Monday 30 November 2015

Forex Margin And Margin Call

Taking into account the possibility you don't know what Forex margin is we want to concentrate on its main functions and definition. Forex margin stands for a tool applied by a FX broker into the brokerage accounts to render his/her clients with an opportunity to gain an access to more transactions than are allowed by their current cash holdings. Margin lets both brokers and traders of Forex get only benefits from using this tool. You see, by using Forex margin investors can have larger returns comparing with those which are commonly offered for them while FX brokers in their turn can benefit from extra commissions required by the larger trading positions.



For sure FX margin trading is commonly leveraged on the high level to make it possible for traders to benefit from small fluctuations happening in the currency valuations. Before a FX trader starts a speculative position in the currency's value he/she should be quite aware of the Forex margin origin. In order to find this information you can use the following tips:
1) A trader has to determine foremost Forex leverage which is provided by a FX broker. Simply call your broker or send him/her an e-mail. According to the latest U.S laws Forex brokers can provide for their clients offers suggesting up to 100X leverage opportunities. It denotes you as a trader can get an access to a 100 USD trade by investing only one real dollar. Many traders will notice that in other countries leverage opportunities are even higher : for example the United Kingdom can offer leverage up to 200X.

2) Determination of the minimum FX margin balance is the next step a trader should fulfill. This margin balance is required by your Forex broker for the currency valuations you expect to trade. And again you can find this margin balance by contacting with your broker via e-mail or a phone.

Suppose, you intend to speculate on the value of EUR against the USD, and suppose that the conversional rate equals 1.33. Your broker will definitely ask you something about 1.5 as the conversional rate for this trade to render not meaningful changes within this rate. The conversional rate is usually changed by a broker if he/she notices fluctuations of the currency value. If we have for a trade the standard leverage of 100X then the minimum Forex market margin balance for a unit of such trade in the pair EUR/USD equals 150 (1.5x100).

3) The last thing you need to do is to divide your cash holdings within the Forex brokerage account by minimum Forex market margin balance conditions for the currency you want to trade. If you have three thousands of dollars and intend to trade EUR/USD at 150 dollars as the minimum margin you can transact no more than 20 contracts according to your account's size. Keep in mind that the same contract/transaction without any FX margin will require from you 300 thousands of USD at your account... Read more


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Friday 27 November 2015

50 Factors That Move Dollar

Taking into account the possibility you don't know what Forex margin is we want to concentrate on its main functions and definition. Forex margin stands for a tool applied by a FX broker into the brokerage accounts to render his/her clients with an opportunity to gain an access to more transactions than are allowed by their current cash holdings. Margin lets both brokers and traders of Forex get only benefits from using this tool. You see, by using Forex margin investors can have larger returns comparing with those which are commonly offered for them while FX brokers in their turn can benefit from extra commissions required by the larger trading positions.



For sure FX margin trading is commonly leveraged on the high level to make it possible for traders to benefit from small fluctuations happening in the currency valuations. Before a FX trader starts a speculative position in the currency's value he/she should be quite aware of the Forex margin origin. In order to find this information you can use the following tips:
1) A trader has to determine foremost Forex leverage which is provided by a FX broker. Simply call your broker or send him/her an e-mail. According to the latest U.S laws Forex brokers can provide for their clients offers suggesting up to 100X leverage opportunities. It denotes you as a trader can get an access to a 100 USD trade by investing only one real dollar. Many traders will notice that in other countries leverage opportunities are even higher : for example the United Kingdom can offer leverage up to 200X.

2) Determination of the minimum FX margin balance is the next step a trader should fulfill. This margin balance is required by your Forex broker for the currency valuations you expect to trade. And again you can find this margin balance by contacting with your broker via e-mail or a phone.

Suppose, you intend to speculate on the value of EUR against the USD, and suppose that the conversional rate equals 1.33. Your broker will definitely ask you something about 1.5 as the conversional rate for this trade to render not meaningful changes within this rate. The conversional rate is usually changed by a broker if he/she notices fluctuations of the currency value. If we have for a trade the standard leverage of 100X then the minimum Forex market margin balance for a unit of such trade in the pair EUR/USD equals 150 (1.5x100).

