Forex Trading - Economic Indicators in Fundamental Analysis

Tuesday, March 8, 2011

Forex or currency trading can be analyzed and traded using two methods. One is technical analysis and another is fundamental analysis. This article will focus on fundamental analysis.

Fundamental analysis refers to trading forex based on the economic and political performance of the country as these two factors generally influence the exchange rate. Fundamental traders use a variety of news and economic indicators to support their decisions in trading. The news and numerical indicators are usually announced or published by the government or experts at certain period intervals such as monthly or quarterly. With the availability of internet, these indicators are easily accessible and hence, traders are able to react to the news faster.

There are many numerical indicators available and some have marked influence on the market price while others affect the exchange rate moderately and some even less. The effect of those indicators that highly influence the currency market can be observed in the price chart after the release of the indicators or news. Upon release, there is a catalytic effect leading to a high and rapid fluctuation of the currency market.

Listed below are some of the indicators that notably affect the economic growth and inflation that in turn, influence the exchange rates:

• Gross Domestic Product (GDP) - this indicator represents the monetary value of all products and services generated in a country over a specified period of time. It is considered the greatest indicator of a country's economy. This information is released on the last day of the quarter, 8.30am EST by the Bureau of Economic Analysis.

• Non-Farm Payroll (NFP) - this is one of the statistics included in the employment report. The report details information such as pay roll, unemployment and job growth. NFP is regarded as the most important due to its significance to the economic growth and inflation. This report is released by the Bureau of Labor Statistics on the first Friday of every month at 8.30 EST.

• Consumer Price Index (CPI) - this index is used broadly as a measure of inflation. It is considered as an indicator on the effectiveness of government policy. A rise in CPI signifies inflation while a fall denotes deflation. This piece of news is usually released by Bureau of Labor and Statistics around the 20th of each month, 8.30am EST.

• Retail Sales - it is a significant measure of consumer spending based on the data supplied by the retail stores on the monetary values of the merchandise sold as well as their inventories. This data is published by Bureau of Census around the 12th of each month, 8.30am EST.

There are many more indicators such as Purchasing Managers Index, Industrial Production, Consumer Confidence Index, Trade Balance and Housing Starts which are released on different day of the month and therefore providing ample opportunities to trade forex based on fundamental analysis.


Trading Forex With Trend Line Indicators

Trend Lines are the most powerful technical analysis tools. They allow you to gauge the trends direction, identify potential reversal levels and enter trades with low risk and high reward. In this article, you will learn how to use trend lines indicators in FOREX trading.

Trend lines are a basically a dynamic support or resistance level. Unlike horizontal levels which are a static level, the trend line is a level that advances with time. The trendline can be either ascending trendline or descending trendline.

There are two main methods of trading trend lines.

Method 1: Bounce

The core of this trading method is that support or resistance are a psychological barrier that price does not break easily. Traders that are trading the bounce wait for price to touch a support or resistance trendline, and to begin a reversal. They then join the new trend, entering in the direction of the reversal.

This method has two main advantages: the first one is that the trading signal behind the trade is based on support and resistance and therefore is strong and reliable. The second advantage is that the trade is taken close to the level, which means that the stop loss is very tight and risk:reward is good.

Method 2: Pullback

The pullback method is slightly different, though it is also based on support and resistance. The basis of the pullback method is waiting for price to break the trend line and then retrace back. Then, traders enter trade in the direction of the breakout.

This method is more reliable than the bounce method as the trader enters trade after a breakout has been validated, and therefore has the trend on his side. However, these trades are much less frequent and therefore it is hard to base your entire trading methodology on this method alone.


RSI is the Best Trading Indicator For Beginning and Advanced Forex Traders

Monday, March 7, 2011

Have you ever wondered what trading indicator you could always use regardless of your skill level? RSI, the Relative Strength Index, is such an indicator. It is an indicator that can be used as a standalone trading system without the need for any other method.

Helpful for the beginner

If you are new to trading Forex, simplicity is important. The RSI indicator can help you understand what is happening on your charts with a minimum of learning. Most Forex educational formats teach you about every tool in the toolbox when you don't need all of the tools in the toolbox to trade Forex.

The problem with Forex education

Suppose you went to college to get a degree in a particular kind of mathematics. While you were in school however you had to take classes in every aspect of mathematics so that when you were done you still didn't really know that much about the area of mathematics you were interested in. For the most part Forex educational systems teach you about everything in a "vanilla" sort of way so that when you are done you look around - after spending $5,000 - and are still wondering how to trade Forex.

The RSI has 4 signals to learn

Suppose you could learn 4 different signals on one chart. Suppose that when you looked at a trading chart regardless of currency pair or time frame,that with a few calculations you knew more about what was going on on that chart then most professionals. RSI allows the trader to get an immediate picture of what is happening on a trading chart in a matter of minutes.

Manually or automatically

RSI has been around since 1978 and is still used extensively to determine whether prices on a trading chart are overbought or oversold. This is NOT the correct use of RSI. It does not determine whether prices are overbought or oversold. However this is what most books and educational formats will tell Forex traders. The 4 signals of RSI are positive and negative divergence and positive and negative reversals. All 4 of these signals can be plotted manually using the drawing tools on a chart or they can be implemented automatically using an indicator called The RSI Paint Indicator.

Why these signals are so important

In the 9 1/2 years - 2000 to June 2010 - there were over 9200 of these signals on RSI hourly charts. You can imagine how many more there were on 15 minute charts. On hourly charts over that period, reversal signals averaged over 70 pips per trade. If 25% of those trades were one kind of reversal that would mean roughly a total of 17,000 pips per year or 71 pips averaged per trading day on hourly charts.

Nothing else is needed

RSI does not need trend lines to tell the trader when to trade. It doesn't need Fibonacci, or Gann or Elliott Wave. RSI is a standalone trading indicator that measures momentum in the market and uses the 4 signals above to tell the trader when to trade.

If you are just starting out in Forex or you have been trading unsuccessfully you should consider the small investment in learning RSI a step in the right direction. You can learn more about RSI by reading the eBook, RSI Fundamentals, Beginning to Advanced.


Forex Trading - The Best Forex Indicator

I don't believe in fancy indicators or indicators on other convoluted indicators. This is all made too complicated by forex traders.

At the same time, I think a lot of traders try to under simplify too reaction to all the over complication. I've heard of traders that don't use any indicators and just stare at price and take trades. Believe me, there are some who have the experience to do that. 99.99% chance that you're not one of them.

You do need a guide when staring at the hard right edge of the chart. I wish I could just tell you to use a simple moving average and just move on. Ha! That doesn't quite work. You need something a little more advanced than that.

However, the ultimate indicator does use moving averages. I'm talking about the MACD. I'm sure you know it. It charts at the bottom of your charts as a histogram. What it's telling you is the difference between two different moving averages. In other words if you were to chart a 5 period MA and a 15 period MA, then you would notice that at times the two lines are getting closer together. That's when the histogram would show just little spikes. Other times the MAs are moving further apart. When this happens, the MACD shows bigger spikes. So you can track the difference between two moving averages with this MACD.

