FOREX OH FOREX: A Beginner's Understanding Of The Game

Forex Trader's Weekly Update (October 25 2010 to October 29 2010)

2010-10-27T03:11:00.000-07:00

EUR/USD

EUR/USD's consolidation from 1.4150 extended further last week and such consolidations would likely continue further in near term. Below 1.3697 minor support will bring another fall to 38.2% retracement of 1.2587 to 1.4150 at 1.3553 and possibly below. On the upside, though, break of 1.4150 resistance will confirm that recent rally has resumed and should target medium term trend line resistance at 1.4550 next.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have finished down to 1.1875 already. Short term outlook will remain bullish as long as 1.3330 resistance turned support holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4572) next. Break there will target a new high above 1.6039. Though, break of 1.3330 will argue that whole rebound from 1.1875. This will also dampen this mentioned case and turn outlook bearish instead.

In the long term picture, the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Pips Mover's Weekly Pivot Point for this week: 1.3917

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

GBP/USD

GBP/USD dropped sharply to as low as 1.5649 last week and the development suggests that rise from 1.5296 is finished. Also, considering bearish divergence condition in daily MACD. whole rally from 1.4230 might be finished too. In any case, short term outlook will remain bearish as long as 1.5877 resistance holds. Break of 1.5649 will target a test on 1.5296 support first. Though, above 1.5877 will flip intraday bias back to the upside for retesting 1.6105 first.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Current rise from 1.4230 could extend to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

Pips Mover's Weekly Pivot Point for this week: 1.5752

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675

USD/CHF

USD/CHF's rebound from 0.9462 extended further to as high as 0.9803 last week. Considering bullish convergence condition in daily MACD, a short term bottom should be in place and strong rise is now is favor to 0.9932/1.0181 resistance zone in near term, with 55 days EMA (now at 0.9978). On the downside, below 0.9571 will flip intraday bias back to the downside for retesting 0.9462. Nevertheless, decisive break there is needed to confirm down trend resumption. Otherwise, we'd expect more consolidations first.

In the bigger picture, as noted before, the sustained break of 0.9634 low indicates that long term down trend from 2000 high of 1.8305 is resuming. While USD/CHF has made a short term bottom at 0.9462, there is no indication of medium term reversal yet. Outlook will stay bearish as long as 1.0330 resistance holds (38.2% retracement of 1.1729 to 0.9462 at 1.0328). The long term down trend is still in favor to continue towards 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

In the longer term picture, the break of 0.9634 confirms that long term down trend from 2000 high of 1.8305 has resumed. There are various interpretation of the price actions. But after all, USD/CHF should be resuming the set of impulsive fall from 1.8305 to 1.1288. Hence, we'd expect next long term target to be 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

Pips Mover's Weekly Pivot Point for this week: 0.9724

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175

USD/JPY

USD/JPY edged lower to 80.83 last week but lacked follow through selling and recovered. In any case, outlook remains bearish as long as 81.91 resistance holds and we'd expect recent decline to resume sooner or later. Below 80.83 will target 61.8% projection of 92.87 to 82.86 from 85.92 at 79.73, which is close to 79.75 low. However, break of 81.91 will indicate that a short term bottom is formed and bring stronger rebound towards 83.15/83.97 resistance zone.

In the bigger picture, whole decline from 124.13 is still in progress and should now target 1995 low of 79.75. Also, considering that monthly MACD has crossed below signal line again, suggesting that USD/JPY is rebuilding downside momentum. 79.75 low would probably be taken out. Though, note that Japan could intervene any time to slow USD/JPY's fall and hence, the path would likely be very choppy. In any case, break of 85.92 resistance is needed to be the first sign of medium term bottoming while break of 94.97 is needed to confirm reversal. Otherwise, outlook will remain bearish.

In the long term picture, there is no indication of trend reversal yet and USD/JPY's long term down trend could still extend further to 1995 low of 79.75. We'd anticipate some strong support from 79.75 initially to bring rebound. Focus will be on whether 79.75 would hold or USD/JPY is indeed resuming the multi decade decline that started back in the 80's.

Pips Mover's Weekly Pivot Point for this week: 81.34

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50

EUR/JPY

EUR/JPY dived to as low as 111.55 last week but was supported above 111.44 support and recovered. At this point, there is no confirmation of short term reversal yet and EUR/JPY's rise from 105.42 could still continue. Above 113.92 minor resistance will turn bias to the upside for 115.65. Break will target 38.2% retracement of 139.21 to 105.42 at 118.32. However, break of 111.44 will argue that whole rebound from 105.42 might be over and deeper fall should be seen t retest 105.42 low.

In the bigger picture, a medium term bottom should be formed at 105.42 already. Rebound from 105.42 is still in favor to extend further towards 55 weeks EMA (now at 119.21). Sustained break there will indicate that whole long term fall from 169.96 is finished too and will target 139.21 resistance and above. However, note that failure below the 55 weeks EMA will argue that long term down trend from 169.96 is still in progress for 100 psychological level and below before completion.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 113.12

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00

USD/CAD

USD/CAD's rebound from 0.9979 extended further to as high as 1.0371 last week before turning sideway. The development indicates that whole fall from 1.0671has completed. Hence, further rise is now in favor after finishing the consolidation from 1.0371. Above will target a test on 1.0671/5 resistance zone. On the downside, below 1.0167 will bring deeper pull back towards 0.9979 low. But we'd still anticipate strong support from parity to contain downside.

In the bigger picture, USD/CAD did get strong support from parity as we expected and the development reaffirms our view that price actions from 1.0851 are just consolidation to rise from 2007 low of 0.9056 only. Break of 1.0671 resistance will indicate that such rebound from 0.9056 is resuming for another high above 1.0851. On the downside, though, break of 0.9979 will invalidate this view and target a test on 0.9056 instead.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0253

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475

AUD/USD

AUD/USD continued to consolidate below 0.9998 last week and such consolidation would likely extend further this week. Below 0.9661 will bring deeper fall to 38.2% retracement of 0.8770 to 0.9998 at 0.9529 and below. On the upside, break of parity is needed to confirm rise resumption. Otherwise, risk will remain mildly on the downside.

In the bigger picture, medium term rise from 0.6008 is still in progress and has resumed the longer term up trend. In any case, outlook will remain bullish as long as 0.9220 resistance turned support holds. Current rally should extend towards 61.8% projection of 0.6008 to 0.9404 from 0.8066 at 1.0165 next.

In the longer term picture, long term up trend from 0.4773 should have resumed. We're now looking at next long term target of 100% projection of 0.4773 to 0.9849 from 0.6008 at 1.1084.

Pips Mover's Weekly Pivot Point for this week: 0.9827

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

Trading Psycology - Entry & Exit

2010-10-24T07:18:00.000-07:00

One of the major problems faced by people who enter into trading and which they continue to face till they become professional traders is the difficulty that they face in choosing the right moment to enter and exit trades. I am no exception and i have faced the same situation when i started out trading and it took me close to 4-5 yrs to get to the right moment to enter/exit trades.

The trick behind entering any good trade is to cut out the emotion behind the entry. Normally what we do is that we see price rising and immediately, we are tempted into entering a long. The temptation is too strong. Guess what !! Thats exactly what the pros want you to do. Give in to emotions, give in to your temptations. They want you to trade emotionally. And the trick to be a successful trader is to do the opposite of what the pros want you to do. Why ? Cos thats what they do. They never enter on seeing rising prices.

Trading, as such, is very easy. All you need to do is to open a 1H or 4H or daily chart and you can easily see places where prices had reversed earlier and or had been well supported. All that you have to do is wait for price to reach such areas and take the trades accordingly. Its so easy on the face of it. But why do all of us struggle in doing this simple thing ? Its because of our emotions and our lack of discipline. We see a previous resistance being broken and price running up and we immediately jump into the bandwagon without noticing the simple logic that any good break will almost always be followed by a retracement back into the resistance region. We see price running up 50 pips after the break and we enter there and when there is a retrace back into the resistance region, we are down 50 pips, we get too scared and we close to escape more drawdown. Wat happens? Price simply moves up again to where we thought it would.

The key to successful trading is to control your emotions and have discipline. Wait for good entries, they are always there and will always be there. All you need to do is wait. Have patience, have discipline. You will succeed.

Forex Trader's Weekly Update (October 18 2010 to October 22 2010)

2010-10-18T08:29:00.000-07:00

EUR/USD

EUR/USD rose further to as high as 1.4150 last week but lost upside momentum. A short term top might be in place and initial bias is cautiously on the downside for deeper treat to 1.3775 support and below. Though, we'd expect strong support from 38.2% retracement of 1.2587 to 1.4150 at 1.3553 to contain downside and bring another rise. Above 1.4150 will target medium term trend line resistance at 1.4572 next.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have finished down to 1.1875 already. Short term outlook will remain bullish as long as 1.3330 resistance turned support holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4572) next. Break there will target a new high above 1.6039.

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Pips Mover's Weekly Pivot Point for this week: 1.3958

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

GBP/USD

GBP/USD's rise from 1.5296 resumed last week and rose to 1.6104 so far. Upside momentum remains a bit unconvincing. But after all, as long as 1.5754 support holds. Further rally is still expected. Current rise should target 61.8% projection of 1.4230 to 1.5997 from 1.5296 at 1.6388 next. Though, break of 1.5754 support will indicate that rise from 1.5296 is over and turn focus back to this support.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Current rise from 1.4230 could extend to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

Pips Mover's Weekly Pivot Point for this week: 1.5961

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675

USD/CHF

USD/CHF's decline extended further last week and reached as low as 0.9462 before making a temporary low there and recovered. Initial bias is neutral this week and some consolidations might be seen first. But short term outlook will remain bearish as long as 0.9727 resistance holds and recent decline is still expected to continue. Below 0.9462 will target 100% projection of 1.2296 to 0.9916 from 1.1729 at 0.9349 next. However, break of 0.9727 will indicate that a short term bottom is formed with bullish convergence condition in 4 hours MACD and bring stronger rebound to 0.9932 resistance first.