3) The last thing you need to do is to divide your cash holdings within the Forex brokerage account by minimum Forex market margin balance conditions for the currency you want to trade. If you have three thousands of dollars and intend to trade EUR/USD at 150 dollars as the minimum margin you can transact no more than 20 contracts according to your account's size. Keep in mind that the same contract/transaction without any FX margin will require from you 300 thousands of USD at your account... Read more



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How To Make Huge Profits Using Fibonacci Tools

The Fibonacci number sequence and golden ratio is used by many savvy traders today so let's look at how they can make huge profits in ANY financial markets.
The Fibonacci number sequence and golden ratio can be found throughout nature and traders such as Gann applied them to financial markets and made millions using this unique tool as part of his trading method.

Support and resistance levels are critical for all traders as they can help identify entry and exit points when trading.
Fibonacci percentage "retracement" levels derived from the Fibonacci number sequence and golden ratio are an innovative and useful tool for any trader, so why are they so useful.
Let's find out.
Fibonacci Numbers and Golden Ratio Applied To Trading
The Fibonacci sequence was printed in the Liber Abaci, written by Leonardo Fibonacci in 1202. It introduced Hindu-Arabic to Europe for the very first time and they replaced Roman numerals.
The Fibonacci number sequence was based around the following equation:
How many pairs of rabbits can be generated from one single pair, if each month each pair produces a new pair, which, from the second month, starts producing more rabbits?
While the Fibonacci number sequence and golden ratio was used to solve the above equation.
The result was:
It produced a number sequence that has importance throughout the natural world.
After the first few numbers in the sequence, the ratio of any number in relation to the next higher number is approximately .618, and the lower number is 1.618.
These two figures are known as the golden mean or the golden ratio.
The Golden Mean and Golden Ratio
These numbers are pleasing to the us and appear throughout biology, art, music, weather, creatures and even architecture.
Examples of natural objects based on the Golden Ratio are:
Snail shells, galaxies, hurricanes, DNA molecules, sunflowers and many more objects that occur in the natural world.
Retracement Levels
The two Fibonacci percentage retracement levels considered the most critical by traders are: 38.2% and 62.8%.

Other important retracement percentages are: 75%, 50%, and 33%.
So how can traders use them?
Well, there are three main advantages and they are:
1. Fibonacci numbers Define exit numbers
If three or more Fibonacci price levels come together, a stop loss can be placed above the area which indicates an important area of support or resistance.
Setting stop loss trades using Fibonacci retracements allows traders to set pre defined exit points, so they can exit the market if their wrong.
This means they can trade in a disciplined fashion and protect their equity, which is critical to all traders.
2. Fibonacci levels Can Define Position Size
Depending on the risk a trader wants to take on a trade Fibonacci numbers can give the size of position to be taken, in terms of risk the trader wishes to assume.
Why?
This is simply because the monetary loss from the stop for a trade is different on most positions taken in the market.
A stop close to resistance and support may mean that a bigger position than one where support or resistance is further away.
Traders can therefore decide position size within their money management parameters easily and have a pre defined exit point.
3. Fibonacci Numbers & Profit Per Trade
With Fibonacci numbers, once a pattern completes against a Fibonacci price area traders can use them to lock in profits.
This indication of how far a profit may run, enables traders to lock in profits at pre defined set levels.
The advantage of the Fibonacci number sequence is they are a predictive tool:
So, they allow traders to have specific stop loss and profit objectives in advance.
Traders can then use them to lock in more profits and cut losses to a minimum, which is essential for longer term profitability.
Gann used them for this purpose and that is why they are such a useful tool for traders
One of the keys to trading any market is discipline:
To cut losses and run profits and win over the longer term by trading without emotion.
Gann knew this and all traders who have traded know how emotions can wreck a trading plan and the Fibonacci number sequence makes a trader stay disciplined.
Do they work?
Gann understood that using Fibonacci numbers could make large profits and cut losses on his trades and he used them to amass a fortune of over $50 million.
Fibonacci numbers are useful but should be used as part of a trading plan and Gann for example did not just rely on them he had an array of innovative tools that he combined to make stunning profits.
He was one of the most successful traders of all time and his legend lives on and many savvy traders around the world still use his methods
Check them out and you may be glad you did.
Not only are they innovative, they can give you big profit potential and that's what we...Read more


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How Does Moving Average Help Forex Traders?

