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

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

You can analyse the foreign exchange markets by using two methods, forex technical analysis and fundamental analysis. The former works by studying the movement of prices, whilst the latter looks at certain economic factors such as the strength of our national economy and certain political events.

When you study the price movements with technical analysis, you need to analyse charts. You should be able to identify trends by looking at the history of certain currencies. So then you can predict whether or not a currency is going to rise or fall. If you spot something that you can take action on, you have a great opportunity right in front of you.

There are three types of forex charts:

1. Line Charts

These line charts for forex simply plot every currencies closing price and joins them with a line. When these lines rise or fall that shows the general movement of that currency value. However, it only shows the close, not the movements within a trading period.

2. Bar charts

Bar charts consist of a series of vertical bars. The top of the bar will represent the highest price during a certain time period. The bottom of the bar will represent the lowest. Two horizontal bars can also be seen on these bar charts, one on the left to indicate the opening price, and one on the right to indicate the closing price.

3. Candlestick charts

Candlestick charts are usually easier to read than the above charts. They’re quite similar to bar charts, except the information is a little bit easier to read. On these the same vertical bars or lines are there, showing high value and low value, but there’s a block in the middle showing the gap between opening and closing price. The colors of the bars will usually be the same, green or blue for rising and red for falling, but sometimes they may vary.

There’s a popular clich? word that traders live by and that’s “the trend is your friend”. When you see a trend forming, you can make money by trading according to the emerging trend. You can usually spot these trends better by using the candlestick charts.

By: Jay Robert Edwards

The title of this article may be somewhat strong but it is important for Forex traders to know if their technical analysis is subjective or objective. David Aronson, author of, Evidence-Based Technical Analysis says that there are two kinds of technical analysis, subjective and objective. Here is what he says about both:

“Objective TA methods are well-defined repeatable procedures that issue unambiguous signals. This allows them to be implemented as computerized algorithms and back-tested on historical data.

Subjective TA methods are not well-defined analysis procedures. Because of their vagueness, an analysts private interpretations are required. This thwarts computerization, back testing, and objective performance.”

In other words, anytime a trade signal is interpretative or leaves in question the direction of the trade, the exit or the entry; the technical analysis is subjective and in my words, worthless.

Many traders will argue that this is not true but take for example Elliot Wave Theory. This has been around for a long time and makes claims that if true would be the perfect way to trade. Elliot Wave Theorists for example, don’t feel using indicators are valid methods of trading because they don’t determine the direction of a trend and how long it will last.

Assuming they are correct, the Elliot Wave Theory can be refuted by asking if it is formulated and computerized in a way that the results can be tested. So far, to my knowledge it hasn’t. Indicators on the other hand can be so formulated and therefore the results do not have to be interpretative.

Elliot Wave Theory along with other theories of trading are subjective and require interpretation. Aronson goes on to say that, “… subjective TA cannot be called wrong, because to call it wrong implies it has been tested and contradicted by objective evidence. Subjective TA is immune to empirical challenge because it is untestable. Thus it is worse than wrong; it is meaningless.”

The point here is not to pummel EWT but for traders to analyze their individual trading systems as to whether they are objective or subjective.

The importance of an objective trading system are threefold:

1. Signals that come from an algorithmic formula are clear and concise.

2. An objective system can look at statistical data from the past and help in decision making for the future.

3. The results of an objective trading system can be recorded much like the batting averages of baseball players so that the trader knows exactly what to expect.

Regardless of what we think, technical analysis may or may not lead to solid trading results. Price spikes created by noise from smallish price positions can move markets and create uncertainty thereby rendering many day trading or scalping systems, including automated trading systems useless. Richard Olsen, Ltd has written about this as have I.

Bernard Mandelbrot, Professor Emeritus of Mathematical Sciences at Yale University, the inventor of fractal geometry, believes that technical analysis is financial astrology.

He may be right. If so and if there is money to be made in the Forex market, how would we trade successfully?

There are several things the trader must do:

1. Understand price theory and how it affects the trading method that they employ. This is true of scalpers, day traders, short term traders and long term traders. If you misunderstand price theory in conjunction with your trading method you will not be as profitable as if you did.

2. Understand how and who trades in the currency market and how size of currency positions can affect the currency pair you are trading in.

3. Understand when the market has the greatest chance to be vulnerable. It is at these moments when you must be ready to pounce.

4. In so much as technical analysis may be a reliable source of trading, incorporate a system that is algorithmic and provides precise entry and exits. A system that can be analyzed statically to give you information about future trading and the ability to record your results.

Technical analysis maybe financial astrology however some of the hocus pocus can be removed by making certain that the TA you are using is objective and not subjective. If it is, then use the data that can be pulled from it to help you make better trading decisions in the future. Just remember to use your mind and look for those moments where the market is vulnerable and then pounce.

By: Paul W. Dean

The number of people who are able to make money in Forex trading in recent years has steadily been growing. This is because there are numerous different Forex trading platforms now available that help to make understanding the market better and also used to undertake trades. But even though there are many advantages to be had from using these techniques there is still some risk involved and you are likely to make losses as well as gains.

However there are certain things that you can do which can help you to be more successful at making money through Forex trading. Below we take a look at just what some of these are.

1. Before you do anything else the thing that has to happen is for you to open a Forex trading account. Doing this will allow you then to make trades online and so allow you to carry out trades with anyone in the world at any time of the night or day. As well as providing you with access to more trading opportunities it provides you with the chance to improve contacts with others in the trade.

2. The next thing you need to decide upon is whether to go it alone or use the services of a Forex Market Broker. If you employ a broker they will help you to go through the process of making trades and ensure that the ones you do make won’t be off too much risk to you. By employing the services of a broker you can snap up any opportunities that come along that you without any training or knowledge would have missed or disregarded. But of course it will cost you money to use the services of someone like this.

If however you have decided that you want to go it alone when wanting to make money in Forex trading you need to collect as many resources as you can. There are numerous training resources available that will suit your learning style and will contain everything essential to ensuring that you learn how to trade effectively on this market.

A good course should be one that is actually able to teach you about Forex fundamental analysis as this will help you to understand better how the Forex market works. Through fundamental analysis you can quickly see what effects both political and economical events can have on this market. So you will be in a much stronger position when it is best to start a trade and when to exit one.

By: Jonathan Veluz