In the bigger picture, as noted before, the sustained break of 0.9634 low indicates that long term down trend from 2000 high of 1.8305 is resuming. Medium term outlook will now remain bearish as long as 1.0330/0624 resistance zone holds. We'd expect further decline towards 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

In the longer term picture, the break of 0.9634 confirms that long term down trend from 2000 high of 1.8305 has resumed. There are various interpretation of the price actions. But after all, USD/CHF should be resuming the set of impulsive fall from 1.8305 to 1.1288. Hence, we'd expect next long term target to be 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

Pips Mover's Weekly Pivot Point for this week: 0.9591

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175

USD/JPY

USD/JPY's down trend continued last week and dropped further to as low as 80.88 before making a temporary low there. Initial bias is neutral this week and we'd expect some sideway consolidation first. But upside should be limited by 82.33 resistance and bring fall resumption. Below 80.88 will target 61.8% projection of 92.87 to 82.86 from 85.92 at 79.73, which is close to 79.75 low. However, break of 82.33 will indicate that a short term bottom is formed and bring stronger rebound towards 83.15/83.97 resistance zone.

In the bigger picture, whole decline from 124.13 is still in progress and should now target 1995 low of 79.75. Also, considering that monthly MACD has crossed below signal line again, suggesting that USD/JPY is rebuilding downside momentum. 79.75 low would probably be taken out. Though, note that Japan could intervene any time to slow of USD/JPY's fall and hence, the path would likely be very choppy. In any case, break of 85.92 resistance is needed to be the first sign of medium term bottoming while break of 94.97 is needed to confirm reversal. Otherwise, outlook will remain bearish.

In the long term picture, there is no indication of trend reversal yet and USD/JPY's long term down trend could still extend further to 1995 low of 79.75. We'd anticipate some strong support from 79.75 initially to bring rebound. Focus will be on whether 79.75 would hold or USD/JPY is indeed resuming the multi decade decline that started back in the 80's.

Pips Mover's Weekly Pivot Point for this week: 81.46

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50

EUR/JPY

EUR/JPY continued to engage in consolidation below 115.65 short term top last week and outlook remains unchanged. Another might be seen as such consolidations continue but downside is expected to be contained by 111.44 support and bring rally resumption. Break of 115.65 will target 38.2% retracement of 139.21 to 105.42 at 118.32 next. However, break of 111.44 will argue that whole rebound from 105.42 might be over and turn focus back to this low instead.

In the bigger picture, a medium term bottom should be formed at 105.42 already. Rebound from 105.42 is now expected to extend further towards 55 weeks EMA (now at 119.43). Sustained break there will indicate that whole long term fall from 169.96 is finished too and will target 139.21 resistance and above. However, note that failure below the 55 weeks EMA will argue that long term down trend from 169.96 is still in progress for 100 psychological level and below before completion.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 113.63

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00

USD/CAD

USD/CAD dived further to as low as 0.9979 last week but has somewhat drew strong support from parity and recovered. Also, downside momentum is clearly diminishing with bullish convergence condition in 4 hours MACD. Initial bias is neutral first this week. Break of 1.0232 resistance will indicate that fall from 1.0671 has finished and will flip bias back to the upside for retesting 1.0675 resistance. Nevertheless, break of 0.9979 and sustained trading below parity will target a test on 0.9929 low next.

In the bigger picture, while we'd still prefer to see strong support around parity to finish off the fall from 1.0671 and consolidation from 1.0851. Break of 1.0232 resistance will reaffirm the view that 0.9929 is the medium term bottom and rise from there is not finished. Further break of 1.0671 should target another high above 1.0851. However, Sustained trading below parity will argue that 0.9929 is not yet the bottom and fall from 1.3063 could still be in progress for 2007 low of 0.9056. and fall from 1.3063 could still be in progress for 2007 low of 0.9056.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0108

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475

AUD/USD

AUD/USD rose further to as high as 0.9998 last week, just shy of parity, before making a temporary top there and retreated. Initial bias is neutral this week and we might seen some sideway consolidations first. But after all, there is no sign of topping as long as 0.9768 support holds. Further rally is still expected to continue to 138.2% projection of 0.8315 to 0.9220 from 0.8770 at 1.0021. Break will see further rise to medium term projection level at 1.0165. Though, break of 0.9768 will indicate that a short term top is formed and bring deeper correction.

In the bigger picture, medium term rise from 0.6008 is still in progress and has resumed the longer term up trend. In any case, outlook will remain bullish as long as 0.9220 resistance turned support holds. Current rally should extend towards 61.8% projection of 0.6008 to 0.9404 from 0.8066 at 1.0165 next.

In the longer term picture, long term up trend from 0.4773 should have resumed. We're not looking at next long term target of 100% projection of 0.4773 to 0.9849 from 0.6008 at 1.1084.

Pips Mover's Weekly Pivot Point for this week: 0.9881

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

Forex Trader's Weekly Update (October 11 2010 to October 15 2010)

2010-10-11T21:47:00.000-07:00

EUR/USD

EUR/USD soared to as high as 1.4028, just inch below mentioned target of 100% projection of 1.1875 to 1.3330 from 1.2587 at 1.4042. A temporary top is in place and initial bias is neutral for some consolidations first this week. But downside is expected to be contained by 1.3636 support and bring another rise. Above 1.4028 will target medium term trend line resistance at 1.4585.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have finished down to 1.1875 already. Short term outlook will remain bullish as long as 1.3330 resistance turned support holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4585) next. Break there will target a new high above 1.6039.

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Pips Mover's Weekly Pivot Point for this week: 1.3914

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

GBP/USD

GBP/USD edged higher to 1.6016 last week and the break of 1.5997 did suggest that rise from 1.4230 is resuming. Nevertheless, upside momentum remains a bit unconvincing. In any case, short term outlook remains bullish as long as 1.5668 support holds. Above 1.6016 will target 61.8% projection of 1.4230 to 1.5997 from 1.5296 at 1.6388 next. On the downside, break of 1.5668 will in turn indicate that rise from 1.5296 is finished and flip bias back to the downside for this support.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Above 1.5996 will bring another rise to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

Pips Mover's Weekly Pivot Point for this week: 1.5919

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675

USD/CHF

USD/CHF dropped to as low as 0.9554 last week, breaking 2008 low of 0.9643 before turning sideway. Initial bias is neutral this week and some consolidations would be seen above 0.9554 first. But after all, upside should be limited below 0.9932 resistance and bring another fall. Below 0.9554 will target 100% projection of 1.2296 to 0.9916 from 1.1729 at 0.9349 next.

In the bigger picture, as noted before, current development suggests that long term down trend from 2000 high of 1.8305 is resuming. Break of 0.9634 will confirm this bearish case and target 100% projection of 1.2296 to 0.9916 from 1.1729 at 0.9349 next. On the upside, break of 1.0330/0624 resistance zone is needed to signal medium term reversal, otherwise, outlook will remain bearish.

In the longer term picture, the break of 0.9634 confirms that long term down trend from 2000 high of 1.8305 has resumed. There are various interpretation of the price actions. But after all, USD/CHF should be resuming the set of impulsive fall from 1.8305 to 1.1288. Hence, we'd expect next long term target to be 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level.

Pips Mover's Weekly Pivot Point for this week: 0.9646

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175

USD/JPY

USD/JPY broke intervention low of 82.86 to resume recent down trend and reached as low as 81.71 so far. Initial bias remains on the downside this week with 82.55 minor resistance intact. Current fall should now target 61.8% projection of 92.87 to 82.86 from 85.92 at 79.73, which is close to 79.75 low. On the upside, above 82.55 minor resistance will turn intraday bias neutral first. But break of 83.15 resistance is needed to be first signal of bottoming. Otherwise, outlook will remain bearish.

In the bigger picture, the break of 82.86 support indicates that USD/JPY has not bottomed yet. Whole decline from 124.13 is still in progress and should now target 1995 low of 79.75. Also, considering that monthly MACD has crossed below signal line again, suggesting that USD/JPY is rebuilding downside momentum. 79.75 low would probably be taken out. Though, note that Japan could intervene any time to slow of USD/JPY's fall and hence, the path would likely be very choppy. In any case, break of 85.92 resistance is needed to be the first sign of medium term bottoming while break of 94.97 is needed to confirm reversal. Otherwise, outlook will remain bearish.

In the long term picture, there is no indication of trend reversal yet and USD/JPY's long term down trend could still extend further to 1995 low of 79.75. We'd anticipate some strong support from 79.75 initially to bring rebound. Focus will be on whether 79.75 would hold or USD/JPY is indeed resuming the multi decade decline that started back in the 80's.

Pips Mover's Weekly Pivot Point for this week: 82.24

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50

EUR/JPY

EUR/JPY edged higher to 115.65 last week but subsequent break of 113.74 minor support suggests that a short term top is formed with bearish divergence condition in 4 hours MACD. Initial bias is neutral this week and retreat from 115.65 should extend further lower. Though, strong support is expected at 111.44 support to contain downside and bring rally resumption. Above 115.65 will target 38.2% retracement of 139.21 to 105.42 at 118.32 next.

In the bigger picture, a medium term bottom should be formed at 105.42 already. Rebound from 105.42 is now expected to extend further towards 55 weeks EMA (now at 119.65). Sustained break there will indicate that whole long term fall from 169.96 is finished too and will target 139.21 resistance and above. However, note that failure below the 55 weeks EMA will argue that long term down trend from 169.96 is still in progress for 100 psychological level and below before completion.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 114.58

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00

USD/CAD

USD/CAD dived to as low as 1.0061 last week before making a temporary low there and turned sideway. With 1.0377 resistance intact, fall from 1.0675 is still expected to continue. Though, in case of another fall, we'd continue to expect strong support from around parity to contain downside and bring rebound. Break of 1.0377 will confirm that fall from 1.0671 is over and bring stronger rally towards 1.0675 resistance.