The need for accurate trading systems and techniques has become a major necessity for all these new forex traders. Among one of the important concepts a new forex trader should know is what a Moving Average means, how it's calculated and what its use as a trading indicator is.
Moving Average is defined as a technical indicator that shows the average value of a particular currency pair over a previously determined amount of time. This means, for example, that prices are averaged over 20 or 50 days, or 10 and 50 min depending on the time frame you are using at the moment of your trading activity.

As an averaged quantity, MA's can bee seen as a smoothed representation of the current market activity and an indicator of the major trend influencing the market behavior.
This smoothing effect of the Moving Average is very helpful when the trader is looking for getting rid of the "noise" in the price fluctuations of the currency pair he is trading at the moment and a more precise emphasis in the trend direction is required.
The basic mechanics of how Moving Averages can tell you where the forex market is moving (up or down), at the moment of your analysis is by considering two different time frame Moving Averages and plotting them on the forex chart. It is very important that one of these MA is over a shorter time period than the other one; let's say one will be over a 15 days period and the other over a 50 days period. Most trading station software available by a number of brokers will let you do this plotting and much more.

Once you have plotted the two Moving Averages, you will notice points of crossover where the shorter time period MA will cross above the longer time period MA indicating an upward trend in the market, or if the crossing is below the longer period MA that will be an indication of a down trend in the forex market.
So from this simple concept you can commence to understand the basics of confirming trends when checking your forex charts during your...Read more

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Wednesday 25 November 2015

Integrating Technical and Fundamental Analysis in Forex Trading

I have come to the conclusion that market moves technically based on the forces of demand and supply.However, this movement is greatly catalysed from time to time by economic indicators.


The movement of the market actually refers to the vibration of market prices.Our focus is the forex market, and this is the kind of market that is unique.The uniqueness of the forex market is seen in the ability of the traders to participate both in a bullish and bearish market. In order words, forex trader can choose to sell when a fall is obvious or buy when a rise is definite.

Price goes up when there is more buying force of the pair than there is selling force in the market.Conversely,
the price will go down when the sellers are more forceful than the buyers.In a nutshell,there are only two forces in the market at any time; buyers and sellers.Hence, the market price always tend to move in the direction of the net force.

The movement of market price is not fashionless! History proves that market exhibit certain patterns and thsese patterns tend to replicate from time to time.Hence we conclude that market moves technically.Since buying and selling is natural,it becomes difficult to predict with absolute accuracy the next scenario without error.However, this error becomes limited in the same capacity as the prediction itself.The equilibrium point definitely exists between the accuracy and inaccuracy of the technical analysis of the market.

I have discovered that forex traders-including successful ones, cannot be right all the time and cannot be wrong all the time.Having known this powerful truth,the success of the forex trading therefore requires good money management as well as risk management plans.For instance, I have determined not to risk more than 2% of my trading account per day and not just per trade! And I will not trade when there is know probability of having profit that will be twice my risk. I like my profit loss ratio  to be 4 ratio 1.

As brilliant as technical analysis is, one still needs to integrate it with respect to fundamental analysis.This is because great momentum is released during the release of ecnomic news/indicators like NFP,CPI,INTEREST RATES,EMPLOYMENT CLAIMS and so on.

How do you know which news to trade and which to avoid? Well, I tend to give attention to those news whose impact colour on forexfactory.com is red. I reset the time on the website to my time zone. Once it is 15 minutes to the actual time of release, I will place pending buying order 20 pips above the current pirce and pending selling orders 20 pips below the current price. I will wait till the news is released. Once one order is activated,I close the second other immediately.The stop loss is usually 25 pips and take profit can be 50 pips or even 100 pips or more.Note that I said the current price at 15 minutes to the release of the news.

