Forex Technical Analysis

There are some traders who are simply trading the news and these people are known as fundamental traders. However there are also traders who only trade with indicators and patterns on their charts and these people are known as technical traders. Personally, I am a technical trader and I am going to show you how you can better trade the currency using technical analysis.

Below is some stuff you need to know in order to be able to do proper technical analysis:

1) Candlestick Patterns: This is usually one of the most overlook parts of technical analysis. Most traders do not spend time learning how to interpret candlestick formation and this is why they are unable to trade with success. You do not need to be able to know everything about candlestick but you definitely need to know the various type of reversal patterns or continuation patterns so that you can enter your trade more accurately.

2) Forex Indicators: Once you have familiarized with the candlesticks, you need to spend time to learn the features of different forex indicators so that you know which to choose for your trading plan.

3) Decide on Your Type of Trading Style: There are basically 3 main types of trading styles you can adopt.

You can be a forex scalper who enter and exit a trade within minutes and only trade on the low time frame charts like the 1 minute and 5 minutes.

You can be a forex day trader who enter and exit a trade within the same day and you will be trading off the 15 minutes, hourly and daily charts.

You can also be a position trader who enter and exit a trade within days or even weeks and you will be trading with the daily, weekly and monthly charts.

What you decide to become depends on your time availability. If you do not have a lot of time to look at the chart everyday, you should choose to be a position trader as you only have to take a look at your chart every few days because you are trading off those higher time frame charts.

If you have 1 to 2 hours everyday to do technical analysis, you can choose to be a day trader. You can spend one to two hours to do proper analysis and then place your trade on the day.

If you have the luxury to trade anything of the day and you are a impatient person who wants to see result fast, you can choose to be a forex scalper.

Once you decide on the type of trader you want to become, you can then decide on the time frames to use. At this point of time, you can then create a trading plan with your chosen indicators and a set of conditions that you need in order to enter a trade and exit a trade.

For those of you who are new, this can be a difficult task but it is something that is necessary in order to be successful in this field.

By: Kelvin Dee

I’m sure you have heard of the great mathematician Leonardo of Pisa, also known as Leonardo Fibonacci? He was a highly influential Italian who lived almost 800 years ago, so you’re probably wondering what Fibonacci has to do with forex trading, I’ll get to that shortly.

He is most famous for developing the numerical sequence that is widely known as the Fibonacci Numbers or the Fibonacci Sequence (he is also credited with introducing the decimal system in Europe).

The very first number of the sequence is 0 and the second is 1. The sequence develops as each subsequent number is the sum total of the previous two numbers. In mathematics it’s known as a recurrance relation. Below are the first numbers in the sequence:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, and so on.

e.g. 2 + 3 = 5, 3 + 5 = 8, 5 + 8 = 13 etc.

Leonardo Fibonacci discover that the Fibonacci sequence and their ratios could be found everywhere throughout the natural world, existing in the most unlikely places, almost as universal rule.

So how does Fibonacci and forex trading go hand in hand?

The Fibonacci numbers are important for charting, spotting patterns and indicators in the forex markets, and are used as an important method of analysis

Why?

When you analyse the currency markets carefully, you often find the same ratios as those in the Fibonacci number sequence. You’ll also find them in investments such as stocks.

The main three numbers you need to be aware of, and ideally should commit to memory are 0.618, 0.500 and 0.382. There are other numbers, but for starters these are the big 3 and most important.

So what are they used for?

The Fibonacci numbers are used by forex traders to calculate what are known are retracement levels, which are used to determine when to place buy orders or sell orders. It works like this:

If a currency pair is trending upward lets assume, then history will tell us then at some point it’s going to hit a peak and go into at least a temporary decline or reversal, and then resume the upward trend. When it starts the reversal, that’s where the Fibonacci numbers come into play.

The prices of the currency pair that are following the upward trend is usually predicted to reverse/decline backwards to one of the key Fibonacci numbers, and then bounce back again to follow the upward trend. The key is to forecast this point accurately so that you can buy in before the trend continues upward, so that you capitalise on the reversal and then profit.

You should have a charting mechanism built into your online trading platform which will chart the Fibonacci numbers. Your retracement levels should be automatically mapped on your chart when you simply draw a line up from the low point to the high point.

Obviously there are other things to take into account, it’s not as simple as just buying into a trade when the price hits a Fibonacci number.

For a start you never know which retracement level the price will drop to and stop at. If you opted for 0.382 and the price ended up dropping to 0.618, you’ve just lost a whole load of pips.

Conversely, if you buy in at the wrong high or low points, the retracement levels are going to be completely out of sync.

It can be problematic. They sometimes don’t work at all. The forex market is such a dynamic complex system with so many variables at play it would be foolish to rely solely on one method to predict price changes.

Moral of the story?

Find a trading system or strategy that incorporates as many elements and variables as possible, do lots of research, data mining and plenty of good old hard work.

By: Justen Robert Case

For people wanting to be successful in the foreign currency markets, having a proper analysis is one of the more important things that needs to be accomplished. This is very effective in determining which currencies to sell and buy, and despite recent advancements in technology, traders that are able to analyze the data are going to be much more prepared for success, to do this many are turning to Forex analysis software.

There are a few ways that are used to break down market data as well as analyzing it, these can offer ways to effectively learn how to enter or leave the market at the right time. Because of different fluctuations which take place during the day, the automated software will know exactly when to conduct the right trade.

For beginners, one of the best ways to learn the profession is to utilize practice accounts. There are many different programs and other software that will simulate transactions, using these is going to eliminate all the risk for users who are new.

There are a variety of Forex tools that are being sold today, one of the biggest differences is going to be how aggressive they are when trading. Some are far more conservative, others are going to trade much more aggressively. The big advantage for all of these is that it will free up your time as opposed to doing it on a manual basis.

