Forex

Introduction This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. Probably most of you have taken a course or studied the use of charts in the past. This should add to that knowledge. Recommendation There are several good charting packages available free. Netdania is what I use. Using charts effectively The default number of periods on these charts is 300. This is a good starting point; Hourly chart that’s about 12 days of data. 15 minute chart its 3 days of data. 5-minute chart it’s slightly more than 24 hours of data. You can create multiple "tabs" or "layouts" so that it’s easy to quickly switch between charts or sets of charts. What to look at first 1. Glance at hourly chart to see the big picture. Note significant support and resistance levels within 2% of today’s opening rate. 2. Study the...

  Remember a basic principle: candlestick charting techniques are a tool and not a system. For example, one must view a candlestick pattern within the context of the surrounding technical picture. Without doing so would be, as the Japanese proverbs says, “Like leaning a ladder against the clouds” With candle charts, one can use candle charting techniques, or Western techniques, or a combination of both. This union of Eastern and Western techniques provides traders with uniquely effective tools to help enhance profits and decrease market risk exposure.   Here are 7 candlestick patterns every trader should know. Engulfing This pattern consists of two candles and a bullish engulfing pattern is when a white real body engulfs (hence the name) a small black real body during a downtrend. It doesn’t mean a stronger rally on a candlestick chart but it does increase the likelihood of that being excellent support and could be the start of an ascent. Be careful....

The Elliott Wave theory is based on how groups of people behave. Mass psychology with swings from pessimism to optimism and back is described as the basis for the patterns the Elliott wave is suppose to identify. The Elliott Wave Principle is named after Ralph Nelson Elliott who did most of his work on wave patterns in the 1930s and 1940s.  Mr. Elliott contends that social, or crowd behavior trends can be recognized in the price trend activity in the financial markets. Elliott came up with thirteen patterns or "waves," that he suggested recur in the markets.  Linking those waves together he suggested helps to identify larger versions of those same patterns that occur over longer periods of time. The basic patterns in Elliott's theory is what is known as impulsive waves and corrective waves. An impulsive wave is made up of five sub waves and moves in the same direction as the larger price trend. A corrective wave is made up of three sub waves and moves...

The Williams %R is an indicator developed by Larry Williams and is similar to the Stochastic Oscillator in calculation but where the Stochastic compares the close to the lowest low over a specified period, the Williams %R compares the close to the highest high over a specified period. The Williams %R is sometimes called Williams Overbought/Oversold Index. When prices are trending, Oscillators like the Williams and Stochastics should be viewed with a careful eye when looking at overbought and oversold signals.  Generally, when the oscillator is in overbought territory, a crossover into the middle range for the indicator is a signal that prices may fall near term.

Moving averages are used to help identify the trend of prices.  By creating an average of prices, that "moves" with the addition of new data, the price action on the security being analyzed is "smoothed".  In other words, by calculating the average value of a underlying security or indicator, day to day fluctuations are reduced in importance and what remains is a stronger indication of the trend of prices over the period being analyzed.  The term "Moving" refers to the method of calculation which takes the average value over a fixed period of time and adds the latest period data to the calculation of the average while dropping the first period of the calculation so that the average continues to be calculated by the same number of periods but moves with each new period of data that occurs.  Thus the average "moves" along with price and changes in value as price data is generated.  An 18 day moving average represents the trend in prices over a...

To calculate Pivot Points enter the following parameters: “High”, “Low” and “Close” of a price move. You can use the Pivot Point Calculator to calculate Pivots from up to four Forex pairs simultaneous. Pair 1   High   Low   Close Pivot Point   Pair 2   High   Low   Close Pivot Point   Pair 3   High   Low   Close Pivot Point   Pair 4   High   Low   Close Pivot Point     Calculate   Reset Pair 1 Pair 2 Pair 3 Pair 4 R3 M5 R2 M4 R1 M3 PP M2 S1 M1 S2 M0 S3 Powered by www.forexeasystems.com Pivot Points has been already used in the 70th from floor traders and are until today one of the most popular ways to determine support, resistance and market turning points. Download the desktop version free of charge here:  Downloads

To calculate Fibonacci Retracements Levels enter the following parameters: “High”, “Low” and “Close” of a price move. For your confidence, you can use the Fibonacci Calculator to calculate levels on up to four currency pairs at the same time. Pair 1   High   Low   Close Pivot Point   Pair 2   High   Low   Close Pivot Point   Pair 3   High   Low   Close Pivot Point   Pair 4   High   Low   Close Pivot Point     Calculate   Reset Pair 1 Pair 2 Pair 3 Pair 4 R3 M5 R2 M4 R1 M3 PP M2 S1 M1 S2 M0 S3 Powered by www.forexeasystems.com As Fibonacci Retracement Levels are very effective to spot actual support and resistance levels, we created a desktop version from the Fibonacci Calculator. Download the desktop version free of charge here:  Downloads