In the bigger picture, consolidations from 1.0851 is not finished yet with another falling leg in progress. At this moment, we'd still to expect strong support from parity to contain downside and finally bring rally resumption. Above 1.0675/0671 resistance zone will target 38.2% retracement of 1.3063 to 0.9929 at 1.1126 at least. However, sustained trading below parity will indicate 0.9929 is not yet the bottom and will turn focus back to this low.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0130

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475

AUD/USD

AUD/USD's strong rise and break of 0.9849 high confirms that long term up trend has resumed. Though, with a temporary top formed at 0.9915, initial bias is neutral this week and some sideway trading should be seen first. But downside is expected to be contained by 0.9541 support and bring another rise. Above 0.9915 will target parity and then 138.2% projection of 0.8315 to 0.9220 from 0.8770 at 1.0021.

In the bigger picture, medium term rise from 0.6008 is still in progress and has resumed the longer term up trend. In any case, outlook will remain bullish as long as 0.9220 resistance turned support holds. Current rally should extend towards 61.8% projection of 0.6008 to 0.9404 from 0.8066 at 1.0165 next.

In the longer term picture, long term up trend from 0.4773 should have resumed. We're not looking at next long term target of 100% projection of 0.4773 to 0.9849 from 0.6008 at 1.1084.

Pips Mover's Weekly Pivot Point for this week: 0.9812

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

Forex Trader's Weekly Update (October 4 2010 to October 8 2010)

2010-10-04T06:13:00.000-07:00

EUR/USD

EUR/USD's up trend continued last week and rose further to as high as 1.3791. Initial bias remains on the upside this week and further rally should be seen towards 100% projection of 1.1875 to 1.3330 from 1.2587 at 1.4024, which is close to 1.4 psychological level. On the downside, below 1.3626 minor support will turn intraday bias neutral and bring retreat first. But in such case, we'd expect strong support from 1.3286 to contain downside and bring another rise.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have down to 1.1875 already. Short term outlook will remain bullish as long as 1.3 psychological level holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4600) next. Break there will target a new high above 1.6039.

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Pips Mover's Weekly Pivot Point for this week: 1.3683

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

GBP/USD

GBP/USD edged higher to 1.5921 last week but lacked follow through buying. Subsequent volatility mixed up the near term outlook and we'll stay neutral first. On the upside, break of 1.5921 will indicate that rise from 1.5296 is still in progress for 1.5997 high. On the downside, below 1.5668 will flip intraday bias to the downside. Further break of 1.5503 support will confirm that rebound from 1.5296 has completed and turn focus back to this support instead.

In the bigger picture, price actions from 1.3503 are viewed as consolidation to fall from 2.1161 only with rise from 1.4230 as the third leg. There is no clear indication that such consolidation is finished. Above 1.5996 will bring another rise to 1.7043 resistance and above. However, we'd expect strong resistance between 1.7043 and 50% retracement of 2.1161 to 1.3503 at 1.7332 and finally bring long term down trend resumption. In any case, a break of 1.4230 support will indicate that the consolidation is completed and down trend from 2.1161 is resuming for another low below 1.3503.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after rebound from 1.3503 is confirmed to be completed.

Pips Mover's Weekly Pivot Point for this week: 1.5807

Historical Levels up to date: 1.9445, 1.8490, 1.7520, 1.6570, 1.6255, 1.5675

USD/CHF

USD/CHF dropped further to as low as 0.9707 last week before making a temporary low there and turned sideway. Initial bias is neutral this week and some more consolidations could still be seen. But even in case of another rise, upside should be limited below 1.0108 resistance and bring fall resumption. Break of 0.9707 will target 0.9634 low next.

In the bigger picture, as noted before, current development suggests that long term down trend from 2000 high of 1.8305 is resuming. Break of 0.9634 will confirm this bearish case and target 100% projection of 1.2296 to 0.9916 from 1.1729 at 0.9349 next. On the upside, break of 1.0330/0624 resistance zone is needed to signal medium term reversal, otherwise, outlook will remain bearish.

In the longer term picture, USD/CHF continued to trade below a falling 55 months EMA. Even though it kept losing downside momentum as seen in bullish convergence condition in monthly MACD, there is no indication of reversal. Whole down trend from 2000 high of 1.8305 is still in progress for another low below 0.9634.

Pips Mover's Weekly Pivot Point for this week: 0.9773

Historical Levels up to date: 0.9880, 1.0685, 1.0830, 1.0875, 1.1000, 1.1175

USD/JPY

USD/JPY's fall from 85.92 extended further to as low as 83.15 last week but started to lose some downside momentum. While further decline cannot be ruled out, we'd maintain that considering risk of further intervention, strong support should be seen at around 83 level to contain downside. On the upside, above 83.92 minor resistance will flip intraday bias back to the upside for upper side of recent range of 82.86/85.92. However, break of 85.92 resistance is needed to confirm that rebound from 82.86 has resumed. Otherwise, we'll stay neutral first.

In the bigger picture, considering bullish convergence condition in daily MACD, fall from 94.97 might have made a medium term low at 82.86. Though, we'd prefer to see decisive break of 85.89 resistance before confirming. In such case, stronger rally should be seen to 55 weeks EMA (now at 89.77) and above. On the downside, break of 82.86 support is needed to confirm down trend resumption to 79.75 low. But even in case, we'll be cautiously looking for more sign of loss of momentum in case of further decline.

In the long term picture, there is no indication of trend reversal yet and USD/JPY 's long term down trend could still extend further to 1995 low of 79.75. However, we'd be cautious on any sign of loss of momentum and reversal on next fall. Break of 94.97 resistance will now be an important signal of trend reversal.

Pips Mover's Weekly Pivot Point for this week: 83.55

Historical Levels up to date: 93.50, 95.75, 98.00, 99.70, 101.35, 101.70, 103.00, 104.95, 105.50, 106.30, 107.20, 110.50

EUR/JPY

EUR/JPY's rally continued further to as high as 114.79 last week and met mentioned target of 114.72 resistance. While EUR/JPY has been losing some upside momentum, there is no sign of topping yet. Initial bias remains on the upside this week and sustained trading above 114.72 will target 38.2% retracement of 139.21 to 105.42 at 118.32 next. On the downside, break of 112.96 will suggest that a short term top is formed and bring consolidations first. But downside should be contained above 109.54 resistance turned support and bring another rise.

In the bigger picture, a medium term bottom should be formed at 105.42 already. Rebound from 105.42 is now expected to extend further towards 55 weeks EMA (now at 120.33). Sustained break there will indicate that whole long term fall from 169.96 is finished too and will target 139.21 resistance and above. However, note that failure below the 55 weeks EMA will argue that long term down trend from 169.96 is still in progress for 100 psychological level and below before completion.

In the long term picture, up trend from 88.96 has completed at 169.96 and made a long term top there. Based on the rise from 88.96 to 169.96, we're favoring that fall from 169.96 is corrective in nature. But EUR/JPY would be contained above 88.96 key support level. We'll hold on to this view unless fall from 169.96 shows sign of acceleration.

Pips Mover's Weekly Pivot Point for this week: 114.31

Historical Levels up to date: 124.25, 126.50, 130.90, 133.25, 135.65, 138.00, 140.00, 151.95, 156.00, 156.85, 164.00

USD/CAD

USD/CAD's break of 1.0190 support on Friday suggests that fall from 1.0671 has finally resumed. Initial bias is on the downside this week for 1.0106 support next. But still, we'd continue to expect strong support from around parity to contain downside and bring rebound. On the upside, break of 1.0230 minor resistance will turn intraday bias neutral first. But break of 1.0377 is needed to signal reversal. Otherwise, risk remains on the downside.

In the bigger picture, consolidations from 1.0851 is still in progress and rebound from 0.9929 is not ready to resume yet. But in any case, we'd continue to expect strong support from parity to contain downside and finally bring rally resumption. Above 1.0675/0671 resistance zone will target 38.2% retracement of 1.3063 to 0.9929 at 1.1126 at least, with prospect of extending further to 61.8% retracement of 1.1866. However, sustained trading below parity will indicate 0.9929 is not yet the bottom and will turn focus back to this low.

In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.

Pips Mover's Weekly Pivot Point for this week: 1.0234

Historical Levels up to date: 0.9805, 1.0060, 1.0270, 1.0470, 1.1025, 1.1140, 1.1270, 1.0160, 1.1940, 1.2040, 1.2225, 1.2475

AUD/USD

AUD/USD climbed further to as high as 0.9749 last week even though it continued to lose some near term upside momentum. In any case, further rally is still expected as long as 0.9461 support holds and current rise is expected to extend further to 0.9849 high next. Break of 0.9461 support will indicate that a short term top is formed and bring deeper pull back.

In the bigger picture, medium term rise from 0.6008 is still in progress. In any case, outlook will remain bullish as long as 0.8770 support holds and further rise should be seen to 0.9849 high first. Break there will confirm that the long term up trend has also resumed and should then target 61.8% projection of 0.6008 to 0.9404 from 0.8066 at 1.0165 next. On the downside, though, note that break of 0.8770 will indicate that rise from 0.8066 is finished and turn focus back to this key support instead.

In the longer term picture, long term correction from 0.9849 has likely completed at 0.6008 already, after being supported slightly above 76.4% retracement of 0.4773 to 0.9849. Rise from 0.6008 is possibly developing into a new up trend which extend the long term rise from 0.4773. We'll continue to favor the long term bullish case as long as 0.8066 support holds and expect an eventual break of 0.9849 high.

Pips Mover's Weekly Pivot Point for this week: 0.9684

Historical Levels up to date: 0.7695, 0.7870, 0.7930, 0.8000, 0.8200, 0.8350, 0.8670

2010-10-02T07:30:00.001-07:00

Forex Online Trading Manual

A Gift To All My Friends.........