Now, how the heck is that useful? It's useful because when a move in the market is running out of momentum, the longer moving average will catch up to the shorter moving average, even if the price is making new highs. When that happens, you get a divergence. The price just made a higher high, but the MACD made a lower high.

This doesn't mean the price will change direction every time, but it does mean that there is a better than 50% chance that the price will change direction. You can place your stop (mental stopless) at the top of the high and wait for a break downwards, enter on the down break and hold it for at least the size of your stop. Then get ready to exit on the sign of a turn around.

This is the simplest, best, easiest trade I am aware of. Most traders discount the power of MACD divergence. You don't have to be one of them.

Oh, I forgot to give you my best MACD settings. I use 5-15-1. Of course, you are free to use whatever you'd like, but that has worked the best for me.


What is the Best Swing Trading Indicator?

Swing traders could not ask for much more than an indicator that could offer the chance of knowing in advance when the market they were trading was at its breaking point. If you could know in advance when a market was ready to turn, this would greatly increase your chances as a trader of entering into a profitable trade. Luckily, such indicators already exist and when used properly they offer to give you an enormous edge while trading. These indicators are known as momentum indicators.

While many indicators are lagging, momentum indicators are leading. Put simply, they offer a glimpse at future price movement before it has occurred. Momentum indicators work on the basis of measuring a currency pair's level of momentum. As a currency pair begins to slow down and lose speed or momentum, the indicators warn of this and alert traders that a possible retracement in future price movement may be about to happen. By plotting a currency pair's momentum, a trader can know in advance when markets may be preparing to pull back.

One such momentum indicator is called the RSI. The RSI (relative strength indicator) shows levels of a currency pair that are considered overbought or oversold. When the indicator is in these areas, a trader should be on the lookout for potential price retracement. When a currency pair goes into overbought or oversold, there is a fairly good chance that it will retrace in order to adjust to the new price levels before it continues. By knowing in advance when this may happen, traders can close trades out early and lock in profits before they are wiped away and lost forever in the retracement.

If you want to know future price movement in advance, then take a look at momentum indicators, especially the RSI, today. The RSI is one of the oldest and most trusted trading indicators available. This may just be the trading indicator that you are looking for to give you an edge in your swing trading.


Do Bollinger Bands Work?

Sunday, March 6, 2011

There is a lot of question asking whether the Bollinger bands work at all for a trader. From my experience using it, the answer is YES and therefore in this article, I will be sharing with you how I use the bands to trade. Those traders who have problems with using the bands are usually trading using it alone. In fact, there is no way you can trade with a single indicator. You must always trade with several indicators and then place your trade when most of them are showing a confluence of signs.

The Bollinger bands work best when it is used together with an oscillator like the stochastic of RSI. The upper and lower bands demonstrate the range that the currency is ranging and there are a few ways you can trade using this range.

1) Reversal Trading: When the currency hits one of the bands, you should immediately check the oscillator to see if it is oversold or overbought. If the price hits the upper band and the oscillator is showing overbought, this is a good SELL signal and if the price hits the lower band with the oscillator showing oversold, it is a BUY signal.

2) Breakout Trading: If the Bollinger bands are moving in a narrow range, it is a sign of consolidation and you should be waiting for the sudden movement of the price to enter a trade. This is how you can make use of the bands to trade breakout.

The Bollinger bands is definitely a good indicator to have and you must learn how to make use of it to improve your trading strategies.


Forex Trading - Combining Internal and External Indicators for Bigger Profits

If you are involved in forex trading, you obviously need to generate forex trading signals for profit and you will be able to make bigger profits and achieve long term currency trading success, if you combine a visual view and then trade off shifts in price momentum, so let's look at how to do this.

A Visual view

Be objective! The right price is the market price and you can see this clearly by using trend lines. There is no better way to spot areas of support and resistance to trade than to use trend lines.

Many traders however like to use subjective indictors to do this like cycles and Elliot wave but these require you to decide where support and resistance lies.

Why bother?

Drawing trend lines and looking at support and resistance gives you the reality and objective areas you can trade against.

You can use other indicators such as moving averages and Bollinger bands, but you need to start with trend lines and use these as back up.

Furthermore avoid Fibonacci retracments, they are simply assumed levels and they break at least as often as they hold.

An internal view.

As we have discussed above, good old fashioned trend lines will give you the reality of price and important support and resistance levels clearly right in front your eyes.

You now need to calculate the odds of success of trading into these levels.

You will need some momentum indicators to do this - these will tell you the strength of price movement up or down and help you calculate the odds of success.

For example if price momentum weakens into resistance chances are it will hold if it increases on a break of resistance chances are the trend will continue.

There are two great price momentum indicators that any novice can use effectively:

The relative strength Index (RSI)

Developed by trading legend Wells Wilder (if you have not read new concepts in technical trading get a copy) its over 25 years old but a classic work and this is a classic powerful indicator.

The stochastic indicator

Developed by George Lane, this is one of the best momentum indicators if not the best, you can use.

There easy to use in forex trading and are covered in our other articles in more detail.

Trading is an odds game!

Trading is an odds game and for this you need to see the reality of price as it is and then get the odds in your favour by watching shifts in price momentum.

It is the shifts in price momentum you can use to execute your trading signals and get the odds in your favour.

If you follow the above tips and get both an external visual view and combine this with price momentum, you will have the basis of a powerful currency trading system.

Furthermore, you will be using objective analysis and trading on the facts, rather than using subjective analysis, which means you have to predict, which by its very nature is doomed to failure.

Follow the above tips and they will help you get the odds in your favour when trading forex and lead you to currency trading success.


Forex Charts - Using The ADX Indicator For Bigger Profits

If you're using charts, then you want to trade the strong trends - and the Average Directional Movement Index Indicator, or ADX, enables you to do this.

Wells Wilder developed the ADX, and outlined it in his classic book "New Concepts in Technical Trading Systems".

Let's look at this essential indicator in more detail - and see how to apply it on your forex charts, to give you greater accuracy when generating your trading signals.

Determining the Strength of the Trend

The ADX is a momentum indicator, which aims to measure the strength of the trend - and attempts to determine if the market is trending, or is trading sideways.

The Advantages of the ADX

A core belief of technical analysis is that a strong trend in motion is more likely to continue, than reverse. Therefore, you always want to be trading strong trends - as your odds of success are higher. The Average Directional Movement is a good indictor - and you should consider using it as part of your currency trading system.

The Technical Bit

For the boffin's out there, here's the technical bit - don't worry if you don't understand the calculation, its easy to use when visually plotted. The ADX is based on the comparison of two other directional indicators, both of which were also developed by Wilder, and they are:

Positive Directional Indicator (+DI) and the Negative Directional Indicator (-DI) to produce ADX as showed in the following formula:

ADX = SUM[(+DI-(-DI))/(+DI+(-DI)), N]/N


N: Refers to the period of calculation. The formula above produces the ADX line, which oscillates between 0 to 100 values. The +DI and -DI are both present and can be seen to make up the indicator.

You don't need to understand the above calculation to use the indicator - you only need to accept that the indicator works.

The indicator is easy to use when it's visually plotted - and you'll find it included, with most of the good forex chart services.