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Tuesday 24 November 2015

How To Use Currency Correlation In Forex Trading

Currencies are priced in pairs, no single pair trades completely independently of the others. This makes the understanding of correlation very important.
For example, currency pair "A" moves in the same direction as pair "B" and we have been following up pair A's move very closely. We expect it to go up and we buy. We have not been following up pair "B" so closely and suddenly we look into that and the fundamentals or technical analysis suggests us that this pair may go down. We short sell. What eventually would happen that we would end up having profit on one pair and loss on the other as they moved in same direction. Similar case would happen if we simultaneously go long or short on two pairs which move in opposite directions.

Once we know about these correlations and their changes with time, we can take advantage of them to control our portfolio's exposure.
The correlation coefficient ranges between -1 and +1.
A correlation of +1 implies that the two currency pairs will move in the same direction 100% of the time. A correlation of -1 implies the two currency pairs will move in the opposite direction 100% of the time. A correlation of zero implies that the relationship between the currency pairs is completely random.
Positive Correlation:
A positive figure but less than +1 means that the currency pairs generally move in same direction but not always. A value closer to +1 means that most of the time they move in the same direction.
Negative Correlation:
A negative figure but more than -1 means that the currency pairs generally move in opposite direction but not always. A value closer to -1 means that most of the time they move in opposite directions.
How to use currency correlation when you are trading Forex? Well, your slow speed because of an occasional traffic jam on the expressway does not really indicate that the average speed you would end up on the road will be same. The correlation are dynamic and change every moment. Take a note of the correlation of the past few days and compare it with the correlation value in the long term, say past one year. If the short term value is far different from the long term value, may be it's offering you a chance to place a trade... but how? Let's say that currency pairs A and B has a correlation value of 0.98 during past one year. It means that they both move in almost the same direction. When currency pair A moves up, currency pair B also moves up with the same speed. Suddenly you notice that during the past one month or one week the correlation value of the currency pairs A and B is 0.10 i.e. moving in the same direction but with a different speed. To clarify as an example let's say two cars are moving towards the same destination, one is moving at 100 miles/hr and another at 10 miles/hour. But we can assume that ultimately both may have to catch up on the speed (similar speeds). So what do we do? Well, we find out which one is slow and ride that.
When we convert this car example to currency trading, suppose two currency pairs move in the same direction and have been moving up with a correlation over 0.60 in the long-term and we find that suddenly the correlation value in during the past few days has become 0.20, we just see which currency pair's movement (increase is slow) and we could buy that. On...Read more



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Tuesday 17 November 2015

Forex Market Analysis 17/Nov/2015

EURUSD Forecast    
The EURUSD had a bearish momentum yesterday and hit 1.0660 earlier today. As you can see on my H1 chart below, price slipped below the bullish channel and now struggling around 1.0670 support area. The bias is bearish in nearest term especially if price able to make a clear break below 1.0670 targeting 1.0600 before testing 1.0500 region. Immediate resistance is seen around 1.0725. A clear break back above that area could lead price to neutral zone in nearest term testing 1.0770 ā€“ 1.0800 but overall I remain bearish and any upside pullback should be seen as a good opportunity to sell. Fundamental focus today will be on German/Euro Zew Economic Sentiment and US CPI/Core CPI which are expected to be a market catalyst.




USDJPY Forecast
The USDJPY had a bullish momentum yesterday and hit 123.35 earlier today. The bias is bullish in nearest term testing 124.00/50 area. Immediate support is seen around 123.00 A clear break below that area could lead price to neutral zone in nearest term testing 122.50. My major technical outlook remains neutral but as long as stays above the H1 EMA 200 I still prefer a bullish intraday scenario at this phase with stop loss below the H1 EMA 200.



GBPUSD Forecast
The GBPUSD didnā€™t make significant movement yesterday. The bias remains bullish in nearest term testing 1.5300 ā€“ 1.5350. Immediate support is seen around 1.5180. A clear break below that area could lead price to neutral zone in nearest term testing 1.5100 or lower. My major technical outlook remains neutral. Fundamental focus today will be on the UK CPI y/y and US CPI/Core CPI m/m which are expected to be a market catalyst.