2010-09-29T06:57:00.000-07:00

With my googling power, I've come across a very interesting methodology in the FOREX trading. It is probably the oldest method of FOREX trading and is called PRICE ACTION approach.It is worth to give it a second look.I hope you'll find it useful. Happy trading!!!!
Price Action Trading Course by Nial Fuller

Forex Trader's Weekly Update (September 27 2010 to October 1 2010)

2010-09-27T08:22:00.001-07:00

EUR/USD

EUR/USD rose to as high as 1.3494 last week and the break of 1.3330 resistance confirms that whole rally from 1.1875 has resumed. Initial bias remains on the upside this week and further rise should be seen towards next target of 100% projection of 1.1875 to 1.3330 from 1.2587 at 1.4024, which is close to 1.4 psychological level. On the downside, below 1.3286 support will suggest that a short term top is formed and bring consolidations. But downside should be contained by 1.3018/3158 support zone and bring rally resumption.

In the bigger picture, price actions from 1.6039 is a correction to long term rally from 0.8223 and could have finished down to 1.1875 already. Short term outlook will remain bullish as long as 1.2587 support holds and further rally should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4600) next. Break there will target a new high above 1.6039.

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect another high above 1.6039 eventually, after correction from 1.6039 is confirmed to be finished.

Forex Trader's Weekly Update (September 20 2010 to September 24 2010)

2010-09-20T01:47:00.000-07:00

EUR/USD

EUR/USD's rally extended further to as high as 1.3158 last week before making a temporary top and retreated. Initial bias is neutral this week and we'd expect some sideway trading first. Note that the strong break of 1.2916 resistance suggests that whole pull back from 1.3330 is finished at 1.2587 already. We'd expect retreat from 1.3158 to be contained by 1.2916 resistance turned support and bring another rise. Above 1.3158 will target 1.3330 and above. However, note that break of 1.2916 will dampen this case and turn focus back to 1.2587/2643 support zone instead.

In the bigger picture, outlook is rather mixed for the moment and we'll stay neutral first. Question remains on whether medium term correction from 1.6039 is completed to 1.1875 and we have no confirmation yet. On the upside, break of 1.3330 resistance will indicate that rebound from 1.1875 has resumed and thus favor the case that EUR/USD has bottomed out. In such case, further rise should be seen to upper trend line resistance (1.6039, 1.5143, now at 1.4600). On the downside, though, break of 1.2587 support will indicate that fall from 1.5143 is still in progress for a test on 1.1639 key support. We'll see which side EUR/USD will take out before solidifying the outlook.

In the long term picture, the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend.

Forex Trader's Weekly Update (September 13 2010 to September 17 2010)

2010-09-17T03:47:00.000-07:00

EUR/USD

EUR/USD's recovery extends further to as high as 1.2896 last week but is still limited below mentioned 1.2921 resistance. Considering that it's near to this resistance, we'll stay neutral initially this week. As long as 1.2921 resistance holds, we'd still expect fall from 1.3330 to resume sooner or later. Below 1.2776 minor support will flip intraday bias back to the downside. Further break of 1.2587 will target 61.8% retracement of 1.1875 to 1.3330 at 1.2431 next. However, decisive break of 1.2921 will indicate that fall from 1.3330 is possibly completed and will bring stronger rally to retest this high instead.

In the bigger picture, note that EUR/USD is still limited below 55 weeks EMA (now at 1.3346) and thus, there is no indication of medium term bottoming. Whole decline from 1.6039 is possibly still in progress. Such decline is treated as correction to long term up trend and will target 1.1639 support after taking out 1.1875 low. On the upside, though, above 1.3330 will turn focus back to 55 weeks EMA and sustained trading above there will lead to further rise to upper trend line resistance (1.6039, 1.5143, now at 1.4600).

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key Fibonacci level will dampen this view and open up the case of a take on parity.

Forex Trader's Weekly Update (September 6 2010 to September 10 2010)

2010-09-06T08:31:00.000-07:00

EUR/USD

EUR/USD's recovery extend further to as high as 1.2896 last week but is still limited below mentioned 1.2921 resistance. Considering that it's near to this resistance, we'll stay neutral initially this week. As long as 1.2921 resistance holds, we'd still expect fall from 1.3330 to resume sooner or later. Below 1.2776 minor support will flip intraday bias back to the downside. Further break of 1.2587 will target 61.8% retracement of 1.1875 to 1.3330 at 1.2431 next. However, decisive break of 1.2921 will indicate that fall from 1.3330 is possibly completed and will bring stronger rally to retest this high instead.

In the bigger picture, note that EUR/USD is still limited below 55 weeks EMA (now at 1.3346) and thus, there is no indication of medium term bottoming. Whole decline from 1.6039 is possibly still in progress. Such decline is treated as correction to long term up trend and will target 1.1639 support after taking out 1.1875 low. On the upside, though, above 1.3330 will turn focus back to 55 weeks EMA and sustained trading above there will lead to further rise to upper trend line resistance (1.6039, 1.5143, now at 1.4600).

In the long term picture, considering the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key Fibonacci level will dampen this view and open up the case of a take on parity.

Forex Trader's Weekly Update (August 30 2010 to September 3 2010)

2010-08-30T08:28:00.000-07:00

EUR/USD

EUR/USD dropped further to 1.2587 but turned sideway since then. Initial bias remains neutral this week and some more consolidations would be seen first. But upside should be limited by 1.2910 resistance and bring fall resumption. Below 1.2587 will target 61.8% retracement of 1.1875 to 1.3330 at 1.2431 next. Sustained trading below there will argue that medium term decline is likely resuming for another low below 1.1875. However, break of 1.2921 will argue that fall from 1.3330 is possibly completed and will turn focus back to this resistance.

In the bigger picture, note that EUR/USD is still limited below 55 weeks EMA (now at 1.3385) and thus, there is no indication of medium term bottoming. Whole decline from 1.6039 is possibly still in progress. Such decline is treated as correction to long term up trend and will target 1.1639 support after taking out 1.1875 low. On the upside, though, above 1.3330 will turn focus back to 55 weeks EMA and sustained trading above there will pave the way to further rise to upper trend line resistance (1.6039, 1.5143, now at 1.4699).

In the long term picture, the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.

3 Golden Ways To Approach News Events In Forex Trading

2010-08-23T08:03:00.000-07:00

Recently, there are a few emails asking me how do we trade news when we do not even know what’s the outcome of the news releases/fundamental reports. It’s not only just that, how are we going to handle different sources of potentially high impact news and reports that are going to hit the forex market. So below I’m going to share on how to handle those in forex trading.

I understand how frustrating it can be when there a constant stream of data/fundamental reports that is releasing every now and then, and it may hinder your decisions for your trading. Forex traders seemingly have loads of stuffs to keep track before executing their trades like countries’ economic data, who is going to speak that will affect the market etc.

Well, I’m going to give you an example here. A stock trader only has to worry about the earnings reports of a certain company, but whereas retail sales reports may be useless to them. For a forex trader, he has to worry much about interest rate change, employment and unemployment figures and some other stuffs but do not really have to worry on what the president of European Central Bank (ECB) have to say. It is possible to narrow down on the items that will have an impact on the forex market that you trade because you can choose the calendar events that that you need to focus on for a certain currency pair. You can refer to a very popular news calendar in forexfactory.com. If you are trading USD pairs, then you should look out for any orange or red coded USD news as it will affect your trade. Below are the 3 ways to approach news events.

1) Predict ahead of the news releases, speech etc. and get into position.
No one can predict where the forex market can go and what the news releases may be. So this is definitely gambling to me and I’ll never recommend this to anyone if you want to trade forex the right way.

2) Avoid the news event by waiting and not trading.
This is the best forex strategy for me when I’m a short term trader. When there is a news events coming up, I will not trade 2 to 3 hours before the news are released, this is to keep me out from unexpected results and choppy markets. Sometimes the market will be very volatile and it can only be challenging but NOT profitable for most traders. So it’s better we stay out of the unpredictable and see how the market moves after that.

3) Trading in a timeframe where intraday swings do not have much impact.
This applies to traders who are not using intraday as their strategy. Instead, they are using short swings and long swings as their trading strategy. The approach here is that when you use swing trading strategy, you will have larger stop loss and these kind of intraday swings are just small fluctuations. But of course, you have to be able to take huge stop loss and your forex trading system must be proven to be able to take in these small swings. If your system can do that, it means the news releases are already factored into your trading system.

Do Not Trade Forex Until You Read These!

2010-08-23T07:58:00.000-07:00

I found this interesting article by a fellow professional forex trader Walter Peters that talks about the 3 Trading Weaknesses and How to Overcome Them:

Do you know what your biases are? Where are your trading weak spots? Where do you let the pips slip from your grasp?

Trading is like any other skill. Profitable trading, like bowling, cooking, planting a tree or driving a motorcycle, can be learned - by anyone. That means you too.

If you would like to become a profitable forex trader, or simply make more pips trading, find out what your weak spots are, and then work on them.

Some common weak spots are:
# 1. Trading too often.

How many times have you had a profitable week, only to give it all back at the end of the week on a few silly trades? (You wouldn’t believe how profitable most traders could be if they simply learned to wait for the ideal trade setups.)

The other common problem with frequent trading is that many traders get into revenge mode. Many traders may try to “get their money back” from a market that handed them their most recent loss. Sometimes a little perspective is all that is needed to see the markets more clearly. By sitting in the bushes until the “free money” is lying there you force yourself to become a more disciplined trader.

Recall the last time you took a trade that was an ideal setup. Remember the feeling you had – knowing that the trade had an unbelievable success rate. You probably had very little doubt that it would work out. Now, consider this: what if EVERY trade you took felt like that. This is what patience can do for you. If you learn to sit and wait for the very best trades, not only can trading become very fun, but it can become extremely profitable.
# 2. Finding it difficult to re-enter a trade.

If you find that you are often stopped out on a trade, but the trade eventually goes in the expected direction without you, you may want to work on this skill. Learning to re-enter is tricky because it may lead to overtrading, but it is invaluable in making sure that you eventually collect your profits - especially for traders who trade lower timeframe (5 minute, 10 minute, etc) charts.