How to Trade using the ADX Indicator

The ADX it's not a bullish, bearish trading signal generator - and should never be used as such.

The ADX indicator simply indicates the strength of the trend - and other indicators should be used to enter, and exit trades.

Although the ADX fluctuates from 0 to 100, it rarely moves above 60.

Use the ADX in the following way:

Readings above 40 indicate the strength of the trend.

Readings below 20 indicate range trading and flat periods of consolidation.

You can use the crossing of +DI and -DI to determine the trend direction; when +DI crosses -DI upward, it's a bullish signal, on the other hand, when +DI crosses -DI downward it's a bearish signal.

The ADX line is a great momentum indicator and like the RSI (also developed by Wells Wilder), the ADX it will help you trade the strongest trends - and give you advance warning of changes in momentum.

The Bottom Line

If you want currency trading success, you can't just trade support and resistance levels, and hope they hold or break. You need confirmation of momentum to get the odds on your side - and the ADX indicator will assist you.

Final Words

New Concepts in Technical Trading Systems was published in 1978, and was one of the first trading books I ever bought. Every trader should make this book a part of his or her forex education. If you want to learn forex trading the right way, get the book, and use the ADX indicator to increase your chances of making big FX Profits.


Forex Secrets - Developing the "Anti-Chaos" Trading Strategy and Tactics at Forex Market (Part I)

Saturday, March 5, 2011

"Trading chaos": B. Williams's contribution and the reasons why millions of traders all over the world lose their deposits when they work according to the techniques of this author.

The book "Trading Chaos" by B. Williams is the classical edition that deals with giving the technical analysis to Forex. It is of a great interest not only to me but also to millions of B. Williams's admirers all over the world. From the viewpoint of mine as a trader, this book is so popular because B. Williams tried to do the following:

1. To present Forex chaotic market as a system, making use of the chaos theory.

2. To depict his vision of logic of the structural components motion in this chaos: a) the strategy (Elliot's wave theory); b) the tactics (the fractal analysis; the use of fractals and the so-called "key factor" - i.e., financial and economic instruments.

3. To submit 5 levels of the professional training of every trader. Each of these levels is clearly described and specified - as well as the corresponding goals and the instruments that traders must be capable of using at each of these levels.

In particular, the following chapters of the book in question are dedicated to the problems enumerated below:

Chapter 6. The first level - a trader- novice.

Chapter 7. The second level - an advanced beginner.

Chapter 9. The third level - a competent trader.

Chapter 11. The fourth level - a skilful (trading) trader.

Chapter 12. The fifth level - a trader -expert.

4. Besides, B. Williams enumerates 5 "bullets" that can "kill" any trend -i.e., its reversal points (points of reference). Starting from such points, one can develop new strategy and tactics of the work within the trend.

5. B. Williams also recommends making a business plan. In this "control list", one must clearly specify "the working rhythm", the signals from "the big finger" concerning the deal opening, "stop-loss" levels, cushion pads (suspension pillows), etc.

6. As a professional psychotherapist and trader, B. Williams submits practical recommendations to the beginners and skillful (competent) traders - see Chapters 11 and 12 from "Trading Chaos». The essence of his attitude to traders' principal psychological problems can be approximately formulated as the following. We learn how to integrate into the market basic structure and establish contacts with the market via realizing our own prejudices and by the development of our individual trading programs. You should compare this approach with other psychoanalysts' viewpoints. Such "specialists" try to make money at Forex market rather incompetently (see Chapter 23, dedicated to traders' psychological problems that arise during the work at Forex and methods of their "healing").

7. As the logical continuation of "Trading Chaos", B. Williams has written another book - see "New Dimensions in Exchange Trading". In this book, the author presents his business approach - i.e., Profitunity "via the web".

· He has introduced the indicators (AO, AC and Alligator). Now they are regarded as the obligatory) components of the majority of Forex trading systems.

· He tried to "specify (detect) all market signals" and open deals at the moment when such signals coincide simultaneously, which must be confirmed by different indicators.

I would like to keep on complimenting B. Williams for his accomplishments and contribution to Forex theory but for "one snag to it". Several years ago I started to reflect on certain aspects of B. William's theory. That is, as a rule, 95-97% of traders had lost at Forex before the edition of "Trade Chaos 1, -2" and "New dimensions". At the same time, notwithstanding all achievements and discoveries by B. Williams, the number of traders -losers still remains the same even after the editing of these books.

This circumstance forced me to scrutinize many of B. William's positions more impartially and in detail. I have cardinally reconsidered my views on the trading at Forex.

As I see it, one must clearly distinguish domains where techniques by B. William's and other authors are applicable and where they do not work but only accelerate the process of losing money by a trader. Only after having learned how to detect this boundary one can develop one's own trading system that will bring profits at Forex.

Further, I try to submit my views on Forex market. Starting from the theory, I make a transition to its practical application. In this way one can better understand logic of the currency pair movement at Forex market. Consequently, this approach helps us to trace out a general pattern of opening and closing of transactions at Forex.


Previously Forex was a chaotic market. B. Williams tried to find elements of a system, making use of the theory of chaos. At present the system "tries to disguise its goals and plans" with the help of a superficially chaotic character of movements in this market.

As regards Consortium, the PRINCIPAL CONCLUSION that a trader must make after reading this chapter is the following. This market has ceased to be spontaneous. Now it is organized and controllable. At present volumes of transactions, opened by traders, have ceased being of great influence. Somebody's interest "to push" a currency towards this or that direction has become much more important. Often this interest aims at usurping an N- transaction volume and a number of traders' orders. The primary goal has become to reverse all currency pairs into the opposite direction. This is why the currency often "moves" against the volume, news and the common sense. The charts on April 1, 2005 perfectly illustrate these tendencies. I sincerely hope that everybody sees that these graphs do make exceptions but they don't confirm the rules of Forex.

This is why the techniques of working at Forex, written by those classicists who dealt with the spontaneous market, will more and more diverge from the currency real (true) quotations. It is necessary to mention that at the spontaneous market the direction of the trend and its intensity coincide with the trading volume. At present the base of Forex market is changed in its essence. Now it's being driven by INTEREST of a certain grouping but not by spontaneous forces. This grouping prescribes the currency quotations to us at the market. It is ready to reverse currency pairs against any volume of traders' orders.

The reader should recall one of A. Elder's principal ideas - this author is the classicist of the stock market technical analysis, a trader and the professional psychotherapist. He states that the market is being driven by a crowd (flock), which opens the deals towards one direction. This results in the trade formation.

It is justified when one deals with the chaotic market.

But what does happen at Forex market at present?

Let us again return to the example of USD trend reversal from the "bear" type to "bull" one.

The charts on April 1, 2005 are depicted below.

Chart 8.1. EUR/USD movement (For view picture see notes in end of article)

Chart 8.2. GBP/USD pair movement. (For view picture see notes in end of article)

Let us scrutinize GBP/USD pair behavior on April 1, 2005 after issuing of positive data on GBP and negative ones concerning USA economics. During March, in Great Britain CIPS manufacturing index made 52.0 (the previous value had been reconsidered from 51.8 down to 51.6). In New York, the oil price heightened by $ 2.40 - up to $ 57.70 per barrel. It was the new record-breaking high price in 21 years. During March in USA Nonfarm payrolls were minimal to start from July of the previous year. Its previous value was revised towards its diminution. Michigan sentiment index was 92.6 in March (the forecast had been 92.9 - it had coincided with the previous value). All USA indexes had fallen down.