USDCHF Forecast
The USDCHF had a bullish momentum yesterday and hit 1.0106 earlier today. The bias is bullish in nearest term testing 1.0125. A clear break above that area could trigger further bullish pressure testing 1.0200/40 key resistance. Immediate support is seen around 1.0070. A clear break below that area could lead price to neutral zone in nearest term testing 1.0000 but overall I remains bullish and any downside pullback should be seen as a good opportunity to buy. Fundamental focus today will be on German/Euro Zew Economic Sentiment and US CPI/Core CPI which are expected to be a market catalyst.


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Friday 13 November 2015

How To Trade In The Direction Of The Forex Market Trend

Market is dynamic.Therefore, a forex trader must possess a good and dynamic  trading system in order to adapt to the idiosyncratic,vibrational ,and translational movement of the market price.A forex trader needs to know the resultant direction of the market trend within certain period of time.This is crucial because the real meat is in the trend.Either you are a bounce trader or a breakout trader,I admonish you not to trade against the prevailing  trend.

The question that most traders ask from time to time is "How Can One Know The Trend?". The answer is not far-fetched.There are many trend-indicating tools and indicators.For example,
The immediate trend is up if the last support is higher than the one immediately preceding it.Also, the trend is said to be upward if the last resistance is higher than the one that came before it.That is a series of higher supports and higher resistances.

We shall use trendline to elucidate this assertion.Briefly, a trendline is a straight line drawn on a forex chart to connects either two or more supports or two or more resistances.It can show both major and minor trends.


From the diagram above,it can be seen that a blue straight line connects S1 and S2. This is a good example of an uptrend. It is an uptrend because S2 is higher than S1 and R2 is higher than R1. Also,we see another straight line whose colour is red.This one connects R2 and R3. It is important to note that R3 is lower than R2.Hence this is downtrend and the red line is a bearish trendline while the blue line is a bullish trendline.

Still on the chart above,We know that price defined an uptrend from S1 to R2. A steady fall occurred from R2 to S3 which pierced and passed through the blue line and continued downwards. When price pierces through a bullish trendline and moves down, we usually say that the trendline is broken. Such scenarios usually suggest in-flush of sellers and out-flush of buyers.However, we observed that price moved down as as far as S3 retraced to R3 and resumed the fall until S4 leading to the formation of another trend which I call minor trend.I call the red line a  minor trend because S4 failed to go beyond S1 and price eventually moved from S4 to R4(breaking the red trendline).The major trend is the blue line because its first support (S1) remains unbroken despite the threat posed by the sellers.The minor trend is the red line because S4 could not exceed S1 before the bearish trendline breaks.


 From the diagram above,it can be seen that a red straight line connects R1 and R2. This is a good example of an downtrend. It is a downtrend because R2 is lower than R1 and S2 is lower than S1. Also,we see another straight line whose colour is blue.This one connects S2 and S3. It is important to note that S3 is higher than S2.Hence this is an uptrend and the blue line is a bullish trendline while the red line is a bearsh trendline.

Still on the chart above,We know that price defined a downtrend from R1 to S2. A steady rise occurred from S2 to R3 which pierced and passed through the red line and continued upwards. When price pierces through a bullish  trendline and moves up, we usually say that the trendline is broken. Such scenarios usually suggest in-flush of buyers and out-flush of sellers.However, we observed that price moved up  as as far as R3 retraced to S3 and resumed the rally until R4 leading to the formation of another trend which I call minor trend.I call the blue line a  minor trend because R4 failed to go beyond R1 and price eventually moved from R4 to S4(breaking the blue trendline).The major trend is the red line because its first resistance (S1) remains unbroken despite the threat posed by the buyers.The minor trend is the blue line because R4 could not exceed R1 before the bullish trendline breaks.

                  Trade To Get Rich In 2016

The advantage of this set-up is that it avoids trading against the strong trend and also reduce over-trading.
If one can clearly identify major and minor trends in the market, than it becomes more sensible to trade in the direction of the major trend and ignore the opportunities to trade against the major trend.

Remember, once a level remains unbroken, then it defines the the trend.That somply means that  a trend is defined with respect to a level that sustains it.Hence, every support sustains an uptrend while every resistance defines a downtrend.A downtrend is questionable when a resistance is broken.Similarly, an uptrend cannot be explained when a support break.
I hope this helps alittle.Is your forex trading account in trouble? Or  are you just new to his world of trading?