Deciding to re-enter a trade is a difficult decision because you are admitting that you were wrong. By re-entering the trade you have decided that the original timing of the trade was off, and that now is the better time to get into the market.

Note that this is very different from pyramiding, or scaling into a position. A re-entry is a trade that is taken after the first trade did not go well and you have exited this original position.When pyramiding, or scaling into a position you are still holding on to your original position.
# 3. Inconsistent risk management.

If you vary your risk from trade to trade, then you may get some value from learning a risk management “trading ritual.” What I mean by this is that you go through specific steps (for example, with a spreadsheet or calculator) to determine what % of your account is at risk on the next trade. If your money management strategy is to vary the risk on each trade, that is fine, but this ritual will really help you because you will know precisely how much is at risk on each trade. This way you are more likely to stick to your plan and exit the trade if the trade goes against you. This will also help you to avoid the painful exit from the trade simply because the trade has gone against you too much - by defining your risk beforehand you are more likely to be able to sleep (if you trade longer term charts) and less likely to exit before your stop is hit because you cannot handle the excessive drawdown.

Trading is simply like learning to ride a bike or drive a car, it is a skill that anyone can learn. Some people will tell you otherwise, that only talented people who are “born to trade” can extract profits from the markets. Trading doesn’t take extreme intelligence or any superhuman gifts, it simply is hard work, just like learning to drive a car.

Walter Peters, PhD is a professional forex trader and money manager for a private forex fund. In addition, Walter is the co-founder of Fxjake.com, a resource for forex traders. Walter loves to hear from other traders, he can be reached by email at walter@fxjake.com.

Forex Trader's Weekly Update (Aug 16 2010 to Aug 20 2010)

2010-08-22T08:50:00.000-07:00

EUR/USD

EUR/USD's sharp fall last week indicates that a short term top is at least formed at 1.3330 on bearish divergence condition in 4 hours MACD. Initial bias remains on the downside this week and break of 1.2731 support will suggest that whole rebound from 1.1875 is completed and will bring deeper decline to 1.2466 support next. On the upside, above 1.2935 will turn intraday bias neutral and bring recovery. But upside should be limited below 1.3330 and bring another fall.

In the bigger picture, while the rebound from 1.1875 was strong, it's limited below 55 weeks EMA (now at 1.3410) and reversed sharply. Break of 1.2731 support will indicate that such rebound is completed and suggest that whole fall from 1.6039 is possibly resuming. Such decline is treated as correction to long term up trend in EUR/USD and would possibly make another low below 1.1639 support before conclusion. On the upside, though, above 1.3330 will turn focus back to 55 weeks EMA and sustained trading above there will pave the wave to further rise to upper trend line resistance (1.6039, 1.5143, now at 1.4699).

In the long term picture, considering the five wave impulsive structure of the long term up trend from 2000 low of 0.8223 to 2008 high of 1.6039, price actions from 1.6039 are viewed as a correction only. Hence, we'd expect strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and 1.1639 support to contain downside and bring another long term up trend. However, note that sustained break of 1.1209 key fibonacci level will dampen this view and open up the case of a take on parity.

Pips Mover's Weekly Pivot Point for this week: 1.2891

Historical Levels up to date: 1.4865, 1.4675, 1.4420, 1.4090, 1.3840, 1.3600

Trailing Stop Loss: Boost Your Profits With This Simple Method

2010-08-21T09:02:00.000-07:00

Using trailing stops is one of the best techniques that an active trader can do to increase their profits. This trading method will allow you to reap profits will also protecting you from taking losses. This is very important as trades can turn quickly and what once was a winning trade can quickly turn into a loss if it is not managed properly. A trailing stop loss will eliminate this and allow you to leave trades open and let your profits run while simultaneously protecting you from taking a loss.

What is a trailing stop loss?

A trailing stop loss is a technique in which your stop is moved up as your trade moves into profit thereby locking in profits and eliminating the possibility of loss. This is extremely beneficial to traders because once a trade reaches this point the traders knows no matter what they will profit on the trade. The trader can then let the trade run and continue to make profits for them while also being protected from losses. This means unlimited profit potential with no chance of taking a loss. What more can a trader ask for?

How to use a trailing stop loss

If you want to implement trailing stops in your trading then its a simple as selecting it when you open a trade with your software. Most trading software gives you the ability to set stop orders that will automatically trail as your position moves deeper into profit. If you are unsure how to do this then you should consult the manual for your software or contact your broker for assistance. If for some reason your software doesn’t offer this capability built in then you can still manually trail your stop orders.

All you have to do is define the point at which you will move your stop order and also the increments in which you will move it. For example let’s say you are day trading the Eur/Usd in the forex market and your initial stop order is 20 pips away from your entry point, you could choose to move your stop order up another 20 pips for every 20 pips you move into profit. So once your position is 20 pips in profit you would move your stop order to break even and then when you reach 40 pips of profit you would lock in 20 pips of profit and so on and so forth. This is just an example as there are unlimited ways to trail your stops. How you choose to do should be based on your style of trading and risk tolerance.

A trailing stop loss provides traders with a great way to limit and even eliminate their losses while also keeping profit potential unlimited. This is a great method that is sure to help your trading once you find a way to implement it that suits your trading style. As with all new methods you should first test it out in a demo account until you figure out exactly how you want to implement it into your trading plan.

Day Trading Secrets: These Powerful Insider Tips Will Take You To The Next Level

2010-08-21T08:56:00.000-07:00

If you are looking for day trading secrets then you have come to the right place. In this article I am going to give you some great information that is is sure to help you in your quest to become a better trader. Well without further ado here are my top 4 day trading secrets:

Dont trade after 12pm est.

The NYSE opens at 9:30 am eastern time and the bulk of action occurs within the first 2 hours of any session. Therefore if you want the best opportunity for profit then you need to be trading during this time. After the first couple of hours of trading market volatility and liquidity drop off considerably as most experienced traders exit the market. Not only does this mean less opportunity for profit but it also leaves the market more vulnerable to short term manipulation which can leave inexperienced traders with heavy losses. If you trade a market other than the U.S stock market then the same principle applies, only trade during the first 2 hours of the session.

The market always retraces.

Whenever there is a large move in the market you can bet your bottom dollar that the market will eventually retrace a portion of the move. This occurs becasue the people that have been in the move since the beginning start taking profit and also becasue of other traders that don’t think the move is sustainable begin to fade it. Both of these forces come together to push price back in the opposite direction of the move. So what does this mean for you day trading? It means that if you ever find yourself on the sidelines when a move occurs don’t fret over the missed opportunity for profit, instead just wait for the first sign that the move has run out of steam and then position yourself to trade the retracement

Only suckers trade the news.

There is no faster way to lose your money than trying to trade the news, and this is becasue of two reasons.For starters, you can’t predict the news so you have no way reliably positioning yourself before the news is released, and trust me listening to the analysts predictions on CNBC is no better than flipping a coin. Lastly, even if you were to guess correctly as to what the news will be there is no way you would then be able to predict how the market would react to it. Just becasue news is good doesn’t mean the market will go up and just becasue its bad doesn’t mean the market will go down. Oftentimes the market will react to surprising ways and many times it wont react at all and becasue of this it is a fools ambition to try to basing his trading around news releases. I’m sure you can get lucky and correctly predict what the news will be and how the market will react to it, but is that something that you can do day in and day out for any meaningful amount of time?

Always take profit.

While this may seem like common sense you would be surprised at how many new traders get this crucial point wrong. When you are in a trade and its in profit those are just paper profits, and what I mean by paper profits is that they are not real becasue you have not taken profit and therefore that money has not been deposited into your trading account. If the market for were to for whatever reason reverse direction all of your profits would be gone and you may even end up taking a loss. This is why its imperative that when you are in a trade and you have some good profits you need to bank them instead of holding on in the hope that the market will continue to move your way. This is probably the most important of all day trading secrets because at any time market conditions can change and what once was profit can quickly turn into a loss if you’re not careful.

So that’s it those are in my opinion the most important day trading secrets that new traders need to know. They are not all there is to know however as there are plenty of other little tidbits and pieces of information that will only come to you with time an experience. I’m still learning new things everyday myself in fact, the point of this article wasn’t to give you some magic day trading secrets that would turn you into a millionaire overnight, I’m afraid they don’t exist. I’m just trying to give you the information you need to become the best trader you can be. If I have helped you or you want to take issue with anything I have said then leave a comment in the box below.

By Jason Madison

Advantage Of Metatrader 4 Online Trading Platform

2010-08-20T22:58:00.000-07:00

MetaTrader 4 is an online trading platform designed for financial institutions dealing with Forex, CFD, and Futures markets.

The platform includes all necessary components for brokerage services via internet including the back office and dealing desk.

Currently, over 100 brokerage companies and banks worldwide have chosen our solution to meet their high standards of business performance.
The MetaTrader 4 Platform has a user-friendly front-end trading interface. It provides technical analysis, charting and Expert Advisors to help you develop your own trading strategies.

Advantages

MetaTrader 4 is a solution for broker companies, banks, financial companies, and dealing centers. The main advantages of the system are:

Coverage of financial markets

The trading platform MetaTrader 4 covers all brokerage and trading activities at Forex, Futures and CFD markets.

Multi-currency basis

The system is designed on a multi-currency basis. It means that any currency can serve as a general currency used in the operation of the whole complex in any country and with any national currency.

Economy and productivity

Implemented data transfer and processing protocols are notable for their economy. It makes it possible to support several thousands of traders through a single server with the following configuration: Pentium 4 2 GHz, 512 DDR RAM, 80 GB HDD. New protocols reduce both the demands on datalink and their operational cost.

Reliability

In the case of damage to the historical data, the complex has backup and restoration systems. Also, the implemented synchronization allows to restore damaged historical databases within several minutes with the help of another MetaTrader 4 server.

Safety

To provide safety, all the information exchanged between parts of the complex is cripted by 128-bit keys. Such solution guarantees safekeeping of information transferred and leaves no chance for a third person to use it. A built-in DDoS-attacks guard system raises the stability of operation of the server and the system as a whole.