I hope you take on trust that at the same moment all other currency pairs were adjusted for benefit of USD rate rise against other national currencies. Those who do not believe can check it - these data are public and open to general use.

There arise the questions.

1. Can traders all over the world open transactions in USD "bear" trend almost at the same moment (from M1 to H4 and D1). That is, under the condition of the issue of negative news on USA economy, all traders simultaneously started to buy USD and sell all national currencies. Consequently, USD rate began to sky-rocket. Clearly, this situation contradicts the news, logic and common sense.

2. One should pay attention to the synchronous character of motion of all national currency pairs. The difference in time makes from a fraction of a second to a minute.

The charts on April 29, 2005 serve as another example.

Chart 8.3. EUR/USD pair movement (For view picture see notes in end of article)

Chart 8.4. GBP/USD pair movement (For view picture see notes in end of article)

Analysts attract our attention to the following facts. In the European session EURO/USD pair rate had increased up to the point 1.2976. In the American session it fell down to 1.2852, minimal to start from April 15. The rate fell more than by 120 points. Analysts emphasize the fact that high values of several other USA indices (CIPS and Chicago PMI) pegged USD rate.

In USA in March the personal income index was +0.5%. At the same time, the prognostication had been +0.4%, which had coincided with the previous value. In USA in March the personal spending index made +0.6%. The prognostication and the previous value had been +0.5% and +0.7%, respectively. In April Chicago PMI made 65.6. The prognostication had been 63.0, whereas the prognostication and the previous value had had been 63.0 and 69.2, respectively.

As the consequence of this second "fortuitous" reversal of currencies, USD trend at H4 was changed - from April till the end September, 2005 - i.e., during half a year (at least when his chapter was being written).

As the result of this reversal, national currencies were depreciated with respect to USD. The corresponding indicators (gauges) are the following:

· EURO fell by 1100 points (from 1.2972 down to 1.1865);

· GBP fell by 1900 points (from 1.9164 down to 1.7271);

· CHF fell by 1600 points (from 1.1882 down to 1.3484);

· AUD fell almost by 500 points (from 1.7844 down to 1.7365).

It is an absurd joke, isn't it?

That is, the trend has reversed synchronously with respect to all national currencies by 1000-1900 points for half a year just because of the following events in USA on March, 2005:

- Chicago PMI index was +0.5% instead of +0.4%;

- personal spending index made +0.6% in place of the previous value +0.7%.

Were these events stimulated by traders' wishes and expectations? That is, does it look like all traders simultaneously were being staking wrong over and over again during half a year!

Giving analysis to all the events of those two days, one can see a striking alternative:

1. Either we assume an absurd possibility that there does exist "a world-wide plot of traders" - big gamblers at Forex " included. That is, traders can always act synchronously, whereas National Banks of all countries keep on remaining oddly passive.

2. Otherwise, proceeding from these and hundreds of thousands of the analogous examples, we must admit that Forex is not a spontaneous, unpredictable and chaotic market any more. Now it is replaced by a market, controlled by somebody. In terms of Financial Times and the journal "Currency profiteer (speculator)", this parent group (the organizer of Forex ), is called "Consortium". Below I use this term as well. Consortium is capable of the following:

a). in a fraction of a second to reverse USD trend more than by thousand of points with respect to all national currencies of the world;

b). not to give any chance to National Banks of all countries in the world to prevent the steep fall (or rise) of their national currency rates with respect to USD. Surely, it is assumable that National Banks closely collaborate with this Consortium. However, in this context another statement is important. That is, USD rate reversal occurs simultaneously with respect to exchange rates of all national currencies. However, it looks rather dubious that this very day wishes of all National Banks' suddenly coincided with the purposes of Consortium. Probably, another situation is more realistic. At least some of National Banks were forced to obey Consortium's resolution - i.e., to reverse USD trend with respect to other currencies, their own included.

Thus, there emerges a completely different model. One must not follow "the crowd" ("the flock"), trading volumes and postponed orders at Forex. Giving analysis to a series of factors (the trading volume included), it is necessary to understand the interests and aims of those who give quotations at Forex. Our goal is "to trade together with those individuals". Very often it is against the "crowd" and "volume" of transactions opened by traders. It is illustrated by the example of the charts on April 1, 2005.

Let's dwell on the difference between the goals of Organizer and common participants of any of financial games.

Imagine yourself in the position of an organizer of any financial game, the game of " Forex " included. In the shoes of Organizer, first of all you must determine your goals and principles, opposite to those of other participants of this "game".

1. For the game organizer it is to gain profit regularly and stably.

2. For this purpose, Organizer tries to establish the game rules as simple and "impartial" as possible. His goal is to make this game attractive for all other participants. In this way Organizer collects a large audience of traders, independently of their age, profession and other differences between them.

And now one should look at the familiar aspects from this viewpoint.

a). The fundamental and technical analysis; the army of economists-analysts and other "specialists" who teach all participants to work at Forex "as all do".

b). The classical version of notions of the support and resistance levels (indicators, advisers, etc.), intended for placing all suspended orders and stop-losses approximately at the same points.

c). An abundance of news and factors that influence the currency quotation behavior. As the result, one can readily explain the movement of any currency pair in any way one likes - however, such explanations are submitted post factum.

In case of logical gaps in "impartiality" of the currency pair movement explanation after the issue of news, "foul (forbidden)" methods are always "at service". It is just impossible to refute this reasoning! There are the examples: "the market is unpredictable", "the currency has already finished "working for" the given news before its publication", "the participants have noticed a negative aspect of the index high values, which for sure will manifest itself in future", "an unknown clearing bank has placed an order for buying a given currency in a large amount - under the condition of the "bear" trend (when all trader stake on "sell")", etc. Can you prove the opposite? Surely, you cannot.

You should compare the behavior of the controllable and spontaneous currency markets under the condition of force major.

Only the force major factor is totally unpredictable by Organizer. Such circumstances impartially and clearly indicate the difference between the spontaneous and organized (controllable) markets.

In any area, extremities always play the role of the moment of absolute truth. That is, such extreme situations indicate weak and strong points of any system. It relates to politicians' behavior at crucial periods in a State, to putting on trial equipment and to the situation at the currency market under force major circumstances.

The Episode #1. The force major circumstances in USA on September 11, 2001. There is the difference in the behavior of spontaneous and controllable money-markets.

Chart 8.5. EUR/USD pair movement (For view picture see notes in end of article)

Chart 8.6. GBP/USD pair movement (For view picture see notes in end of article)

The results of trading at Forex on September 11, 2001 ( Forexite Ltd.) are the following. The dollar rate sweepingly fell as compared with the principal national currencies. EURO/USD rate increased more than by 200 points (from 0.8965 up to 0.99167). GBP/USD rate increased more than by 210 points (from 1.4559 up to 1.4773). USD/JPY rate fell almost by 330 points (from 121.84 down to 118.58).