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Thursday 12 November 2015

Trading MACD Double Top Divergence

Although this concept is quite widely applied, its inherent value is worth repeating. As the market enjoys a trading range between its relative support and resistance levels the market will reverse direction at specific points tempting each of us to find a way to isolate those great entry points, where the potential reward far exceeds the risk, providing us with a favorable risk to reward ratio. Traders hold these situations with very high regard because we are able at times to increase the position size, as our risk can be paired down to a minimum while our possible return could significantly improve our overall account equity. So the question remains, how can we find these spots on the chart on a consistent basis?

As the market reaches and reverses direction at these critical price levels, we may see the emergence of a 'double top or double bottom' pattern. This occurs when the market tests and fails to break above (or below) a specific level at least twice and then subsequently reverses course. Let's take a look at a typical double top pattern. At times the market will break above this double top and continue to higher highs, while other times the market will in fact return to a lower price level from which it came. So far we have found a way basis to make a trade, but we still lack a qualifier or an outside source of information that will keep us far away from the losing trades, and allow us the chance to benefit from the winning trades. Although no single technique is proven accurate all the time, we can improve our success ratio by simply adding a popular technical indicator such as the MACD. The MACD histogram (in this example) measures the relationship between two exponential moving averages; 12 and 26-periods.

How to apply this indicator: As the market tests a certain price level for the second time, we should simply note the position of the MACD histogram. If the histogram registers a lower high while the market attains at least a similar high price, this shows us divergence, or in other words, a disagreement between the indicator and the market's price action it measures. On the other hand, if the MACD histogram reaches new highs as the market tests its high barrier, this convergence may indicate a likelihood of a continuation to the upside. When we spot MACD divergence as the market's trading at its highs, traders may consider selling short just below resistance with protective stops placed above the recent highs of this infamous double top. Once again, by doing so, our risk can be kept to a bare minimum while our potential profits remain...Read more


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Eight Powerful Forex Trading Indicators

There are several valuable technical trading tools that I use on a shorter-term and even an intra-day basis. While I am not a "day trader" and am more of an intermediate-term "position trader," I do have many readers that are day traders or trade shorter timeframes. Thus, I like to provide analysis and clues that do help out those traders who use shorter trading timeframes. And even for the longer-term position traders, shorter-term trading tools can help refine their all-important entry and exit strategies. Below are some of my favorite shorter-term chart signals that I employ.
(You'll note that my favorite shorter-term trading signals are not computer-generated, in keeping with my philosophy that while computers certainly aid traders in many ways, they can never replace the extreme value of the human eyes examining a price chart.)
Collapse in volatility:
A collapse in market price volatility occurs when trading ranges (price bars) narrow substantially. This price pattern is evidenced by price chart bars (the bars can be daily, hourly or in minutes) that suddenly get smaller. The smaller price bars should number at least three in a row, and do not necessarily need to get progressively smaller with each bar. This "collapse in volatility" usually sets off a significantly bigger price move--either up or down. As the smaller price bars accrue on the chart, there is no set number of bars that will set off the bigger price move. It could be three bars, or it could be 10 bars or more before the bigger price action is set off.


Outside days (or bars):
Outside days (or bars) occur when the last price bar is bigger (a bigger trading range) than the previous bar on the chart. If the close (or last trade of the bar's timeframe) is higher than the previous bar's last trade, then that is considered a bullish "outside day" (or bar) up. A bearish "outside day" (or bar) down occurs when the close (or last trade of the bar's timeframe) is lower than the previous bar's close, or last trade.


Inside days:
These occur when the last price bar is "inside" the previous bar--meaning the trading range is smaller and inside the previous bar's trading range. In other words, the last bar's high is lower and the low is higher than the previous bar's trading range. Inside days (or bars) signal that the market is taking a break after a busy period. Inside days can also be an indicator that a collapse in volatility may be setting up and that yet another bigger price move could be on the horizon. After a big price bar and busy trading day, one can expect the next session could be an "inside" rest day.