A new scheme of system working operation was created especially for DDoS-attacks resistance. With its help, you can hide the real IP-address of the server behind a number of access points (Data Centers). Data Centers also have a built-in DoS-attacks protection system; they can recognize and block such attacks. During distributed attacks at the system, only Data Centers are attacked; MetaTrader 4 Server continues its operation in regular mode. Thus, Data Centers increase the system's stability to DoS and DDoS attacks.

The implemented mechanisms of rights sharing make it possible to organize the security system with more effectiveness and to reduce the probability of ill-intentioned actions of company staff.

Multilingual support

MetaTrader 4 supports different languages, and a MultiLanguage Pack program is included into distributive packages. It provides translation of all program interfaces into any language. With the help of MultiLanguage Pack you can easily create any language and integrate it into the program. This feature of the system will bring MetaTrader 4 nearer to end-users in any country of the world.

Application Program Interfaces

MetaTrader 4 Server API makes it possible to customize the work of platform to meet your requirements. API can solve a wide range of problems:
»creating additional analyzers for finding a trend of monthly increase of traders;
»creating applications of integration into other systems;
»extending the functionality of the server;
»implementing its own system work control mechanisms;
»and do much more.

Integration with web-services

To provide traders with services of higher quality, the system supports the integration with web services (www, wap). This feature allows realtime publishing of quotations and charts on your site, dynamic tables containing contest results and much more.

Flexibility of the system

The platform possesses a wide range of customizable functions. You can set all parameters, from trade session time to detailed properties of financial instruments of each user groups.

Fundamental Forex Trading… The Forgotten Art

2010-08-19T11:34:00.000-07:00

Traders in the forex market use two types of analysis in their trading, fundamental forex analysis and technical analysis. Technical analysis seems to be the method of choice for most traders especially since it can be used to trade effectively on smaller time frames, but traders shouldn’t underestimate the value that fundamental analysis could bring to their trading. As in the stock market, forex fundamental analysis involves looking at the intrinsic value of a investment, but countries are not like companies in that they do not have balance sheets and income statements. So, in order to determine the value of a countries currency traders have to look at the economic conditions in the country that have an affect on the valuation of its currency. In this post we are going to take a look at some of these fundamental analysis factors.

The Economic Indicators

Economic indicators are reports that are released by the government or a private organization and they form the core of fundamental forex trading. These reports are similar to the financial statements that publicly traded companies are required to file with the SEC. These reports are released at a scheduled time and since they are the only formal way to measure the strength or lack thereof of national economies if there deviate from the norm then they can cause huge swings in the value of a currency. What follows is a list of the major economic indicators used in fundamental forex analysis.

Gross Domestic Product

GDP is designed to give a broad view of the strength of a economy and represents the total market value of all goods and services produced in a country during a given year. A positive GDP means that the economy as a whole has grown in size, which is good for the currency while a negative GDP means that the economy has contracted which may signal further economic issues.

Retail-Sales

The retail-sales report is a measurement of the total receipts of all retail stores in a given country. This measurement is gathered through a diverse sampling of a nations retail establishments. This report is important because it tells traders whether or not consumers are out spending money in the economy. High retail sales indicate a active economy which bodes well for the strength of the economy as a whole and also it’s currency.

Industrial Production

This report measures the overall change in the production of factories, mines, and utilities within a nation. It also reports how closely these factories are to operating at full capacity. If the factories of a nation are operating at or near full capacity and there is also an increase in overall production then that is a sign for future economic strength.

Consumer Price Index

The CPI measures the change in the price of consumer goods. This measurement is done across 200 categories of consumer goods. When compared to exports it can be an indicator of whether or not the country is making or losing money on its products and services.

Using These Indicators

These forex fundamental analysis factors are meant to be used as a guide to the strength of an economy and by extension the potential its currency has for appreciation. These reports are a good place to start if you are trying to get a grip on fundamental forex trading. However, there are a number of other factors that play also play a role in the valuation of a currency so don’t go opening trades any trades simple because a nations GDP has risen. This post is meant to give you a quick overview of fundamental analysis in the forex market and to give you another lens through which to view your trades.

Fundamental Forex Trading: All About GDP

2010-08-17T07:17:00.000-07:00

If you are interested in fundamental forex trading then there is one economic indicator that definitely needs to be on your watch list and that is the gross domestic product or GDP for short. The GDP reflects the value of all goods and services produced by the economy during the time frame measured; taking into account consumer spending, purchases made by the government, inventories of private companies, construction costs, and the foreign trade balance. This thorough analysis of the economic activity within a country makes the GDP an important part of forex fundamental analysis.

Unlike other indicators used in fundamental forex trading the GDP is released on a quarterly basis which makes it less prone to fluctuations as the data is gathered over a larger period of time. It is also very comprehensive as it incorporates the information from many other economic indicators and combines them with the result being the GDP. So in a sense the GDP is an indicator of economic indicators as it brings all of the data from the other major economic indicators together to provide a clear picture of the state of a country’s economy.

How To Use The GDP In Fundamental Forex Trading

For your trading you are going to want to look at the rate of growth of the GDP. It is generally believed that a annual GDP growth rate of 2.5-3.5% is best for the economy of a country. Any lower and it may indicate future trouble for the country in terms of economic growth and may even foreshadow economic contraction. If the GDP is higher than 2.5-3.5% then it may signal inflationary pressures that may hurt country’s economy and value of its currency in the long run. So, as far as fundamental forex trading is concerned if the growth rate of a country’s GDP is in the optimal range of 2.5-3.5% then there is a strong likelihood that the value of its currency will increase. Too high above or below this range may signal problems that may lead to a future decline in value of the currency.

GDP is a a great tool for any fundamental forex trader. It takes a huge amount of information and compiles it into a simple number. This makes it both easy to understand and powerful, however it is not a magic bullet. You can’t just look at the GDP, make a trade, and then having everything work out. GDP is a tool to be used in conjunction with other tools to make an informed decision.

Dear Lord, We, The Forex Traders Do Make Mistakes...Guide Us Please!

2010-07-20T20:34:00.000-07:00

1.Day Trading and Scalping

Compared to all other types of trading, scalping is by far the hardest to master. Many amateur traders make the mistake of thinking that by trading in the very short term, they increase the probability of profiting from a trade. It's intuitive to think that small, quick trades are easier to profit from, isn't it?

In the Forex market however, the reverse is true.This is because of the volatile nature of the Forex market; market prices can fluctuate rather violently without any good reason at all. Although you risk smaller amounts of your capital when scalping, you're actually dramatically increasing the probability that your stop losses will be hit.

Although I've personally met people who are proficient scalpers, it might do you well to know that they are highly trained and experienced traders. I've never met a beginner trader who was successful at scalping. If you want to try your hand at Forex trading, do try to trade on larger time frames such as using hourly or daily charts instead. Avoid trading using minute charts at all costs!

2.Trading Breaking News

This is one of the most appealing schools of thought among the Forex trading community. Who wouldn't like to benefit from a quick 100 pip gain in less than 10 minutes?

The allure of quick, one time profits is what drives many traders to try their hand at news trading. Personally however, I would strongly discourage most inexperienced traders to news trade.

The reason is simple: the institutional traders (i.e. the big players) have all the advanced technology and knowledge in the world to beat you at this game. Their news feeds are faster, and they have their own in-house economists and currency strategists.

What do retail traders have? A top-notch desktop computer with a high-speed internet connection at best? Even their broker platforms won't be able to keep up with the volatility that occurs during news announcements. And not to mention the larger spreads that retail traders pay compared to the institutional traders.

To be a rich retail trader, you'll have to work on your strengths and avoid your vulnerabilities. News trading is definitely not for the average retail trader, so please pick your battles wisely.

3.Trading Expert Opinion

All the forex news you see looks so convincing and today, we have TV channels and lots of resources on the net but there only opinions. They won't help you win. If they did, more traders would win than they did 50 years ago and this is simply not the case - the ratio remains the same. Sure, the news sounds convincing but chances are its wrong, as it reflects the views of the majority who lose.

The traders who do this need to learn the following - markets move to perception of the news not the news itself and how far it is already discounted. Markets always crash when the news is most bullish and rally when its most bearish and trying to trade on the back of it is a waste of time.

4.Trading a Forex Robot with a Simulated Track Record

You can buy these online and they tell you that you can get rich for a few hundred bucks, you won't be surprised to learn - you can't. Most of these robots have great track records, the problem is there simulated over past data and won't help you make money - there not worth the paper there written on, we can all be rich if we know what happened and could trade it!

A Forex robot software is a software that can help you to calculate and analyze the market trend. Some common functions that can be found in the software will be predicting the possible short term trend, automatically generate buy and sell signal by analyzing the Japanese candlestick indicators etc.

However, due to the convenience of the Forex software, many people have done several mistakes that can cost them thousands of dollars. One of the great mistakes is they tend to have too much faith in the software and decided not to put a stop-loss limit, and they often trade with very little deposit left. Once the prices go against them, and the brokers call for a margin call, it will be a total disaster for them.

Another mistake that people tend to make is they left the Forex robot software alone to do all the tradings automatically without monitoring them, thinking that money will continue to roll in. This is very wrong the Forex softwares can only trade according to the trend. It is vulnarable to the sudden fluctuation due to news. The traders should monitor the chart and the news closely so to avoid any losses due to sudden fluctuation.

5.Trying to Predict Forex Prices In Advance

Prediction is another word for hoping or guessing and that won't get you far in forex trading. You can't predict forex prices in advance so don't try. Act on the reality of price change and trade the truth.

Many gurus sell scientific systems that claim they have found the formula for market movement and all you need do is follow them. If however markets did move to a scientific theory, we would all know the price in advance and there would be no market. Prices move because markets are uncertain not certain!

6.Failure To Use Stop Loss Correctly

Stops are necessary to avoid bad losses, however poorly placed stops can be just as bad. Before placing a trade the trader should consider the risk to reward ratio for the trade. The stop needs to be set with the traders money management in mind and should not be too close or too far away from the price. Traders should also consider moving their stop as the trade goes in their favor to lock in profits and reduce potential losses.