The reason for drop in USD rate was the terrorists' attacks on New-York and Washington. According to news agencies, terrorists had had high-jacked passenger planes. The latter were directed at Trading Center in New-York and Department of Defense (Pentagon) in Washington. The planes had fallen down, which caused the subsequent conflagration and collapse of Trading Center two sky-scrapers. As the result, the trading at New-York Stock Exchange did not take place that day. It was suspended for a not fixed period of time.

The events in USA stimulated the drastic strengthening of CHF rate. In American session USD/CHF rate fell more than by 530 points (from 1.6895 down to 1.6365). EURO/CHF rate fell more than by 200 points and came down lower than the level of the strong psychological support - 1.5 CHF for 1 EURO - to the point 1.4950. The matter is that CHF is considered saving (salutary) currency under the conditions of various world crises. Consequently, investors were anxious to buy CHF as many as possible in such an uncertain situation, induced by the act of terrorism in USA.

Do you get it? Panic captured the whole world - in the first place, USA itself. At the same time, USD rate fell with respect to

- EURO by 2%;

- GBP by 1.47%;

- JPY by 2.7%.

Now let us determine the real fall in USD rate all over the world. As the starting point we take Special Decision by National Bank of Ukraine.

The board of directors of National Bank of Ukraine adopted the resolution, in accordance to which National Bank of Ukraine could fix a rate without taking into account demand and supply. After the act of terrorism in USA on September 11, currency exchange centers in Ukraine raided USD buying rate from 5.25 down to 3.0-2.5 hrivnia (Ukrainian national money) per $1. USD selling rate was being maintained at 5, 35 hrivnia per $1. National Bank of Ukraine stipulated that USD exchange rate had not to deviate from the official rate more than by 10%. Only after threatening to cancel the license to work at the currency cash payments market (Available Funds), currency exchange centers return to buying of USD in cash according to the rate that had been in force before September 11, 2001.

That is, in contrast to the controllable market, the spontaneous one reacted to one day of the force major of September 11 by the double fall in USD rate and more!

Thus, the difference between the reactions of the currency exchange spontaneous and controllable markets makes 50 times and more.

Is it a pure accident? Thus, it looks as at that day the traders, one and all, deciding to stand by USD - so that in their transactions they did not stake on USD rate slump? Or, probably, some of traders bought USD against other national currencies, even not knowing whether USA economics will retain the leading positions in the world or it will level with undeveloped countries (e.g., such as Ukraine). Is it possible? You just imagine what would happen if another plane or two were fallen on reactors of nuclear power plants in USA so that the major part of America would turn into "Chernobyl zone"!

See continuation of this article under name Forex Secrets - Developing the "anti-chaos" trading strategy and tactics at Forex market (Part II)

Note: Full text of this article and pictures of examples Article

If you wish to be trained on Trading System Masterforex-V - one of new and most effective techniques of trade on Forex in the world visit Masterforex-V Academy


Trend Lines Are Still a Great Technical Indicator For Forex Trading

When you are forex trading you really need to take advantage of anything you can. A slight edge can mean the difference between thousands literally. That is where this article comes in. We are going to look at how drawing trend lines can give the forex trader an advantage.

Just a basic reminder about technical analysis, technical indicators make different mathematical calculations and display the results on a price chart. The skilled forex trader interprets these technical indicators and makes trading decisions.

The most basic technical indicator is is one that you can draw with your own hand, it is referred to as a trend lines.

To draw trend lines simply:

1. Print out an historical price chart for a given time interval of a currency pair.

2. draw a line connecting two or more parts of a graph that have higher lows, or lower highs.

Poof, now you have trend lines. The trend line represents the basic price direction of the currency pair. When the price of the currency pair breaks through the trend lines in the direction opposite of the trend, you would expect a reversal.

By reversal I mean this:

1. If the prior trend was upward and the price broke through the trend lines moving down, this would indicate a new downward trend using the trend lines method.

2. If the prior trend was downward and the price broke through the trend lines moving up, this would indicate a new upward trend using the trend lines method.

Trend lines can act as either floors or ceiling for price data. When these lines are penetrated, the price usually moves completely to the other side of the trend line.


Forex Day Trading System for Beginners - What's the Best Forex Day Trading System?

If your new to the Forex Day Trading System, then it is well worth becoming versed on all the tools and analysis instruments before you dive in. Do not feel that through buying a piece of software which when all the green lights light up you open a trade and then when all 4 Red lights appear you close your deal. This is not how to trade.

There's so much garbage out there, it makes it very confusing for beginners to discover the genuine Forex day trading systems. What you ideally should be delivered when you choose an Fx day trading system are the following.

Firstly, you should receive one-on-one training from your own personal account manager. He or she will be able to train you either over the phone or through an online chat system. To avoid costs these are also conducted through online workshops or seminars.

Secondly, you should receive a guide from this system. Normally in PDF eBook format this will verse you with their platform, detailing there technical analysis, Forex Charts readings, Forex Glossary and their financial indicators.

Thirdly, you should receive Video Tutorials. These are an integral part of your Forex day trading course. Here you will be taught how to open a trade, modify it and close the deal. You will also be taught how to use there specific software which will calculate potential profit scenarios.

Fourthly, and not every system includes this on their platform - but you should have access to their Inside Viewer. Here you can see what currencies traders are trading on this platform, which are the most popular and which are being bought and sold and the aggregate structure of these deals.

Choosing the best Forex day trading system will be invaluable to your success on trading Fx online.


Hundreds of Currency Trading Indicators, Which One to Use?

Friday, March 4, 2011

You probably have looked at your trading platform in the past or even recently and wondered which currency trading indicator or indicators are the best one(s) to use. It's not easy to decide because most traders do not understand how and why they were developed. And many of the indicators that were designed for a particular purpose, do a poor job of meeting that purpose.

How does a trader decide which indicator or indicators to use? First, using too many indicators is a recipe for disaster. One of the 26 Reasons Why People Fail In Forex, is the use of too many indicators. There is a plausible reason for this. The short answer is that the indicator that gives you the best percentage signal for a trade is the best indicator for you to use. So, if you have 3 indicators all telling you to trade and one has a 45% win percentage and the other two have less, then the 45% winning percentage is the one you should use. Adding up all 3 of your indicators does not give you an increased chance of winning. I explain this more completely in the book.

Second, which indicator is the best one to use? There are going to be many arguments regarding this. Many professional traders use some kind of momentum indicator or oscillator in their trading decisions. The best one in my opinion and in the opinion of many is RSI, the Relative Strength Index. However, as in most cases when it comes to indicators is that people are using the wrong information when it comes to reading what they say or mean.

For example, RSIs best use is not overbought and oversold readings. In fact, it can be easily proved that in most cases these reading are false. Nor is it the location of divergences simply because many traders today believe that divergences are signals for price to reverse when in fact they are signals that price is about to do the opposite.

The best use of RSI and momentum is a signal that is produced called a Reversal. I have written about Reversals here on this site and extensively in RSI Fundamentals: Beginning to Advanced (You can order this now and get a FREE copy of RSI Trading Examples Vol. 1 until January 2nd, 2011.)