The higher the leverage you use, the   harder   it's going to be for you to make money. The more leverage you use the more value each pip has. Since the pips are worth more, you have to risk fewer pips per trade to avoid risking your account's wellbeing. Here's the problem. When you risk fewer pips, you'll get stop too close to the market's current price. Then any market "hiccup" will take you out with a loss. If you had lower leverage, you would have had more room for the trade, and it may have very likely become a winner. Many new forex traders are trying to trade with these really tight stops (10 to 15 pips). That's way too close.   Decrease your leverage   and give your trades some room to breathe. You'll probably find that you have more winning trades. Another reason why you shouldn't trade with tight stops is that it becomes a known target for Forex Brokers and will be triggered if possible to take your money however small your trade....

The Relative Strength Index (RSI) is one of the most popular Technical Indicators in oscillator charting methods. RSI is normally used to compare the currency strength and to predict currency price movements. Developed J. Welles Wilder, the Relative Strength Index ( RSI ) is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between zero and 100. Traditionally, and according to Wilder, RSI is considered overbought when above 70 and oversold when below 30. Signals can also be generated by looking for divergences, failure swings and centerline crossovers. RSI can also be used to identify the general trend. RSI is an extremely popular momentum indicator that has been featured in a number of articles, interviews and books over the years. In particular, Constance Brown's book, Technical Analysis for the Trading Professional, features the concept of bull market and bear market ranges for RSI . Andrew Cardwell, Brown's RSI mentor, int...

Trading Forex requires good understanding of the basics and some common ways for the trading. Many people enter trades and fail because they ignore the following points although forex trading is open to all people. The important point to notice is that forex trading like any other business requires good understanding of the basics. Below is presented four tips that must be followed when trading forex: 1. Don’t use forex robots unless Well understanding them: many people that are new to forex trading can buy the forex robots that say that the person can make many bucks per month with it for long lifetime. This can be attractive to new forex traders and buy it with knowledge oh how it woks. Forex robot sellers say that it will make hundreds of points per month. The point here is that the person buying them must know how they work and know also the basics of the forex trading. 2. Use simple Forex Trading System : when beginning to trade, one can depend on many indica...

A thorough understanding of how to effectively use support and resistance is crucial for any aspiring professional forex trader. There are essentially 4 primary ways to implement support and resistance levels into your forex trading routine. The 4 primary support and resistance forex strategies include: using support and resistance to trade consolidating markets, using support and resistance to trade trending markets, using support and resistance to trade breakouts, and using support and resistance combined with candlestick strategies to find confluent areas. Trading Ranges Notice in the chart below how price has been stuck in a trading range between about 135.85 and 131.00 for over 2 months. By watching for price to enter into a trading range scenario like the GBPJPY daily chart below, you can simply buy or sell bounces off the trading range high and / or low. When price gets near the top of the range you can sell with a stop loss above the highest high of the trading range, and wh...

Wikipedia : A pivot point is a price level of significance in technical analysis of a financial market that is used by traders as a predictive indicator of market movement. A pivot point is calculated as an average of significant prices (high, low, close) from the performance of a market in the prior trading period. If the market in the following period trades above the pivot point it is usually evaluated as a bullish sentiment, whereas trading below the pivot point is seen as bearish. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations. There are several different methods for calculating pivot points, the most common of which is the five-point system. This system uses the previous day's high, low and close, along with two support levels and two resistance levels...

In the 13th Century, an Italian mathematician named Leonardo Fibonacci made a remarkable discovery: Rabbits, when placed in an enclosed area for one year, will reproduce a new pair of kits in a very precise, repetitive pattern. Fibonacci also contributed to the science of numbers, and introduced the "Fibonacci sequence" The Fibonacci sequence is the sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, introduced in his work "Liber abaci" in a problem involving the growth of a population of rabbits. Aside from this sequence of number where every next number is the sum of the proceeding two, 0, 1 (0+1), 2 (1+1), 3 (2+1), 5 (3+2), 8 (5+3), 13 (8+5), etc. There are the "Fibonacci ratios".. By comparing the relationship between each number, and each alternate number, and even each number to the one four places to the right, we arrive at some fairly consistent ratios.. The important ones are .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and for good mea...