7.Over Leveraging a Small Account

You can get up to 400:1 leverage with many forex brokers and most traders think the more they leverage they use the better - but they get stopped out quickly and their accounts are soon wiped out.

When traders use a high level of leverage the returns can be astounding, but when the trade doesn’t work out the result can be catastrophic. Traders should always calculate the value of the risk they are taking for each trade and ensure that this is appropriate for their account balance. Experienced traders rarely risk more than 2-3% of their account balance on any one trade.

8.Relying Too Much On Technical Indicators

Technical indicators are great tools that assist traders to make decisions. However making decisions for trades based solely on what the technical indicators are telling us can result in large losses. By considering fundamental information together with technical information you will have a much better chance at being successful.

9.Failure To Control Your Emotion And Discipline

Forex trading is a highly volatile market. Emotions tend to run high and low, and either of those extremes can influence your trading decisions, unless you have a strategy planned in advance, and stick to it, no matter what you THINK you’re seeing at the moment. The trick to making money in the currency exchange market is to avoid making emotional decisions and follow a carefully thought out strategy that takes the current market and history into account. Letting your emotions rule your decisions can hurt your trading in several different ways. It’s the reason that most experienced traders tell beginner or novice traders that they need to develop a trading system, and stick to it no matter what. The system tells you when to buy, what to buy, when to trade and what to trade for. By sticking to your system even when you want to fly in the face of accumulated data, you’ll maximize your profits.

A trading system based on Technical analysis of historical market trends is one of the most potent tools that you can utilize if you’re just getting started in Forex trading – and many traders with years of experience continue to use their system to keep the profits rolling in. In fact, many will tell you that when their ‘gut instinct’ and their system collide, the system is almost always right.

Analysis of trends in the market will show you that the market moves in trends within overall patterns that are predictable. No trend moves smoothly in an up or down line – there are inevitable periods of time when values suddenly spiral up or down based on some outside factor. These are the times when emotion can hurt your portfolio. When a currency that you’re holding takes a sudden dip south, it’s tempting to succumb to panic trading, cut your losses and run even if your system tells you to hold on. On the other hand, it’s easy to catch the rising excitement as a trade starts increasing in value and scramble to buy more of the same. These are exactly the times to rely most heavily on your trading system. It will tell you exactly when to trade for maximum profit.

Trading on the Non-Farm Payroll (NFP) Reports?....what the heck!!!

2009-01-20T07:44:00.000-08:00

The Unemployment Report, also referred to as the Non-Farm Payroll (NFP) Reports, is a major indicator of a country's economic health, and one of the most anticipated economic reports for investors in all markets, including the Forex. This report, in the United States, includes roughly 80% of the paid workers in the country and excludes government, farm, and non-profit employees and is released on the first Friday of every month by the U.S Bureau of Labor Statistics

The Unemployment/Non-Farm Payroll Report is one of the major five economic reports for each country that traders jump on, the other four being interest rates, consumer price index, trade balance, and retail sales.

Even among all these, the unemployment report often gets the strongest attention, and is considered one of the most accurate economic indicators of a country's overall economic health, which makes sense. The more people who are working, the more currency you have being made and spent in a nation's economy.

Should You Trade on the Non Farm Payroll Report?

The short answer is: "Not unless you know what you're doing."

The Non Farm Payroll Report is often seen by new traders in the forex markets as a juicy profit opportunity. But, is it really as easy a call as some would have you believe?

The problem with attempting to trade on this report is that the hour when this announcement is made is one of the most volatile periods during the month; therefore it can be susceptible to big surprises in market movement.

When asking yourself the question: "How do I trade the Non Farm Payroll Report?" The answer you should be heeding (if you're new to forex trading) is: "You don't." Or to put it another way, "By maintaining a neutral position."

The market is far too volatile during this time to expect a high probability trade. There may be some gamblers who relish the thought of "placing a bet" to go long or short, expecting to make a small fortune for a few minutes work. But many serious traders know better and prefer to remain on the side of caution. The majority of them say the same thing: "Stay on the sidelines and wait for the market to calm down." This may take between 30 to 45 minutes in some cases, and even then the direction of the market may still be uncertain.

Of course, if you are an experienced trader using price and volume indicators you may have an easier time during these volatile trading periods. Your trading time may be all of about a half a minute or so. But trading within these windows of opportunity a small fortune can be made if you get in and get out at just the right moments. And, as mentioned before, if you truly understand what you are doing.

So how do the savvy traders manage during this magical time? The same way ALL trading should be done . . . plain and simple. You do what the market tells you to do via price and volume. There is no secret and no chart or no news report that can predict the future, especially when trading in these short time intervals.

No matter what you read or believe, the market will do what it wants.

The Non Farm Payroll announcement is just like any of the other volatile government announcements: you wait for the price to move. It either goes up really fast and pauses, retracing slightly, or it goes down really fast and pauses, then retraces. It has followed this pattern every single time this phenomenon has occurred. You simply watch the tape and when the opposite side of the move starts to be taken out in bug chunks you get ready to jump in. You can miss it by a tick or two and not suffer any ill effects from having done so.

On the other side of this question, there are many who believe that the Non Farm Payroll report can set the tone – creating a trend – for the rest of the month. If this is true, it means that a trader would not have to trade the report in the short term with all the accompanying risks. Instead, a trader could open up a longer term trade late on Friday, Sunday, or Monday – when the trading environment is calmer – and hold onto the trade for days or even weeks. These trades could have the potential for gains of 100 pips or more.

Whichever way you choose to go, be certain of the strategy you use and of your ability to accomplish the trade you intend to make. Forex trading on the short term is often not something that new traders should necessary expect to be able to successfully achieve. When contemplating a trade in a volatile market, just be careful and don't try something you're not one hundred percent certain of.

In the development of your forex strategy do you wonder how you can trade the non-farm payroll report?
Seeing this is one of the most, if not the most, volatile announcement during the month (first Friday in every month) newer traders watch the huge movements and wonder how to make money from all that volatility.

The answer given below you may not fully appreciate until some explanation is offered.

Question

"How do I trade the non-farm payroll report?"

Answer

"You DON'T!"
Or to put it another way, "By maintaining a neutral position!"

Some suggest you can trade volatile market movers such as the non-farm payroll report by waiting for the first leg of the move, up or down, then wait for price to pull back 10 or 15 pips, then enter a trade to catch the second leg of the move which often follows.

That's one possibility but still high risk..

Trading The Aftermath

However, while many professional traders sit out the non-farm payroll report, that doesn't mean they don't trade afterward.
After the market has made a violent move in one direction you sometimes see price stalling and then give a clear signal that it's momentum is exhausted.

Look For Combination Factors

This may be in the form of a candle pattern such as a hammer with a very large shadow which also happens to be on a key support or resistance level.
Now you can enter a trade with a small level of risk as you place your stop just above the high or low of the candle signal.
By applying a number of technical indicators to the chart pattern after a non-farm payroll report, you may see a point where a previous support/resistance level convergences with a Fibonacci retracement or extension, or the 200 EMA (Exponential Moving Average), or a pivot point.
If a distinctive candle forms at that level also you can expect a reasonable price bounce and extract a number of pips from the market.

This advice applies to all fundamental announcements which are considered 'market movers'.

By developing a cautious forex strategy based on sound trading principles, you will enjoy this business and get the satisfaction of seeing your account equity steadily growing.

I want to say this again: trading right after an economic report is released can be very dangerous to your account balance.

I am not saying that it is IMPOSSIBLE to trade directly after a report is released. I am simply warning you that trading after an economic report carries enormous risks.

Trading for the longer term, and looking for the bigger moves, can be very rewarding, less stressful, easier to manage, and more profitable in the long term. I find that many traders that I work with move from short term trading to longer term trading so that they can get more out of each move and spend less time staring at charts. Trading in the longer term might not be best for you, but I believe that it is worth considering.

A POINT TO PONDER #1.....

2009-01-09T08:11:00.000-08:00

Most new forex traders think they know how prices move but in reality they misunderstand the formula for market movement and this contributes to their downfall. If you want a good forex trading education, you need to know how and why forex prices move. Let's check out the formula...

The formula is simple and is the following:

Forex fundamentals (supply and demand inputs) + Human Perception of = Price

Now many traders don't understand what the above really means and make these errors:

- They trade the news and events

- They believe markets move to a scientific theory

- They believe you can predict prices in advance

- They try forex day trading and scalping

If you understand the above equation, you will understand why none of the above will work.

The fundamentals are important but what is more important is how the traders perceive them.

It's not the fundamentals by themselves that move markets its trader psychology, this is why markets rally when the fundamentals appear most bearish and markets collapse when there most bullish.

While humans determine the price of anything, they do not move to a scientific theory and those who believe they do are wrong.

Forex trading is a game of odds not certainties. Also, if you try and predict, you are simply hoping or guessing and you don't get rewarded for that in life and especially not in forex trading.

The way to trade forex correctly is:

To get the odds on your side and that means trading longer term, only in longer term time frames can you get the odds in your favour.

The forex day trader or scalper is destined to fail because, all volatility is random in short time frames and you cannot get the odds on your side. No one can predict what millions of forex traders, will do in a short space of time, so don't try.

If you understand the above equation, you will also understand that to win at forex trading you need to use forex technical analysis, follow trends and trade the reality of forex price movement and not guess.

You only need a simple forex trading system and the mindset to succeed.

Then in just 30 minutes per day, you could soon be earning big forex profits and enjoying currency trading success.

So learn currency trading the right way and make sure you understand the equation for forex price - simple? Yes it is - but most traders don't understand it, make sure you do.

ANOTHER LOOK AT THE PRICE ACTION .....#2

2009-01-05T23:36:00.000-08:00

Swing Highs and Lows

The First thing that we need to recognise is what is a a Swing High and Swing low. This is probably the easiest part of price action and bar counting although the whole process gets easier with practice.