If you learn about Reversals and where they occur you will be on your way to trading Forex in a successful way and the currency trading indicators question will no longer be an issue for you.


Free Forex Buy And Sell Indicators Really Help Forex Traders

A forex trader may not be able to make a profit with every investment they make in the forex market. But using technical analysis of historical data, the currency pricing momentum can be predicted. Experts who understand the process of foreign exchange provides free forex buy and sell indicators for gathering and using this information effectively. Forex buy and sell indicators are created by collecting data like average price of a given time period, volatility, currency price changes, difference in price range etc. Indicators help a trader to analyze the market scientifically and make decisions so that he can earn more profit.

Free forex buy and sell indicator helps to confirm trends or support and resistance levels in the forex market. They are also useful in deciding on a trading strategy particularly when the forex market is unstable. Forex market tends to move in trends due to macroeconomic factors and international capital flows. Often more than one indicator is needed to identify the market trend. Most traders use technical analysis using indicators to get an overview of the forex market and to check whether they are buying or selling at a fair price.

A common feature of markets like stock and forex market is that the price movements repeat itself in a predictable pattern called signals. Free forex buy and sell indicators uncover current market signals by examining past market signals. Similarly price fluctuations, often called trends are not random and unpredictable. Buy and sell indicators provide data like price and volume charts and other mathematical analysis of market data to identify current trend, the strength and sustainability of that trend over a period of time. These studies help traders determine when to enter or exit a trade in the forex market.

Free forex buy and sell indicator helps a trader to organize his trading plan. It is difficult for a novice trader screen out all fundamental aspects of the market and recognizes his entry and exit points as planned due to human inefficiencies like inconsistency, fear or tiredness. These indicators help you see your trading plan objectively and impassively.


The Best Indicator For Forex Trading

In the field of forex trading, you will encounter hundreds of different forex indicators and it will be very hard for you to know which one is the best indicator for forex. In fact, the choice of the best forex indicator is very subjective and it depends on each individual trader.

However in this article, I will be sharing with you a forex indicator that I feel is the best for me and I hope that it can be of help to you in your trading.

The Moving Average Convergence Divergence (MACD) is my personal choice for the best indicator in forex trading and it is because it has several features that are built within it. You can use the MACD to tell the trend of the currency pair you are trading as well as identify the possible reversal of the market after it has been trending for some time.

What I love about it is its ability to confirm a trend line break or any breakouts. The problem most traders face in trading is the occurrence of fake outs and this problem can be minimize with the help of the MACD.

Depending on your trading style, you can adjust your MACD to make it more sensitive or less sensitive. Making it more sensitive will give you more trading opportunity but at the same time more false alarms. Therefore it all boils down to your trading style and habits.

The above is what I feel the best indicator for forex trading but it will be very risky for you to trade with only one indicator. I usually trade the MACD with other 2 indicators to give me better entry and exit. I hope that you will also benefit from MACD as much as I do and wish you all the best to your trading.


What Are the Top Ten MetaTrader Indicator Options and How Are They Used?

Thursday, March 3, 2011

If you're reading this article, then you're probably already using one or more MetaTrader indicators to augment your trading with the MetaTrader 4 or 5 terminal. Indicators have been used by technical forex traders for years to generate buy or sell signals according to specific conditions and situations that arise in the markets. The top ten most popular MetaTrader indicators for the forex market are the:

1. Relative Strength Index or RSI - this indicator is self-explanatory. It measures a currency pair's strength by comparing current prices to past prices. The indicator flags when the currency pair is overbought, going over 70, and when it's oversold, going below 30.

2. Moving Average Convergence Divergence indicator or MACD - this indicator is used by traders to confirm market trends. MACD differs from a normal moving average in that it incorporates the convergence/divergence aspect and generates buy and sell signals when there is a crossover. The indicator is also effective in signaling key trend reversals.

3. Stochastic Oscillator - this is a momentum indicator that compares the current currency rate with the historical price. It indicates an overbought condition when it exceeds 80 and an oversold condition when it drops below 20.

4. Bollinger Bands - this indicator makes use of simple or exponential moving averages to determine relative price levels and volatility that are then used to generate trading signals.

5. On Balance Volume or OBV - this volume indicator is very useful in generating a trading signal based on positive or negative volume that is determined by the previously traded forex rate.

6. Accumulation/ Distribution or A/D indicator - a momentum indicator that gauges supply and demand by discerning whether the currency is under accumulation or distribution.

7. Money Flow Index or MFI - a momentum indicator similar to the Relative Strength index, however the MFI is volume-weighted and calculated using a 14 day period. By taking volume into account the index determines positive versus negative money flow and is measured on a 0 to 100 scale.

8. Average True Range or ATR - a volatility indicator that is determined by a 14-day moving average and three values: high-low, high-close and low-close. Like most volatility indicators, ATR calculates the activity level of a currency pair and cannot predict a directional change.

9. Average Directional Index or ADX - this indicator is used to determine the strength of a trend, and it is based on oscillators that range from 0 to 100. The ADX number rarely goes over 60, with 40+ indicating a strong trend and under 20 reflecting a weak trend.

10. Williams Percent Range or %R - a momentum indicator used to determine oversold or overbought conditions in a non-trending market. It is read like a Stochastic Oscillator except that it is drawn upside-down. Readings of 0 to -20 indicate an overbought condition while -80 to -100 indicate an oversold condition.

All of the above indicators are included in the stock MetaTrader indicator list which also includes 20 more indicators you can incorporate into your custom expert advisor. Technical indicators such as these can be instrumental in generating optimum buy and sell signals in an automated trading plan and should be studied carefully before incorporating them into your overall trading strategy.


How To Trade Effectively With Average True Range Indicator - A Forex Stop Loss Indicator

Welles J. Wilder a popular technical analysis has invented the Average True Range (ATR) indicator and several other trading indicators like parabolic SAR and RSI (Relative Strength index) indicator. Average true indicator is a famous indicator since it doesn't generate any objective Forex trading signals. ATR presents you the volatility of market without generating trading signals. It depicts the average volatility in last fourteen bars of candles. The techniques for using Average Truth indicator for successful Forex trading are as below.

To Calculate Stop Loss

One of the great benefits of ATR indicator is calculating stop losses. If you want to design a Forex trading system either manual or automatic, you must design it in such a way that it is universal and can return profits in different currency pairs. For designing a system profitable in different pairs, it should fit according to various Forex pair volatility. You can use the ATR for adapting the system to the different currency pairs and hence work without need for manual intervention for various pairs.

For instance, instead of fixing of the stop less with constant value as 20 pips you can set it in terms of ATR like 120% ATR so that stop less will be 1.5 times the time of Average truth indicator. By implementing such settings, you system will be more adaptive and suitable for different currency pairs without requirement of optimization.

To find out the strength of a trend

As a rule of thumb, if the value of average truth indicator is low, then it indicates a week trend. And when the ATR reads high value, then it indicates a strong trend and candle range increases with gaining momentum of price. It can be helpful to measure the trend strength before you enter into trading. If the ATR value is decreasing, it indicates the current trend is losing strength and it is risky to enter trade.