Key reversals:
These are more important chart signals that occur less frequently than most others I discuss in this feature. Key reversals are one important signal of a potential market top or bottom. A key reversal occurs when a new for-the-move high or low occurs, and then during that same day (or trading bar), the price sharply reverses direction to form an "outside day" up or down. Some analysts will call this, alone, a key reversal. But in my trading rules, a key reversal must be confirmed by follow-through strength or weakness the next trading session (or trading bar). Follow-through greatly helps eliminate false signals and makes a market "prove itself" after a bigger move.


Exhaustion tails:
These occur when either buying or selling apparently is exhausted after prices make a fresh-forĀ­the-move high or low that creates a bigger price bar on the chart. Then prices reverse course to close at the other extreme of the bar's earlier move. Thus, you get the bigger bar that creates a "tail." These tails are then important guideposts because they then become an important resistance or support level on the chart.


Closing Price:
Most traders agree that the most important price of the trading session is not the open, the high or the low--but it is the closing price, or settlement. After an entire session of buyers and sellers doing business, this is the level at which they have agreed (voluntarily or involuntarily) on price. I place more emphasis on a closing price below an important support level or above an important resistance level, or above or below a trend line or chart pattern--as opposed prices just probing above or below those levels during the session only to then pull back.


Daily or weekly high or low closes:
If a market closes near the session high or at the weekly high close, that's a sign of market strength and suggests there will be at least some follow-through strength the next trading session (or price bar). On a close near the daily low or a weekly low close, this suggests market weakness and that follow-through selling could occur the next trading session or price bar.


Gaps:
These chart formations occur when price bars push well above or below the previous bar to form a gap on the chart. (The last bar's low is higher than the previous bar's high for a gap-higher move. The last bar's high is lower than the previous bar's low to form a gap-lower trade.) Gaps can be created on a minute, hourly, daily, weekly or monthly chart. Price gaps indicate a strong market move and many times the gaps will then serve as...Read more



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Forex MACD Rule Of Thumb

MACD is one of the most commonly used technical indicators for market price and it is relatively simple to apply and understand. It uses 2 sets of moving averages to determine trend characteristics. Momentum is determined by subtracting the longer moving average from the shorter moving average and plotting the results, which may be above or below zero, as a line. The standard model uses a 12 day exponential moving average and a 26 day exponential moving average. A positive MACD indicates that the 12 day moving average is trading above the 26 day moving average and conversely a negative MACD indicates that the 12 day moving average is trading below the 26 day moving average.

Bullish Trend:

If MACD is positive and rising, then the 12 day moving average is increasing at a faster rate than the 26 day moving average and the gap between the two is widening. Positive momentum is gathering pace. This trend is considered bullish - a signal that the price is going up.

Bullish Signals:

1) Positive Divergence
Positive divergence occurs when MACD advances upwards at a time when the price is still in a down trend. MACD forms a sequence of higher lows (each low higher than the previous day or period). Positive Divergence is the least common of the 3 bullish signals but it is the most reliable and leads to the greatest price moves.
2) Bullish Moving Average Crossover
This occurs when MACD moves above its 9 day EMA or trigger line. These are the weakest of the 3 bullish signals, are very common and are not very reliable as market signals in their own right. They should never be used in isolation.
3) Bullish Centreline Crossover
This occurs when MAC moves upwards from a negative value and crosses the 0 axis to a positive value. Of the 3 bullish signals, a centreline crossover is the second most common. It is generally regarded as a confirmation signal.

Bearish Trend:

If MACD is negative and decreasing, then the 12 day moving average is falling at a faster rate than the 26 day average and the gap between the two is expanding. Downward momentum is accelerating. This trend is considered bearish - a signal that the price is falling.

Bearish Signals:

1) Negative Divergence
Negative divergence occurs when the price advances or moves sideways and MACD declines. The divergence can either take the form of a lower high or a straight decline. Although this is the least common of the 3 bearish signals, it is the most significant and reliable one.
2) Bearish Moving Average Crossover
This is the most common signal. It occurs when MACD falls below its 9-day EMA signal level. Be warned! These signals are so common that they often produce false signals. The moving average crossover should be read in conjunction with other signals to avoid expensive mistakes.
3) Bearish Centreline Crossover
This occurs when MACD moves below the zero line and into negative territory. It is a clear indication that the momentum has shifted from positive to negative and from a bullish to a bearish trend. This signal can be a confirmation on its own or may be used as a confirmation together with negative divergence or a bearish moving average crossover. Either way, once MACD is negative, it means the trend has become bearish, even if it is short-lived.

