PARABOLIC SAR: Commonly referred to as Stop And Reverse indicates the buy and sell signals. When the Parabolic Sar lies above the Trend and Candlestick, this is a clear sell signal, but where it is below then that is a clear buy signal.
STOCHASTIC OSCILLATOR: The common use of this indicator is to indicate when the Market is either overbought or oversold. In most cases the 80 and above area is considered as the overbought zone, while the area around or below the 20 zone is generally considered as the oversold zone.
RELATIVE STRENGTH INDEX 'RSI': Is a great indicator, that measures the market activities just like the Stochastic. It also indicates whether a market is overbought or oversold. It gives an indication to the direction of the market. The higher the number, the more overbought the market is and the lower the number the more oversold the market is.
BOLLINGER BANDS: The common use of Bollinger Bands is to identify an overbought or oversold market. A price at or close to the upper band signals an overbought market, while a market price at or close to the lower band, signals an oversold market. Either way they are both signals that you should exit your current position
Wednesday, October 8, 2008
Tuesday, October 7, 2008
UNDERSTANDING YOUR TECHNICAL INDICATORS
Before proceeding, let me touch on the Japanese Candlestick.
CANDLESTICK TECHNICAL ANALYSIS CHART: Japanese Candlestick is a short term timing technique that generates signals based on the relationship between open; high; low and close prices. it is known to generate more trading opportunities than any known trading plan.
There are several indicators for trading the forex market, with over 800 expert advisor indicators, but using too many or wrong indicators is counterproductive, as the information that those indicators provide are quite misleading, hence I will limit you to learn Forex Trading with the best strategies and systems in the forex market. Therefore I will concern us with very few indicators. In the course of my series of post, I will touch some other good expert advisor indicators with signals and buyable indicators to improve your trading.
MOVING AVERAGES: Moving Averages are the most popular and easy to use technical indicators. They make it easier to spot the trend, which is very helpful in volatile markets. They are like foundation blocks for many other technical indicators.
There are three distinctive Moving Averages, Moving Average Convergence MACD;Simple Moving Average SMA and Exponential Moving Average EMA.
Moving Average Convergence 'MACD' as it's commonly called is an oscillator that is capable of measuring the market momemtum and equally follow the trend. MACD is designed to generate the buy and sell signals. A buy signal occurs when the MACD line crosses from below to above the signal line, while a sell signal occurs when the MACD line crosses from above to below the signal line.
SIMPLE MOVING AVERAGE: This is formed by computing the average price of a market over a period of time, the only problem is that it is lagging, it does not signal a change in trend on time.
EXPONENTIAL MOVING AVERAGE: EMA reduces the lagging in the Simple Moving Average SMA by applying more weight to recent prices. The shorter the EMA's period, the more weight that will be applied to the recent price. The most important thing is to have it in mind that EMA puts more weight on recent prices and this will make it react quicker to price changes on time than the Simple Moving Average
CANDLESTICK TECHNICAL ANALYSIS CHART: Japanese Candlestick is a short term timing technique that generates signals based on the relationship between open; high; low and close prices. it is known to generate more trading opportunities than any known trading plan.
There are several indicators for trading the forex market, with over 800 expert advisor indicators, but using too many or wrong indicators is counterproductive, as the information that those indicators provide are quite misleading, hence I will limit you to learn Forex Trading with the best strategies and systems in the forex market. Therefore I will concern us with very few indicators. In the course of my series of post, I will touch some other good expert advisor indicators with signals and buyable indicators to improve your trading.
MOVING AVERAGES: Moving Averages are the most popular and easy to use technical indicators. They make it easier to spot the trend, which is very helpful in volatile markets. They are like foundation blocks for many other technical indicators.
There are three distinctive Moving Averages, Moving Average Convergence MACD;Simple Moving Average SMA and Exponential Moving Average EMA.
Moving Average Convergence 'MACD' as it's commonly called is an oscillator that is capable of measuring the market momemtum and equally follow the trend. MACD is designed to generate the buy and sell signals. A buy signal occurs when the MACD line crosses from below to above the signal line, while a sell signal occurs when the MACD line crosses from above to below the signal line.
