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Develop Your Forex Strategy: Every Candle Tells A Story

Jan 28

Posted by admin in Currency Trading

Your forex strategy will be greatly enhanced by a thorough understanding of candlesticks.

Used by Japanese traders for centuries, the Western world has only recently (since around 1991) become aware of their value due to the work of Steve Nison.

Candlestick charts are now the preferred medium for probably the majority of traders due to their visual impact. Like bar charts, candlestick charts are based on four main pieces of information relating to the timeframe of the chart (15 minute, 1 hour, 4 hour, daily, etc.) – the open and close prices for the timeframe, plus the high and low points during that period.

However, by representing this information graphically, in the shape of a candle, the trader is able to absorb a glut of information about a single trading period with just a glance.

So learn to read candles well – your forex strategy will be more solid as a result.

What you can read from a single candlestick?

Certainly not enough to base a trade upon. However, a distinctive single candlestick in conjunction with other indicators can be very significant.

When reading candlesticks it helps to think of the battle constantly going on in the market place between the bulls and the bears. A candlestick will tell you how the battle went during any given period.

Take for example a candlestick on the hourly chart which has a long solid body and very small shadows if any. If the color of the candle is green, or whatever color your charting package uses when a candle closes higher than when it opened, it means either the bulls are in firm control or there was little or no interest from sellers.

If the candle is red, or whatever color your charting package uses when a candle closes lower than when it opened, it means either the bears are in firm control, or there is little or no interest from buyers.

If the solid body of the candle is small but there is a long upper shadow and a long lower shadow, it means during that 1 hour period, the bears took the trade to the lowest point, the bulls took the price to the highest point, but neither could maintain the position so the end of the period is close to where it was at the beginning.

Get a series of those candles and the market is obviously in an indecisive state, or reconciled to trading within a range for the foreseeable future, until a further stimulus comes along, such as a fundamental announcement, to cause price to break out of the channel.

Candles come in all shapes and sizes with very distinctive names such as spinning tops, doji, hammers, etc.

Learning to read candles in conjunction with understanding other technicals such as pivot points and support/resistance lines, Fibonacci retracements and trendlines can add real power to your forex strategy.

Remember, when browsing your charts, every candle tells a story. It`s up to you to decipher and interpret the significance.

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Be In The Right Emotional State When Forex Trading

Dec 18

Posted by admin in Currency Trading

Lots of strategies are being employed in forex trading. There are secrets that work, there are some that do not. Occasionally , straightforward methods work fine, infrequently difficult ones do. Regardless of the methods you are employing in forex trading, you should really only be targeting for one thing, that is, be ready to be on the winning end and not on the losing end. It is very useful to be able o create your own forex trading technique to be in a position to develop a winning run during forex trading. The most vital thing to think about in developing your own forex trading methodology is to be in a position to make it simple to you. The reason is because the more complex a forex trading methodology is for you, the harder it is to keep up with. You’d need to keep up and maintain a tally of lots of things that may make you lose sight of your principal goal, that is, to keep on winning and making good cash during forex trading. First thing to think about in forex trading is to be ready to work out what your most important objective is. Your objectives may change from time to time, naturally. During one trade, your target could be to earn two times as much. In another, your aim could be to earn 1,000,000 $. Whichever your target is, it is bent on one thing, that is, to win and be in a position to make money. To do that, your aim should be to be ready to make consistent winning trades with the same plan. Whatever system you use in forex trading, you should generally have one characteristic to stick to.

And what characteristic is that? Discipline. Why? Discipline will keep your feelings under control. As in everything, when you’re in charge of your feelings, you’ll be in a position to make sound choices since you are in the right psychological state. You’ll have the power to concentrate on what you do. It will permit you to gauge when to put the stops.

It’ll teach you how to adhere to a plan and achieve success in it. In forex trading, the most significant thing is to make certain the system or the method that you’ll be using will function well and, naturally, all the fine details of it should be like the middle of your hand. You should make your own set of rules and criteria to be in a position to establish which would or would not work. Of course, you need to think about the forex signals that you can openly find anywhere, may it be online, the local paper, or a trustworthy chum who is also doing forex trading.

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200 EMA Forex Strategy ? Easy For Beginners

Jun 1

Posted by admin in Currency Trading

A challenge facing many new traders when developing their forex strategy is the ability to identify the overall trend for intra-day trading.

Using the 200 EMA can help solve the problem.

The 200 EMA is a very popular indicator and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.

To use this forex strategy, create charts on 3 time frames: the 4 hour, the 1 hour, the 15 minute.

Now plot a 200 EMA indicator on each chart and, as a suggestion, color it red, for easy visual impact.

Preferably tile the 3 windows containing your 3 charts into a vertical fashion so you can see the 3 time frames next to each other. It will squeeze up the information on the charts somewhat but for the purpose of this strategy that doesn?t matter.

Now scroll through the various currency pairs you like to trade. If you prefer to trade only pairs with a smaller pip spread, they amount to about 9. They are:
EUR/USD; GBP/USD; USD/CHF; USD/JPY; EUR/JPY; USD/CAD; AUD/USD; NZD/USD; EUR/CHF

What you are looking for is any currency pair that bucks the 200 EMA on the 15 minute chart. So for example, look at the EUR/USD pair and note the position of price relative to the 200 EMA on the 3 time frames. If price is well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking the trend.

The overall trend is up, price has temporarily gone against the trend and is currently in a retracement.

Using the fundamental trading principle of ?buy the dips in an uptrend?, ?sell the rallies in a downtrend?, look for a suitable entry point. In the example give above you would look for an opportunity to buy the EUR/USD, perhaps watching for a candle signal that price has exhausted it?s downward momentum, bucking the 15 minute chart 200 EMA and will soon resume it?s upward momentum.

