save a tick or two or three can cost a trader a good entry point or even a missed trade altogether.

It’s certainly easy to be guilty of this offense because every trader is always trying to get just a little better price. This doesn’t mean that limit or stop-limit or other types of orders are not useful in certain circumstances because they are. However, most trade entries are best made “at the market.” Look at pitchers in major league baseball who “nibble” with their pitches around home plate. Most wind up with a walk instead of an out.

4. Don’t form a new market opinion during trading hours.
This rule goes hand in hand with the rule that says you need to stick to your trading plan of action. Day-to-day market “noise,” or the minor up-and-down price fluctuations of a market, can be at least distracting to a trader and at most prompt the trader to make a hasty and poorly founded trading decision.

5. Don’t force trades; if you don’t see a trade, stand aside.
Don’t chase a market just to put on a trade. Try to exhibit patience and discipline in trading – easily said but hard to follow. Patience and discipline are not easy virtues for any trader to learn because a typical futures trader has a “Type A” personality with a competitive nature who hates to wait in lines. However, to have even a chance at success in trading, you have to control your impatience. If you happen to miss a trading opportunity because you waited too long, other trading opportunities will come along.

A good trade is usually profitable right from the beginning. If the market price moves “your way” in the first couple days after you’ve executed the trade, then odds are significantly higher that your trade will be a winner if you have waited patiently for the right position. This rule reinforces the notion that tight protective stops are an important part of trading success. But there is a time to be impatient: If a straight futures trade is under water after two or three days, more times than not it’s prudent to take a small loss and move on. Do not be patient with losers.

6. Use intermarket analysis to spot trading opportunities.No market trades in isolation but is influenced by what is happening in a number of related markets. Don’t focus on just one market as much of today’s single-market technical analysis does. Instead, take into account developments in other markets that are likely to affect prices in your target market. If you trade stock indexes, you have to be aware of what is taking place in interest rate, currency and commodity markets such as gold. The price of a market you want to trade may be the sum of what is happening in ten or more interrelated markets.

7. Watch open interest statistics, especially in options.
When you are contemplating trading any contract, make sure to first check the open interest for that specific contract or strike price. If a futures contract or options strike price has a low open interest total, it is probably best to seek out a more liquid contract. Fills on both entry and exit can be tough and may produce more slippage than is desired. When you get into a position, be sure it is liquid enough so you can get out on favorable terms.

8. Know what you can and cannot control.
You can control the market you want to trade. You can control the type of market order you want to give your broker. You can control when you want to enter the market. You can control the amount of contracts you wish to trade. You can control when you want to exit the market.

But you can’t control the market, which often has a habit of doing unusual and unexpected things. Knowing and prudently managing the market factors you can control and knowing that you cannot control the market gives you a trading edge.

9. Make the market’s action confirm your opinions.
If you have a particular market on your “radar screen” for a trade, don’t just jump in based on a hunch or a “gut feeling” or because you want to get a fill right away. That’s when a market order advised above may not be in your best interest. Make the market first confirm your opinion. Make the market show you some strength if you want to be long, or make it show you some weakness if you want to be short.

10. Do not overtrade.
Trying to trade too many markets or too many contracts in one market can create problems for an undercapitalized trader. There is no set rule for how many markets a trader should trade at one time. Some traders can trade many markets at the same time and not have a problem. However, if you are feeling stress about a position you are carrying or can’t keep up with what’s going on in all the markets you are trading, then you are likely over-trading.

For those traders who are really not sure how many markets to trade at one time or how many contracts to trade for each position, it’s always better to take a conservative approach. Step in slowly until you become comfortable trading in a larger size or in multiple markets.

2007-07-13T19:01:00.000-07:00

Forex
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The average daily trade in the global forex markets currently exceeds US$1.9 trillion. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks.
Over come the market
successful trading(3M)
Mind
Method
Money
Technical analysis
1.stop loss
2.let profit run
3.protect your profit
4.contrarian opinion
5.learn and practice
6.investment discipline
7.right time/right price

Currency Converter
"Do not attempt to trade until you receive the education and training. There is substantial earnings to be made in the Foreign Currency Exchange Market, but trading on the Forex Market is for the well-informed."
(Jared Martinez, Author, Founder and CEO of Market Traders Institute, Inc.)

DAILY SUPP-RESIST & PIVOT

Make Money with Currency Trading on FOREX

2007-07-11T15:51:00.000-07:00

FOREX investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in FOREX short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.

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forex market time zone

2007-06-30T01:21:00.000-07:00

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

2007-06-30T00:54:00.000-07:00

The Art of Candlestick Charting

2007-06-30T00:40:00.000-07:00

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

2007-06-29T23:29:00.001-07:00

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

2007-06-29T23:23:00.000-07:00

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

2007-06-29T23:11:00.000-07:00

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

2007-06-29T19:51:00.000-07:00

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.

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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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

2007-06-29T18:19:00.000-07:00

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