SIMPLE MOVING AVERAGE: This is formed by computing the average price of a market over a period of time, the only problem is that it is lagging, it does not signal a change in trend on time.
EXPONENTIAL MOVING AVERAGE: EMA reduces the lagging in the Simple Moving Average SMA by applying more weight to recent prices. The shorter the EMA's period, the more weight that will be applied to the recent price. The most important thing is to have it in mind that EMA puts more weight on recent prices and this will make it react quicker to price changes on time than the Simple Moving Average
Monday, October 6, 2008
TYPE OF ORDERS
In forex trading market, there are different types Orders, I will only explain the three most important ones now-Market Order; Stop Order and Limit Order.
Market Order: This type of Order is used to either enter or exit the market at the quoted currency price of any given pair instantly.When you place such orders, you are simply saying you will buy or sell that given currency pair, at whatever price it reaches when I would be filled.
Limit Order: This type of Order is used to buy or sell a currency pair at a predetermined price. This Order is simply put in place to redeem your profit at that predetermined price, when you are not there to monitor your trade.
Stop Order: This type of Order is also used to buy or sell a currency pair at a predetermined price and it is the opposite of Limit Order because it is placed to stop your losses at the predetermined price, when you are not there to monitor your trade and cut your losses.
Market Order: This type of Order is used to either enter or exit the market at the quoted currency price of any given pair instantly.When you place such orders, you are simply saying you will buy or sell that given currency pair, at whatever price it reaches when I would be filled.
Limit Order: This type of Order is used to buy or sell a currency pair at a predetermined price. This Order is simply put in place to redeem your profit at that predetermined price, when you are not there to monitor your trade.
Stop Order: This type of Order is also used to buy or sell a currency pair at a predetermined price and it is the opposite of Limit Order because it is placed to stop your losses at the predetermined price, when you are not there to monitor your trade and cut your losses.
Sunday, October 5, 2008
FORCES THAT DETERMINES MARKET MOVEMENT
There are two forces that moves market price. The TECHNICAL AND FUNDAMENTAL ANALYSIS.
With the Technical Analysis a trader studies the past movements to predict the future price of a currency pair. Therefore Technical Analysis reflects the behavior and pulse of the entire marketplace.
While the Fundamental Analysis are those things that make a country tick, the release of economic news like the social and the political happenings in a country. When Fundamental data is made public there are always reactions from investors and speculators because the release of these economic indicators "could" cause a currency to rise in price or "might" cause the currency price to fall. The words 'could' and 'might' indicated the double-entendre or better still the parisology of the Fundamental data.
Hence I will recommend the use of both the technical and fundamental indicators for a better forex trading.
With the Technical Analysis a trader studies the past movements to predict the future price of a currency pair. Therefore Technical Analysis reflects the behavior and pulse of the entire marketplace.
While the Fundamental Analysis are those things that make a country tick, the release of economic news like the social and the political happenings in a country. When Fundamental data is made public there are always reactions from investors and speculators because the release of these economic indicators "could" cause a currency to rise in price or "might" cause the currency price to fall. The words 'could' and 'might' indicated the double-entendre or better still the parisology of the Fundamental data.
Hence I will recommend the use of both the technical and fundamental indicators for a better forex trading.
Thursday, October 2, 2008
TRADING PERIODS
Forex is a 24hours market and it is operational for five days in a week.
We have the Asian; European; London and New York Sessions.
The Asian Session opens on sunday at 1.00A.M GMT or better still 8.00P.M EST and closes at 8.00A,M GMT or 3.00A.M EST. The European Session opens at 7.00A.M GMT which is 2.00A.M EST and closes at 3.00P.M GMT i.e 10.00A.M EST. the London Session which run almost at the same time with the European Session opens 1hour after the European Session and closes 1hour after the European Session closes.
The New York Session opens at 1.00P.M GMT or 8.00A.M EST, while it closes at 8.00P.M GMT which is 3.00P.M EST.
It is advisable to watch the historical price data on the forex chart to see what time frame that suits you to trade and what time you could be busy doing something else. The idea is to trade when the trading range is worth it, while you stay out of the market when the trend is not favourable.
We have the Asian; European; London and New York Sessions.