MACD Rules of thumb:

  1. Buy/Sell when MACD goes above/below the signal line (9 Day EMA).
  2. Buy/Sell when MACD goes above/below zero.
  3. When MACD crosses the signal line it is an indication of a strong market.
  4. When MACD rises dramatically, i.e. pulls away from the 9 day EMA, it is an indication that the price is over-extended and that the market is either overbought or oversold and will soon return to...Read more

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How To Define The Best Stop Loss Point


The suggestions below  are based on 4Hours chart.
These ways of defining Stop Loss points have worked for me, but they  does not necessarily work for you, so ask your mentor or an expert friend to do evaluate the probability of fitting those suggestions to your trading strategy.

Why 10 pips? This is because sometimes price hit the important support or resistance levels by more than a touch.

Please don't forget, the Stop Loss issue is not actually a game. It is not even an option for you; it is a "MUST" and will save you when you can do nothing, so refresh your mind in this case.


  • Use 10 pips over/below the first Parabolic SAR spot(dot) appeared over/below the price candles for Short/Long Trades.
    Note#1: Remember you just can use 10 pips above the parabolic SAR dots as an Stop Loss point when you have a Short trade and Vice Versa.
  • Note#2: You realized that the Stop Loss obtained from SAR is too far from the point which you want to enter the market. OK, this means you are about to enter the market very late so better to not do it.
  • Use 10 pips over/below the day before yesterday's HIGH and LOW and in the case of the market has moved a lot far, use 10 pips over/below the yesterday HIGH and LOW as a Stop Loss point for your Short/Long trades.
  • Use two Moving Averages of 55 EMA and 144 MA. You may place your stop loss just 10 pips below/above one of those two MAs depending on how do you set up the profit/loss game for your Long/Short trades.
    Note#: If you trade on the range market break out be aware of this kind of Stop Loss setting, and it is quite safer to use another way.
  • Place the Stop Loss 10 pips over/below Bollinger Bands Upper/Lower band for Short/Long trades.
  • If you use Elliot Waves theory to analyze the market:
    # Place the Stop Loss just 10 pips below the lowest point of the Second (2) wave in bullish trend when you LONG on Wave 3.
    # places the Stop Loss 10 pips below the lowest point of the 4th Wave when you go for LONG on 5th Wave.
    # Place the Stop Loss right above/below the top/low of the previous wave when...Read more




How To Increase Your Forex Profits By 100% In 10 Minutes

This simple exercise will increase Forex profits 100% and works for 99% of all short-term FX traders - stop trading so much - widen out your stops - widen out your profit targets - and only trade in the direction of the trend indicated by 4 hour chart.
1) Stop trading so much
Sure there are no commissions but the spreads are HUGE and believe it or not (well you'll believe it after you do the simple exercise below) the spreads are reducing your profits 100%!
2) Widen out your stops
Initial stop loss should be a minimum of 23 points; I use between 23 and 35 point stop losses for short-term trading.
3) Widen out your profit targets
Unless you think a trade can make you 100 points or more don't do it.
4) Only trade in the direction of the 4 hour chart
The real money is made in the direction of the trend

Simple exercise
1) Download all your trades for the year into an excel spreadsheet (if you don't know how to do this ask your broker for help).
2) Determine the dollar value of the spread for each trade.
3) Sum up the total dollar value of all spreads for all trades and add this number it to your current account balance; this is your spread adjusted account balance.
4) Take your spread adjusted current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
5) Take your actual current account balance and divide it by your opening balance at beginning of year; the result will be a percentage change.
6) Subtract your spread adjusted year to date percentage change from your actual year to date percentage change.
7) That number should be 100% or more
8) Take the necessary steps as outlined above (1 to 4) and improve your...Read more



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