Forex Day

Archive for January 3rd, 2010

Using Currency Trading Charts To Forecast Price Movements
Currency trading charts and the various indicators that come with them are the tools used by nearly every trader in forex And it can be the skill with which you use these tools that can determine whether you ever get to be successful, so let’s have a quick survey of them . .Before we do, bear in mind that there are only three pieces of information you’re looking for from any indicator or chart You want to know whether the price is going to move more than a few points if so, whether it is likely to move upwards or downwards whether there is likely to be any volatility, or movement in the opposite direction, of more than a limited number of points before your target is reached . . .1 Bollinger Bands . .These are two lines drawn on the chart to show you the volatility of the market Very similar to support and resistance levels, they show you at a glance whether the price has strayed upwards or downwards too much, bearing in mind where it should be according to the normal rules of the marketplace So if the price has broken through one of the lines then it is a sign that it will shortly retrace back into the space between the two The lines themselves can and do move up and down roughly reflecting the actual price movements so this means the retracement may not always be by the same number of points as the original movement . .If the price has stayed between the two lines for a protracted period, then when it does eventually break through one of them it is often a sign of a strong movement in that direction, and so you can often make a successful trade based on that information . .2 Stochastics . .Stochastics uses the moving average principle to determine whether the market is overbought or oversold The theory is that if the moving average lines are above 70 the market is overbought (which means you should buy) and if they are under 30 the market is oversold (so you should sell, or go short) . .3 Parabolic Stop And Reversal (SAR) . .This is more of a long term indicator, and is designed to let you know when there is a reversal in trend It is displayed as a series of dots When the price breaks through this line then it is a sign of a definite movement in that direction that you can trade on . .4 Relative Strength Index (RSI) . .This is similar to Stochastics in that it can tell you if a market is overbought or oversold If you use the two indicators together, and they both agree at some point, then it’s a strong indication that the price will reverse The trouble is that it’s usually difficult to tell when exactly the reversal will take place, so if you trade on such information using a spread betting account then you should use a large stop loss if you can afford it . .5 Simple Moving Average (SMA) . .If, for example, you have a 50 period simple moving average setting then it shows you the average price over the previous 50 accounting periods So if it is an hourly chart, i e where each bar, or “candlestick” represents the price movement of one hour, then the SMA shows the average price of the last 50 hours . .You can tell at a glance from this whether the price has been rising or falling over that period This in turn shows you what the current “trend” is If you trade following the “trend”, as many successful traders do, then the SMA is your guide In fact the SMA is probably the only indicator, apart from the chart itself, that you really need It’s certainly the only one that many successful traders use . .It’s normal to use two SMAs, for example a 5 period and a 30 period, if you’re a short term trader, or a 25 period and a 150 period, if you’re a long term trader You then watch out for the shorter period SMA crossing over the longer period SMA, which is often a signal to go long or short, as the case may be The strongest signal is where the current price goes through both the SMAs at a steep angle .
Source: www.rsstnx.com

Emini Futures Day Trading : Fundamentals And Simulated Trading System
Fundamental Analysis Fundamental analysis is a methodology for analysis of a company as a viable stock that you want to hold for long term. Fundamental analysis is more widespread in the world of investing since you are going to hold your companies for 10 to 20 years, you do not wish that your companies go bankrupt the next day. Some of the common ratios used are P/E ratios (price earnings ratios) which measures the relative price of the stock to the earnings of the company, the EPS (earnings per share), the debt equity ratio and tons of other ratios. Although I have spent considerable time studying such ratios I discovered that you do not really need such information to be successful in day trading. I repeat, fundamental analysis plays a marginal role in day trading. In fact, most of the time, I don’t follow it at all. If you still have reservations about ignoring fundamental analysis, I recommend trading ETFs (exchange traded funds) such as QQQQ which mirrors the movement of the NASDAQ 100. In essence, you are actually trading the index like a normal stock. Indexes usually have a huge number of stocks in them, making them less susceptible to company specific news. However if you are paranoid, then you might still want to follow the news of the major companies in the index. here is no lack of information and no end to analysis. Knowing the fundamentals might seem cool when you discuss company so and so over a cocktail party, but it will not help you rip money off Wall Street in day trading. Being able to remove fundamental analysis from the decision making process is also one of the reasons why I recommend trading Emini index futures. Paper Trading: Don’t Ever Underestimate it! Paper trading refers to trading with virtual money, you do not use real money. You jot down in your notebook when you bought at what price and why. When you sell, you record in your notebook again why you sold and calculate the profit or loss associated with the trade. If you cannot make money by paper trading, you can forget about making money in real trading. Always test a new trading idea with paper trading first before using real money. Also start with paper trading after a long period of break, to help you get back in touch with trading. Although there is very little difference between paper trading and real trading in Emini, real trading is subjected to slippage and psychological factors come into play when you are using real money. Do not underestimate the impact of psychological factors on your trading. After you have a reasonable method and money management techniques, it is the psychological factors which will determine whether you make a profit or loss. Some traders have created software to paper trade. You hit the buttons like you are doing real trading but only virtual money is involved and no real cash is used. The system will record down the time, price, symbol and the position opened or closed. This saves you the trouble of keeping a paper record. Michael Taylor is a professional trader and webmaster of <a href="http://www.daytradeemini.com">www.daytradeemini.com</a> He regular updates his trading blog at <a href="http://www.daytradeemini.com/blog">www.daytradeemini.com/blog</a> with educational articles and trading records.
Source: www.ArticlePros.com

Forex Trading Tips
Forex is traded for three key reasons; countries managing their foreign currency reserves, companies buying and selling good and services in foreign currencies and investors speculating for profit. All traders research the market in different ways. Some prefer analyzing what is called fundamentals such as a country s interest rates, trade balance and the general state of its economy, reflected in measurements of unemployment, GDP, building approvals and business investment. Other traders prefer technical analysis, using charting, such as pivot points, candlestick patters and Fibonacci retracements. The important thing to remember is that the market is subject to both of these styles and as such, it s important for traders to have an understanding of both. Trading Systems Some traders do not have the time or the training to be able to do proper fundamental and technical analysis and prefer to use a robotic trading system. These have generally been developed by successful traders who have a winning formula, which they package up for sale. Choosing the right one can avoid unnecessary losses and subscription fees. A simple way to test a trading system is to open a demo account with a forex broker you like and trade a demo account without real money. Over time, you ll see how profitable it is, or isn t. When you find a system that works for you, you can use your demo information to work out the average profit per trade. If you multiply that by the actual amount that you intent to invest in each trade, you can begin to work out the potential profit of your forex trading. Before getting too carried away with the possibilities, it is important to be realistic about the fact that demo accounts and live trading is a howl different experience and you shall most probably end up with different results altogether, and not for the better. In addition you need to take into account how much time you have to trade, over any given period. Family and work pressure can also limit the amount of trades you can successfully execute. Managing your trading funds As in any business, managing the money in your account is very important. This involves setting a limit of how much you ll invest in each trade, as well as how much you re willing to leverage. Poor money management can result in you quickly losing your initial capital. Speculators are therefore well advised to know their limits in their ability to research and analyze, work out which style fits them best and if necessary, find a trading systems that works for them.
Source: www.ArticlePros.com