The Asian Session opens on sunday at 1.00A.M GMT or better still 8.00P.M EST and closes at 8.00A,M GMT or 3.00A.M EST. The European Session opens at 7.00A.M GMT which is 2.00A.M EST and closes at 3.00P.M GMT i.e 10.00A.M EST. the London Session which run almost at the same time with the European Session opens 1hour after the European Session and closes 1hour after the European Session closes.
The New York Session opens at 1.00P.M GMT or 8.00A.M EST, while it closes at 8.00P.M GMT which is 3.00P.M EST.
It is advisable to watch the historical price data on the forex chart to see what time frame that suits you to trade and what time you could be busy doing something else. The idea is to trade when the trading range is worth it, while you stay out of the market when the trend is not favourable.
Tuesday, September 30, 2008
TERMS AND LANGUAGES OF FOREX
First let us get used to the terms and languages as being used by the pros in forex trading.
You get to hear things like Pairs; Base/counter currency; Bull/Bear;Pips; Margin; Spread; Leverage etc.
Currencies are traded in pairs like USD/JPY which means the US dollar/ the Japanese Yen. The USD being the Base currency here while the Japanese Yen is the counter currency.
When you hear the pros say it's Bull, that means the base currency is strong and at this point a trader buys but when they say it's bear, then that means the counter currency is stronger and this is when a trader sells.
A pip is an acronym for Price Interest Point which is the movement of the price of any pair from a point to another it equally determines the volume of your profit or loss and your mean goal is to gain as many pips as the market permits you.
Margin is the amount of money a trader invested in the Forex trading, it's a sort of bond to ensure against total loss of his/her deposit.
Spread is the difference between the BID and the ASK price and this is the token fee being charged by the broker.
Leverage is the amount of money your broker loans to you, it give a trader the ability to control a bigger trade with your little money. Any market movement will have an equally proportional effect on your deposited fund. See you in the next lesson.
You get to hear things like Pairs; Base/counter currency; Bull/Bear;Pips; Margin; Spread; Leverage etc.
Currencies are traded in pairs like USD/JPY which means the US dollar/ the Japanese Yen. The USD being the Base currency here while the Japanese Yen is the counter currency.
When you hear the pros say it's Bull, that means the base currency is strong and at this point a trader buys but when they say it's bear, then that means the counter currency is stronger and this is when a trader sells.
A pip is an acronym for Price Interest Point which is the movement of the price of any pair from a point to another it equally determines the volume of your profit or loss and your mean goal is to gain as many pips as the market permits you.
Margin is the amount of money a trader invested in the Forex trading, it's a sort of bond to ensure against total loss of his/her deposit.
Spread is the difference between the BID and the ASK price and this is the token fee being charged by the broker.
Leverage is the amount of money your broker loans to you, it give a trader the ability to control a bigger trade with your little money. Any market movement will have an equally proportional effect on your deposited fund. See you in the next lesson.
INTRODUCTION TO FOREX TRADING
Are you new to Forex Trading? Do you want to grasps the currency market fast? If YES then come along with me in my serial post while I lead you almost by the hand. But you have to acquaint yourself with the Forex terms, master the languages as being used by the pros.
Now, What is Forex. The Foreign Exchange market commonly referred to as Forex was established way back in 1971, when the exchange rates began to materialize. And all is about buying and selling of currencies. Trading in the Forex Market is a challenging task where above average returns are available for investors who are willing to take above average risk. The Market carries with it a high degree of capital risk and only those who have risk capital, should be trading in the market. Therefore before deciding to participate in the FOREX Market, you should carefully consider your investment objectives; level of experience and the ability to shoulder risk. On a final note and most importantly DO NOT invest money you CANNOT afford to loss.
Now, What is Forex. The Foreign Exchange market commonly referred to as Forex was established way back in 1971, when the exchange rates began to materialize. And all is about buying and selling of currencies. Trading in the Forex Market is a challenging task where above average returns are available for investors who are willing to take above average risk. The Market carries with it a high degree of capital risk and only those who have risk capital, should be trading in the market. Therefore before deciding to participate in the FOREX Market, you should carefully consider your investment objectives; level of experience and the ability to shoulder risk. On a final note and most importantly DO NOT invest money you CANNOT afford to loss.
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