If you have ever thought about investing in these software programs, there are a few things you might want to inquire about. You want to make sure that the company is providing good support for customers, as well as appropriate training videos and other manuals. Additionally, try and find testimonials from past customers who have actually used the program and have profited from it.

Most of these vendors will give a full money back offer if it does not work as advertised, some also provide support forms to help those in need learn from others and share different ideas. This is very important for people who are just starting out as it is always good to have interaction with other users that are more experienced and can provide additional information.

This is definitely a software which can be very profitable to use, there have been many people in the past few have earned a big profit by utilizing it. Also, even the most inexperienced beginner can earn income when it’s used and is one of the better tools ever offered. I personally made more than 8 times on my money using a Forex automated trading robot and would highly recommend it.

By: William Barnes

Fundamental analysis of the currency for many people is the bread and butter of successful forex trading. There is no doubt that there is a lot of truth in the statement that the currency markets are primarily driven by changes underlying the economies of the world. That is why so many professional traders ensure that their information is based on the best and latest information available. The question of whether someone needs to be an expert in fundamental analysis in order to be a highly profitable home forex trader is debateable.

So what is fundamental analysis? In its simplest form is a review of all the real economic data, political decision, national and international events that have the possibility of impacting on the perceived collective awareness of the forex market that in turn will potentially drive currency movements.

It is vital to understand the enormous volume of information that comprises fundamental data. Many of the financial institutions have departments dealing with analysis, teams of strategists and economists who do their best to try to foresee market movements. And the frightening thing is that with the availability of information over the internet, every home trader also has access to that information. The sheer volume of information for many traders is overwhelming.

When I first started to look at forex trading as part of my part-time home business, I bought into the statement that I needed to understand how the markets work, the impact of all the various drivers. I could see that the task was enormous and i likened it to standing on a station platform, stretching our your hand and grabbing onto a high-speed train. The consequences can be disastrous!

So then I thought, well if the object of my analysis is large how do I tackle? As someone once said, how do you eat an elephant? The answer is one bite at a time. Now that is all well and good, until I realised that the currency market is more like the size of a prehistoric 100 ton huge dinosaur than an elephant. I have by profession been very open to the concept of analysing information prior to decision-making. Unfortunately with the scale of information, I quickly became a victim of “analysis paralysis.”

If you are starting in forex trading, have your normal 9 to five job the time available to you is very limited. I found that by the time I factored in the time travelling to and from work that only left me three hours a day during the week for my research and analysis. I quickly came to the conclusion that despite some of the advice given, for me and many others another approach had to be taken.

Thank goodness for the internet. There are a number of sites now providing free information on the times of all the key economic announcements across the world. Some provide basic data i.e. interest rate announcement in the US at 9am Eastern Time. Others will provide details of past announcements and their impact on a currency as well as a forecast for what the announcement maybe.

The home forex trader will need to gain is an understanding of the impact an announcement may have on the market. If there is one thing a market does not like, it is unexpected announcements. Very often markets will move in anticipation of an announcement, If the announcement is not in line with the anticipated result the market will move.

I personally do not see the possibility of a home forex trader being able to compete with the financial institutions. However, that is not as bad as it seems. I would suggest that a trader needs to understand that when these announcements are made, that they have a potential to move. How much is not something that can be ascertained, so why be concerned about it?

Fundamental analysis therefore is an important tool to have in ones armoury, however, those running a home forex business, do not need to become an expert in this area. For me personally, the day when I learnt that there are alternative ways of being highly successful as a forex trader without being an expert in fundamental analysis, I felt an enormous weight lift of my shoulders.

By: Kaz Kowalski

Currency values or the currency exchange historical charges are nothing but a way to ascertain exactly how a particular currency pair has cost in the past. The main agenda is to come across the exact historic prices and use that information to make potential future predictions. Thus many forex trading agents and platforms have use for the historical trade values. The process of getting these charges begins with taking the help of historical trading value converter. To get hold of the historical values, say of a particular currency pair, one has to invariably choose a language of transaction and then supply the required date range that one wants to look for.

The very next step would include feeding in the currency pair. This would result in the interface to automatically give one an idea about an assortment of currency values for a given period. One can corroborate the charges for say, credit cards, and other cash and Inter bank charges in this manner. Thus the utility of historical exchange rates cannot be over emphasized. These come in handy for comparisons and in recovering old data that are some times needed by many institutions. Thus there indeed are a bunch of users that need these values as a backdrop for transactions in the forex world.

In a general scenario one has the option to sort through the results produced by way of country name or even through the currency codes. It has been believed that the news trading and the technological analysis are very significant in order to pencil in viably from the forex. the fundamental analysis which are based on the foreign exchange rate stability of the present as well as the past dates, is just as important, or even more so. The monetary charge of the yore thus aids a trader, or any other person, who is in a similar pursuit.

However, relying on the currency’s trend which was way too into the history is sometimes advantageous. This way the users can analyze exactly where the currency is headed for in the future. This is also one of the most significant ways to successfully move around and trade. When the calculation of cost is done, as well as the value of the money that is transferred is needed, one needs a basic chart that represents the entire history of the movement of the said coinage values. One can use the help of highly regarded and expert websites to help provide such information.

Also historical rates can be found from the major business news agencies, as well as from the major forex dealers. However it is best to consult a financial dealer in order to ask for the much needed information regarding conversion charges, etc. These brokers aid in offering much additional information like, what would be an assortment of applicable fees and other related taxes, etc. Thus, all in all it can be said that the past switch over charges are useful to some extent and the users of these values vary highly.

By: Arefin Shams