To identify reversals

Another great advantage of ATR is its use in identifying the tops and bottoms of market trends. The concept behind this method is the concept that when Average true Range indicator is at minimum value, it identifies that the price will be at reversal point. The traders must concentrate on ATR value, and should be cautious about price reversals if ATR hits the bottom.


The Best Forex Strategies Revealed For Consistent Profits

I have spent years trying different trading strategies and waiting for the perfect forex strategies to be revealed. Waiting for some secret or holy grail that would make my trading profitable. I tried different indicators and signals, I drew the trend lines support and resistance levels and studied everything I could about technical trading. I would do back tests on systems and the tests showed excellent profit but when I would trade the systems live I never could get them to make a profit. I would always end up losing money.

After several years and thousands of dollars lost I finally discovered the secret to profitable forex trading. The problem all those years was that I was looking in the wrong direction. There are endless numbers of trading strategies that are time tested and profitable. The secret is that it's not so much about finding a good strategy, the secret is about us becoming good at consistently trading any system we are using.

No matter how good the trading system is it won't do us any good unless we are effective with our trading. I was always blaming the strategies for my failures but when I look back on it the problem was that I was not being consistent with my trading. This is what causes most traders to fail.

It takes an extremely disciplined person to be able to stick to a system and trade without emotions such as fear and greed entering their trading decisions. When you bring human emotion to the table it alters your trading system and alters the results. If your emotions aren't right for trading it usually alters your trading in a negative way and often turns a profitable trading strategy into loser.

Another problem with forex trading is the market is moving 24 hours a day. While this is an advantage in some ways it can also be a big disadvantage. The disadvantage is you can't be watching the market 24 hours a day. You can't be there to catch all your trade signals. This alone can make many trading system almost impossible to follow unless you are working with a team of people who can monitor the markets 24 hours a day.

I don't know about you but I don't want to spend my life watching charts and I decided a while back that manual forex trading is really not for most people. The solution I found is to use automated programs called robots that will monitor the markets for you 24 hours a day and trade the forex for you automatically. Using a proven profitable system they will enter and exit your trades when the market gives them the signals. Modern robots are very simple to set up and one they are they everything automatically whether you are there or not.

When selecting a robot watch out for back tested claims. You want one that actually has a history of making a profit trading a live account. Most important is to make sure you can let it run on a demo account for a while and make sure it will make a profit before you use it with real money.

For me using a robot is the only way I have found that I can get consistent profits in my trading. The robot makes money automatically while I can spend my time doing other things that I enjoy.


Do Bollinger Bands Work?

There is a lot of question asking whether the Bollinger bands work at all for a trader. From my experience using it, the answer is YES and therefore in this article, I will be sharing with you how I use the bands to trade. Those traders who have problems with using the bands are usually trading using it alone. In fact, there is no way you can trade with a single indicator. You must always trade with several indicators and then place your trade when most of them are showing a confluence of signs.

The Bollinger bands work best when it is used together with an oscillator like the stochastic of RSI. The upper and lower bands demonstrate the range that the currency is ranging and there are a few ways you can trade using this range.

1) Reversal Trading: When the currency hits one of the bands, you should immediately check the oscillator to see if it is oversold or overbought. If the price hits the upper band and the oscillator is showing overbought, this is a good SELL signal and if the price hits the lower band with the oscillator showing oversold, it is a BUY signal.

2) Breakout Trading: If the Bollinger bands are moving in a narrow range, it is a sign of consolidation and you should be waiting for the sudden movement of the price to enter a trade. This is how you can make use of the bands to trade breakout.

The Bollinger bands is definitely a good indicator to have and you must learn how to make use of it to improve your trading strategies.


Day Trading Forex With Technical Indicators

Wednesday, March 2, 2011

Day trading technical indicators are the representation of mathematical formulae a day trader can use to decide when to do the trading. Forex day trading involves buying and selling of various currencies with the goal of making a profit from the difference between the buying price and the selling price within a day.

The day traders employ different strategies like short term scalping where positions are only held for a few seconds or minutes or longer term swing and position trading, when they hold the position for the whole trading day. For their trades they follow one or more day trading technical indicators or develop a strategy based on a combination of many such indicators.

A day trading technical indicator is a series of data points that can be derived by applying a formula to the price data. Price data includes any combination of the open, high, low, or close over a period of time.

Some technical indicators may use only the closing prices while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced, which in turn creates the indicator.

The list of day trading technical indicators is practically endless. There are Absolute Breadth Index, Bollinger Bands, Bull/Bear Ratio, Candlestick Charts, indicators based on Dow Theory or Elliot Wave Theory, Envelopes, Fibonacci Levels, MACD, Moving Averages, TRIX, Weighted Close, and many more. All these can be used as a day trading technical indicators with slight or no modifications.

For example, the absolute breadth index or ABI is a market momentum indicator which shows the activity, volatility, and change taking place in the market without paying attention to the direction of the prices. High readings implicate active markets. As a day trading technical indicator, it can predict future direction if combined with other indicators.

Bollinger Bands on the other hand are a kind of moving average envelope. It exist at standard deviation levels above and below the moving average and generally stay within the upper and lower bands. As a day trading technical indicators, it predicts the future market movements. Fibonacci numbers with 4 theories - arcs, fans, retracements, and time zones, which highlight reversals in trends.

Day trading technical indicators has three functions-to alert, to confirm and to predict. So a trader can never miss a trading opportunity or run into loss if he or she can use the indicators judiciously.

The best approach will be to develop a strategy based on more than one indicator. Learning how to use these indicators is more of an art than a science. Through careful study and analysis, a day trading technical indicator can be developed over time, but they can never be full proof.


Currency Trading For Beginners Made Easy

If you are a new trader looking for currency trading tips, this currency trading for beginners article is definitely one you should not miss. As a beginner, it can be quite tough as you are not well versed in the arena of forex trading. Therefore it is extremely important for you to have a good education so that you can have a good foundation in future.

Currency trading is not as simple as what you have seen in the advertisement. It is not something that can make you money with the click of a button, it requires you to put in time and efforts to learn and practice until you manage to get it right. Therefore I have decided to write this currency trading for beginners article to share with you things that I know.

Below are some of the things you need to learn as a beginner

1) Trend Line - The trend line forms the fundamental of trading and it is something that all currency traders must know. The trend line represents an area of support and resistance where the bulls and bears fought for territory.

2) Choice of Forex Indicators - There are over a hundred different indicators available for traders to use but it is impossible for anyone to use them all. Therefore you need to have a good understand of the various type of indicators in order to know which are the suitable one for your trading.

3) Types of Forex Strategies - As a trader, you definitely need to know the different ways you can trade the currency market. You can choose to be a breakout trader, scalper, range trader or position trader depending on your time availability and trading style. Therefore you need to spend some time to learn the various types of forex strategies and see which one suits your best.

There are a lot to learn in trading but the above are 3 most important things that you need to learn now in order to proceed. I hope that this currency trading for beginners article is of help to you by showing you the important things to take note so that you will not be lost.


What is a Good FOREX Buy and Sell Indicator?