This is an easy exercise and it can be done once or twice a day, taking just a few minutes.

Once you see price bucking the 200 EMA on the 15 minute chart, whereas it is on the opposite side on the 4 hour and 1 hour charts, sit up and take note. Watch carefully and grab the opportunity to get in and make a few pips!

Michael A. Jones is a writer and webmaster with over 10 years experience who also trades the forex regularly. Visit this page for details of how he finally started to make consistent profits:

http://www.vitalstop.com/Forex/forex-course.html

Click here for his advice for absolute beginners:

http://www.vitalstop.com/Forex/learn-to-trade-the-forex.html

Michael has also put together a list of key free resources which he finds invaluable:

http://www.vitalstop.com/Forex/forex-directory-free-resources.html

Writen By : Michael A. Jones

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Forex Strategy: How Do You Trade The Non-Farm Payroll Report?

Jun 1

Posted by admin in Currency Trading

In the development of your forex strategy do you wonder how you can trade the non-farm payroll report?

Seeing this is one of the most, if not the most, volatile announcement during the month (first Friday in every month) newer traders watch the huge movements and wonder how to make money from all that volatility.

Here?s an answer you may not fully appreciate until some explanation is offered. ?How do I trade the non-farm payroll report?? The answer is: ?By maintaining a neutral position!?

To put it another way, YOU DON?T!

The market is far too volatile at this time to expect a high probability trade. There may be some gamblers out there who relish the thought of ?placing a bet? to go long or short. But serious traders know better.

Actually, the professional traders I know all say the same thing: ?Stand aside and wait for the market to calm down.?

This may take between 30 to 45 minutes in some cases and even then the direction of the market may be uncertain.

Some suggest you can trade volatile market movers such as the non-farm payroll report by waiting for the first leg of the move, up or down, then wait for price to pull back 10 or 15 pips, then enter a trade to catch the second leg of the move which often follows.

That?s one possibility but still very high risk. Personally I prefer to base my forex strategy on sound market assessment and carefully researched trades.

However, while many professional traders sit out the non-farm payroll report, that doesn?t mean they don?t trade afterwards. After the market has made a violent move in one direction you sometimes see price stalling and then give a clear signal that it?s momentum is exhausted.

This may be in the form of a candle pattern such as a hammer with a very large shadow which also happens to be on a key support or resistance level.

Now you can enter a trade with a small level of risk as you place your stop just above the high or low of the candle signal.

This advice applies to all fundamental announcements which are considered ?market movers?. By developing a cautious forex strategy based on sound trading principles, you will enjoy this business and get the satisfaction of seeing your account equity steadily growing.

Michael A. Jones is a writer and webmaster with over 10 years experience who also trades the forex regularly. Visit this page for details of how he finally started to make consistent profits:

http://www.vitalstop.com/Forex/forex-course.html

Click here for his advice for absolute beginners:

http://www.vitalstop.com/Forex/learn-to-trade-the-forex.html

Michael has also put together a list of key free resources which he finds invaluable:

http://www.vitalstop.com/Forex/forex-directory-free-resources.html

Writen By : Michael A. Jones

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Killer Forex Trading Strategy For Beginners

Mar 14

Posted by admin in Currency Trading

If you\’ve just begun trading Forex, you probably want all the help you can get. Though Forex trading can be very lucrative, you\’ll want a Forex winning system that will work for you. There are several Forex killer systems available just as there are in marketing, sales, and other forms of business. You must find the Forex strategy that works for you, and develop good trading habits for long-term success. Here\’s a brief Forex winning guide for getting started.

Develop a Forex Trading System that You Can Stick With

Not only do you need a Forex strategy – you also need a system. You can have the best strategy in the world, but if you don\’t do it systematically, you could lose. Create a schedule of when you will do your Forex trading. Then, create a budget to manage your money coming in and going out. Just like operating any business, you\’ll have good and bad times. Stay with your Forex trading strategy through up-times and slumps for the best results.

Develop a Forex Trading Plan in Advance

Before the Forex market opens, you should already have a plan as to how you will trade. Don\’t get caught up in the moment. Carefully plan your investment as if you were making a big decision such as buying a home or a car. Even if the Forex trading amount seems small, treat it as if it were a million dollars. It could turn into that amount one day.

Expect Small Losses

If you plan to do Forex trading for the long haul, expect and accept small losses. They will occur no matter how well you know the market. A Forex winning system is one where you are prepared to accept the small losses in hopes of acquiring something greater in the future.

Be Patient

Remember, steady and slow is the key to any long-term Forex success. Don\’t sit staring at the quotes all day long! Take a break, enjoy life, and don\’t see a loss as the end of the world.

Avoid Forex Trading Strategies You Don\’t Understand

When developing a Forex winning strategy, avoid using methods you don\’t fully understand. Use helpful Forex guides and tutorials, but beware of Forex scams. There are many out there today – especially email scams. Be leery of companies who want to do your Forex trading for you. Develop a plan with the help of Forex experts, but please do your own trading or choose a reputable broker.

Develop an Exit Plan

Know when it\’s time to take your money and run! Don\’t hope for the best when all evidence points toward the worse. It\’s better to exit your trading with some of your money than to lose it all in a risky trade. Before you begin trading, set limits on how much you will invest – and stick with your limits.

Use this quick Forex guide to develop a strategy that works well for you. Forex trading doesn\’t have to be stressful. You can realize Forex trading success sooner than you think!

Chris Robertson is an author of Majon International, one of the worlds MOST popular internet marketing companies on the web.
Learn more about Quick Forex Guide for Beginners or Majon\’s FinancingInvesting directory.

Writen By : Chris Robertson

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