Forex Technical Analysis

Forex traders are frequently looking for the 10 essentials of Forex trading. This article will discuss the top 10 essentials of Forex trading. Keep reading to get instant access to a Forex $100.000.00 demo account.

Forex trading is not a game, it’s a business. Only a select 10 percent of Forex traders are consistently successful. These 10 essentials of Forex trading will help you get into the select 10 percent and stay there.

Essential of Forex Trading Number 1: The majority of your time should be spent on the 15 minute chart only.

Essential of Forex Trading Number 2: Don’t overdo it. If you are new to Forex trading then only try and carve out 20 pips at one time. Once you have done that turn it off and do some more Forex study.

Essential of Forex Trading Number 3: Try not to dwell much at all on the 5 minute chart as it could only serve to distract you and confuse you.

Essential of Forex Trading Number 4: Don’t use MACD for buy and sell signals as it is useless as a trigger.

Essential of Forex Trading Number 5: Do all you can to protect your money by using 20-30 pip stops in your Forex trading. You will generally lose 3 out of 10 trades so it’s important to keep your losses to an absolute minimum.

Essential of Forex Trading Number 6: Consider employing trailing stops where you keep moving your Forex profits up to protect your losses.

Essential of Forex Trading Number 7: Keep an accurate and detailed log of all your good and bad trades. Analyze where you went wrong and what you could hav done better.

Essential of Forex Trading Number 8: Your “gut feeling” can get you into a lot of financial trouble. Only react to bona fide indicators and ignore all others.

Essential of Forex Trading Number 9: Everyone has different pivot points because everyone uses different market markets.

Essential of Forex Trading Number 10: If you’re not going to take Forex trading seriously then don’t even start!

There are many fundamentals that successful Forex traders follow to ensure they reach and stay in the select group of 10 percent of Forex traders who are consistently Forex winning traders.

By: Karin I Manning

Using renko charts to trade forex has been regularly discussed on forums over the last few years. They’re similar to bar charts, the primary difference being that they are not based on time.

On a traditional price chart, an hour candle will form every hour, regardless of how far price travels. On a renko chart, a new bar will only form when price moves a predefined amount. As an example, if a trader inputs a setting of 40 pips per bar, then a new bar will only form every time price travels 40 pips.

The primary benefit of using renko charts is that they eliminate a lot of “noise.” They are able to display trends more clearly by eliminating the traditional bars that form on a time basis. In this way a trader can spot emerging trends without having to strain his eyes, or his brain. When a new bar forms below or above the previous price pullback, it could potentially indicate a continuation in trend.

As beneficial as these charts may seem, a trader is still required to know some technical analysis basics. Surprisingly, renko bars exhibit similar characteristics to regular price bars. Having a knowledge base of price patterns, support and resistance lines, and trend channels can be beneficial when trading renko bars. The more experience a trader has with technical analysis, the more they will be able to truly reap the benefits of renko charts.

Having a solid trading strategy still applies. Using renko charts will not spare you the need to protect your account from risk, and from having to make good trading decisions. It is critical for a trader to utilize a profitable forex trading strategy in order to make money. Having smoother looking charts can ease some rough spots, but only to a point. Getting situated with the right money management techniques, and trading strategy will fill in the rest of the blanks.

By: Yevgeny Katz

Often people ask me if it is really possible to make a living trading the Forex market. I would have to say that it is definitely not possible to merely make a living unless you have no idea of what simple trading money management is. If you are successful in Forex trading and you understand what money management is, you will not just make a living but will create wealth relatively quickly. So I often tell people that if you are looking for a job, you might want to try Wal Mart. I hear they are hiring part time employees.

A good tool that can help you to understand how this works is a calculator. They can be purchased at most local stores for as little as $5.00. Then you might want to open a Forex trading demo account and place a trade. Observe what happens to the digits that display the profit or loss and get an idea of what the value of a PIP is in your account. Then you can develop a purely hypothetical trading plan.