Tuesday, March 1, 2011

A good FOREX buy and sell indicator would be able to tell the correct signals when the correct time to buy or sell a particular currency would be in order. Thanks to a lot of technologies nowadays, these have now been made possible at the control of anyone who purchases a FOREX autopilot system. These are FOREX trading software applications that allow an individual to trade in the foreign exchange market in the comforts of their own homes.

A nice feature of these autopilots is that since they are programmed to detect the signals the instant they are made, these robots can take appropriate actions without the need for human intervention. In most cases, this is, by any means, faster than a human trader would be able to react and place a call to make a trade, thereby giving you an unparalleled advantage.

Another advantage this has is that it contains various programs of all trading indicators, which it assesses against collected data it picks up, analyzes from that trend, and then takes the appropriate measures to get you the best possible deal. This is where it excels over human emotion and uncertainty when making a trade, which sometimes is the cause of lost opportunity and the difference between making a profit and losing it.

In many instances, it is the fear of making the appropriate decision that tends to make a difference in successful trading. Multitasking is also a strong point of the FOREX robot. This is because it can do all the mathematical computations relevant to the data at hand, and it will always know the best time when to buy and sell even without human intervention. This gives you the opportunity to enjoy time with the family and delve into your other pursuits in life.

These FOREX robots already come prepared in their packages, and all you need to do is install them on a computer and make sure they are connected to the Internet. They show all the lists of indicators and the currency pairs you will be trading against in the software. After picking one, you need not make any adjustments to the program itself unless you want to make fine tunings yourself. Having a FOREX autopilot system installed in your home is the best choice you could ever make if you want to do trading with currencies. Since these robots also have the best FOREX buy and sell indicator systems equipped in their package, you have all the assurance of having the best tools for the job available to you.


Forex Charts - Essential Indicators For Bigger Forex Profits

If you want to use forex technical analysis, then you will need to look at forex charts to decide where to execute your trading signals.

You will of course need to combine indicators to do this - Here we will give you some essential ones, to help you achieve currency trading success.

Before we look at how to use forex charts correctly, lets make two things clear.

1. Day trading

Do not even try and attempt it. The time frame is to short and all volatility is random, so you have no valid data and will lose. Day trading profits is one of the biggest myths of forex trading - Don't fall for it.

2. You can't predict market turns in advance

Forget the far out investment theories like Elliot wave, Fibonacci numbers, cycles etc that are supposed to repeat with scientific accuracy - they don't. If they did everyone would know the price in advance - so there would be no market.

Right lets move on and look at forex charts and how to get trading signals for longer term profits.

Determining the trend

You have a choice trend lines or moving averages.

The former are better, as you have more precise levels but there is no harm in using moving averages as back up.

Your main aim is to determine support and resistance levels and decide if they are going to break or hold.

Determining Price Momentum

You need to ALWAYS trade in the direction of price momentum. An accelerating price momentum through resistance for example would favour the bulls; if price momentum drops it favours the bears.

There are two essential indicators you can use and if you don't know what they are learn them - the stochastic AND Relative Strength Index ( RSI) - these are simply great indicators for helping you enter trades and take profits.

Determining Volatility

You need to know about volatility from the point of view of warning pf price reversals and determining targets and there is no better tool than the Bollinger band.

This indicator should NOT be used to generate trading signals but as a warning of trend change coming, or in determining targets there is no better tool.

Using trend lines to determine areas of support and resistance combined with momentum indicators to time entry and exit levels is all you need.

These are objective tools that tell you what to do - Ignore ANY Technical tool that means you have to make subjective judgements i.e Elliot wave or cycles -they will simply see you lose.

The indicators above are essential tools and if you learn about them and combine them, you will have a simple robust method t trend follow or swing trade and ALWAYS trade with the odds in your favour.

If you remember the above in relation to your forex charts, you can achieve longer term currency trading success.


Why is it Important Use Forex Indicators?

Forex indicators are a series of data points applied to predict movement of currencies. It is a technical indicator containing following components.

♦ Stochastic Oscillator

♦ Relative Strength Index (RSI)

♦ Elliott wave theory

♦ Moving Average Convergence Divergence (MACD)

♦ Number Theory

♦ Gaps

♦ Chart formations

♦ Trends

Stochastic Oscillator:

It indicates the oversold and overbought conditions on scale of 0-100%. In uptrend, the closing prices concentrate on period range's higher part. While in downtrend, the closing prices are near extreme low level on period's range.

Relative Strength Index (RSI):

It is most popular in Forex indicators. The RSI is displayed in range between 0-100 and calculated by measuring the ratio of upward moves to downward moves. The instrument is considered overbought if RSI is 70 or greater, while a RSI of 30 or less, it indicates instrument oversold.

Elliott wave theory:

The theory is a way to analyze market, which depends on Fibonacci number sequence and repetitive wave patterns.

Moving Average Convergence Divergence (MACD):

This indicator requires plotting two momentum lines. The MACD line refers to difference between two exponential changing averages and trigger or signal line, which refers to exponential moving average difference.

Number Theory:

Fibonacci numbers is a sequence (1, 1, 2, 3, 5, 8, 13, 21, 34.....) achieved by adding first two numbers to achieve the third number in the sequence. The ratio between the smaller number and the next larger number is 62%.

Gann numbers:

The Gann numbers refer to methods developed by W.D. Gann to trade instruments, which are based on relation between time and price movement. These Forex indicators are hard to explain, as it uses angles in charts to ascertain resistance, support areas, and speculate the timing of future trend.


No trading is indicated on bar chart by spaces, which are called Gaps. These Forex indicators indicate the market conditions.

There are different types of indicative gaps in Forex indicators

♦ An up gap is displayed on the graph when lowest price of trading day is comparatively higher than highest high price of the previous day. It is a sign of strong market.

♦ A down gap is displayed on the graph when highest price of the trading day is comparatively lower than lowest price of previous day. It is sign of weak market.

Chart formations: There are different chart formations such as rectangle, head, shoulders, and triangle chart, which display different information related to Forex indicators.

Trends: They are Forex indicators that denote direction of prices. Rising peaks and troughs signify uptrend and falling peaks and troughs signify downtrend.


What's the Best Forex Indicator? Your Own Eyes

Have you been on a forex forum lately?  If you have, then I am sure you probably have seen the endless amount of threads dedicated to the subject of indicators.  They'll talk about the new indicators, generic indicators, (moving averages, stochastics,etc..)  proprietary indicators, expensive indicators, etc....  They all want to know which is the best one?  I have a different question.  My question is does anybody talk about trading> anymore?

Think about why all these traders are seemingly infatuated with forex indicators.  It's because it does all the work for them.  It allows a trader to trade basically on autopilot (for a lack of better word). It allows a trader to just slap on a couple of formulas on a chart (which are lagging by the way) and all of a sudden they don't have to think about the market, because their indicators will tell them exactly when to buy or sell. Oh.....isn't that just fine and dandy.

Let me ask you a question. If the forex market can be traded so mechanically like this, why couldn't a child trade it? After all, the only thing they have to do is wait for their indicators to align.

Real trading requires both discretion and analysis from a trader.  The real way to look at a chart isn't when it's filled with indicators, its when it's completely bare. Looking at a simple bar chart will provide all the information you will need from a technical standpoint. All you have to do is open your eyes and pay attention.


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