After you have learned a little about how Forex trading works you should start to get an idea of what is a realistic expectation for results in PIPS over a given period of time. Then decide what a prudent risk management plan would be. Some say no more than 2% of your capital is a good number. That number is of course, based on a false industry belief that it is not possible to have a high win to loss ratio in Forex trading. Regardless, it is a good conservative number. Then simply start off with a number that represents the amount of capital you plan to start with and project what would happen if you were successful with a realistic win to loss ratio. How many PIPS will you earn? Win to loss ratio is the number of winning trades vs. the number of losing ones. Risk to reward ratio represents the average number of PIPS per loss vs. the average number of PIPS per winning trade. What will your average net gain be per day or per month? What will that do to your capital?

The next step is to note the amount of money you need to meet your living expenses. When the amount of your monthly profits is at least twice as much as the amount you need to live, begin taking out 50% of your monthly profits. From that point on you will make a living AND your trading account will increase each month while the amount you take out will also increase every month from that point on. What could be better than that?

By: Scott Shubert

Traders make their movements depending on the data obtained from analyzing the market. Fundamental analysis of the Forex market is based on financial factors. The exchange rates reflect the changes in economy which are, in their turn, generated by changes in government’s monetary or fiscal policies. Only the economic factors should trigger financial factors. The latter ones may have priority over the former ones when governments lay emphasis on different aspects of the economy or have additional international responsibilities. Such was the case of the European Monetary System in the early 1990s.

A basic factor in the markets is represented by the interest rate differential. Since in the Forex market are used two currencies independently from the real economic environment, the market has to focus on two interest rates. Here is where the interest rate differential stems. Traders react and make movements depending on the changes registered at the level of the interest rates. If more countries involved in the Forex market decide to lower the interest rate differential, then the effect wouldn’t affect the parties, but if only one or two parties do this, then the alteration can influence the market.

Another factor that influences transaction on the Forex market is the time lag between the rumor and the fact, the reasons that endorse a change in the interest rate and the perceived importance of the change. If political rather than economic reasons determine a change in the discount rate, then the markets are likely to go against the central banks. The perceived importance of a change in the interest rate differential is another aspect on which traders rely when making deals.

What can have real negative influences on Forex is a political crisis. This can generate a sharp decrease in trade volumes. In these conditions the spreads between bid and offer jump from 5 pips to 100 pips. Predictable political events such as parliament elections, interstate agreements conclusion determine steady changes, whereas a political crisis strikes unexpectedly. The traders have to react fast in order to prevent great losses and fast decisions are not always the best. The only thing certain is that return on the market after a crisis is often problematic.

By: Daniel Brueck

If you want to trade forex on an intraday basis, you will have to select your trades carefully and be very precise. The global forex market is value as a trillion dollar industry which works 24 hours a day. This means that there are enough opportunities for an intraday trader to make money. However, a day trader has to aware of what factors he must overcome in order to be successful.

A day trader should look for the best intraday forex trading strategies to come out a winner.

The bid ask spread in the forex market makes trading in a short span of time extremely difficult. The usual bid ask spread in the forex market is at least 3 pips and sometimes trading takes place within seconds. The daily range for a currency pair can be quite wide and this gives many opportunities to a day trader. However, intraday forex trader should keep a look out for specific technical and fundamental conditions before executing a trade.

In addition, there is no centralized exchange for forex trading and this means that day traders do not have the necessary data on volume and open interest, which are important sources of information for traders who are trading in other markets. This results in the intraday trader focusing more on other technical and fundamental factors. Although interbank forex traders have the benefit of seeing the order book at the workplace and using it to their advantage, retail forex traders have to react faster than the interbank traders. Also, the trade that is executed by intraday traders will not move the market like the trades done by larger institutions.

However, it goes without saying that technical and fundamental analyses are a must for any intraday forex trader.

By: Pauline Go