I define a swing high as;

A three bar combination

A bar preceded and succeeded by lower highs

I define a swing low as;

A three bar combination

A bar preceded and succeeded by higher lows

Market Phases

There are only three ways the market can go;

Up
Down
Sideways

With the swing high/low definition now in mind we can start to build some layers on to the chart to identify these market phases and start to do a simple count of these swing highs and lows.

In short

The market is going up when price is making higher highs and higher lows
The market is going down when price is making lower highs and lower lows
The market is going sideways when price is not making higher highs and higher lows OR lower highs lower lows

This may sound like child's play and a statement of the obvious but you will be surprised at how often people will forget these simple facts. One of the biggest questions I get asked is, which way is it a market going? By doing a simple exercise you can see which way that price is going and decide on your trading plan and more importantly timing of a trade.

What do I mean by timing? It may be that you are looking for a shorting opportunity as the overall trend is down but price on your entry time frame is still going up (making HH's & HL's). There is, at this stage, no point in trying to short a rising market until price action start to point down (making LH's & LL's. More on this shortly).

Bias Changes

A Short or Bearish Bias Change occurs when the following sequence develops.

HH>HL>LH>LL>LH The bias change is confirmed when price moves below the las lower low made as highlighted on the chart.

Another way of saying this is 123 reversal and you are trading the pullback as your entry trigger (Red Line).

There are a few variations of this pattern but this is quite simply a price action bias change in its simplest form.

A Long or Bullish Bias Change occurs when the following sequence develops.

LL>LH>HL>HH>HL The bias change is confirmed when price moves above the last higher high made as highlighted on the chart.

Another way of saying this is 123 reversal and you are trading the pullback as your entry trigger (Blue Line).

There are a few variations of this pattern but this is quite simply a price action bias change in its simplest form.

Trending Price Action

After a bias change has been seen and confirmed, one of the phases that the market can then take is to start trending either up or down depending on the bias change previously.

In the chart below we can see what price ideally looks like when price is trending up and trending down. Each phase shows price making HH's & HL's on its way up and LH's & LL's on its way down.

Ranging Price action

Now this is where the chart can become interesting. By using the price action counting of the swing highs and lows we can know at a very early stage IF price is going to start to develop range bound activity.

Price is not making new highs OR new lows on the move.

I don't mean all time highs/lows or new day/week/month highs/lows... just simply a new swing high or low on the move. Price will start to stall and not make a new swing high/low and typically will stay contained within the last swing high and low that was made on the chart. Isn't that a simple definition?

Range rule definitions

Price doesn't make a new high or low on the move
If price stays contained within the last swing high and swing low to be made, price will remain range bound until it makes news move highs or lows.
Price confirms the range when a lower high and a higher low is made within the previous swing high and low.

In the chart below you can see that from the left side of the chart price is making LH's & LL's all the way to the first blue arrow which in real time would be the latest lowest low. Price then moves higher to make a HH. These two swing levels have been highlighted.

At the point of the chart, in real time, price needs to either start moving higher past the last swing high (red Arrow) making a new high OR move lower past the last swing low (blue arrow) making a new low. Until either of those things happens price will most likely remain range bound. As price unfolded on the chart price made a higher swing low and a lower swing high within the previous swing high and swing low highlighted confirming that price was moving into a consolidation phase.

Range considerations

Some considerations for identifying ranges at an early stage in real time are;

That price could be creating a pullback or bias change and as the chart unfolds for you a new high or low could be made voiding the potential range.
There are several definitions of a range one of the more common ones is that you are looking for a double touch of support and resistance. For me this is a little too late in the game as price may not create the double touchas in the example above. With this price action method you can identify the possibility of a range developing VERY early without having to worry IF price does or does not give you the double touch. As you can see with that definition you would interpret that price is not range bound at all but, you can clearly see visually that price is moving sideways without any definition.

What you should have learnt from this short article

A simple rule defined method to identify swing highs and lows
How to use this swing high/low definition to interpret price action market phases
How to identify a bias change
How to identify trending price action
How to identify Range bound price action

Bias Change pattern variation

In the below images we can see the pattern variation and compare them to the outlined pattern above. The only main difference is that you are looking for a breach of a previous swing high or low as the first qualifier to indicate a potential bias change.

Acronyms used

HH - Higher High
HL - Higher Low
LH - Lower High
LL - Lower Low
PB - Pull Back

ANOTHER LOOK AT THE PRICE ACTION .....#1

2009-01-05T22:22:00.000-08:00

“What is Price Action?” is a question frequently asked by aspiring traders. Traders who ask, feel it is a well kept secret when all they receive for an answer is: “Swing highs, swing lows, test of top/bottom, etc., are all price action.” The answer still leaves them in the dark. Understanding price action enables a trader to minimize questionable entries and improve exits. Price action is the footprint of the money.

Let’s start with the very basics. The bars on the following chart are labeled as traders commonly referred to them.

Up Bar is a bar with a higher high and higher low than the previous bar. The bars marked off are in an uptrend. Notice how the close is higher than the open until what turns out to be the last bar of the trend where the close is lower than the open. There were more sellers then buyers on the last bar.

Down Bar is a bar with a lower high and lower low than the previous bar. The bars marked off are in a downtrend. Notice how the close is lower than the open until what turns out to be the last bar of the trend where the close is higher than the open. There were more buyers then sellers on the last bar.

Inside Bar, also called a narrow range bar, is a bar with the high that is lower than the previous bar and low that is higher than the previous bar. Some traders do not consider an inside bar that has either an equal high or an equal low as an inside bar, others do. Inside bars usually represent market indecision. As on any bar, the closer the open and close are to each other shows just how undecided the market is as neither the buyers or sellers are in control. Buyers are in control on the inside bar marked on the chart because the close is at the top of the bar.

Outside Bar, also called a Wide Range or Engulfing Bar, is a bar with a high that is higher than the previous bar and with a low that is lower than the previous bar thereby engulfing the previous bar. Since the open and close are close together on the marked bar, neither the buyers or the sellers are in control and the market is undecided which way to go.
When the open is in the bottom quarter/third of the bar and the close is in the top quarter/third of the bar, it is said to be bullish engulfing with the buyers in control. When the open is in the top quarter/third of the bar and the close is in the bottom quarter/third, it is said to be bearish engulfing with the sellers in control.

Another definition used for this bar – especially if candlestick charts are used - is that the open and close have to engulf the previous bars open and close and not just the high and low of the bar. With this definition, the wide range bar or engulfing bar does not need to have a higher high or lower low to qualify. The first definition most probably came about with bar charts where it is harder to notice the open and close.

The following chart has the swing highs and lows marked in both an uptrend and a downtrend. Price on a given time frame is in an uptrend if it is making a higher highs (HH) and a high lows (HL) and in a downtrend if it is making lower highs (LH) and lower lows (LL). If price is doing anything else, it is in a consolidation pattern - range, triangle, pennant, rectangle etc.

The trend is considered in place until price is no longer making higher highs and higher lows in an uptrend or lower highs and lower lows in a downtrend. After a trend is broken, there is usually a period of consolidation that is easier to see on a lower time frame.
With practice, you will be able to visualize this going on without looking at the lower time frame.

When price is in a consolidation pattern that is often referred to as chop, it is usually in a range with no trend pattern to the swing highs and lows.

The above chart shows how an exact test of high or low may mean a change in trend as it failed to make a higher high on test of last swing high or a lower low on test of last swing low.
(A) Price was making HHs and HLs until price tested the prior swing high at A.
(B) Price made a LL and LH until price tested the prior swing low at B.
(C) Price made a LH (The bar that does not touch line at C) until price tested the prior swing low at C.
(D) Price was making HHs and HLs until price tested the prior swing high at D.

It is possible for one time frame to be in one trend and another time frame to be in a different trend or show consolidation. This is where the phrase “trend within a trend” regarding price action and the different time frames comes from. An example would be that while price may be rising on a daily chart, the intraday chart will show retracements, corrections of various types and consolidation periods
The true meaning of this and how it can influence your trading, eludes many. The following exercise is an excellent way to learn what the phrase “trend within trend” means visually

Pull up a 15 minutes chart and mark the highs as higher high (HH) or lower high (LH) and the lows as lower low (LL) or higher low (HL). (The note tool was used in Ensign to mark these charts.) You can also print out the chart and mark it by hand. Use red lines if price in a downtrend and green lines if price in an uptrend. Remember price is in an uptrend if it is making HH - and HL and in a downtrend if it is making LH and LL. If price is doing anything else, it can be a consolidation pattern - range, triangle, pennant, rectangle etc.

1-4 is in a downtrend.

5-8 is in an uptrend.

Now take the same chart and change the time frame to a 5 minutes chart, keeping the colored notes and numbers from the 15M by using the padlock with the L to lock lines in Ensign. Mark the new highs and lows with green numbers for an uptrend and red numbers for a downtrend.

Now we can see by the yellow HH and LL what trend is on the 15M at the same time we are able to see the trend on the 5M

Both charts are in a downtrend until the 5M makes a HH at the first green #1. The downtrend is broken when the LH at black #3 is exceeded. Price then goes on to make a HL starting an uptrend that continues until price makes a lower high at the red #1. The 15M just made a HH at the black #5 and will not make a HL until black #6. At this point, we are expecting a HL on the 15M, and are waiting for a long signal on the 5M. Some traders would take the entry on the pair of reversal bars at red #2, others would wait until the last swing high at red #1 is exceeded.

The time frames are now in agreement (shown by green #1-#4) up to the black #7 HH. After the HH at #7, the 5M goes into a downtrend (shown by red #1-#6) to what is still a HL on the 15M at #8.

So, while the 15M price action shows only two trends, the 5M shows five different trends!

While you may trade the trends on the smaller time frame, waiting for price action to show it is going to move in the same direction as the larger time frame is trading with the trend.

The trend is your friend!

Article source Da Charts

TRADING BASED ON PRICE ACTION

2009-01-05T19:59:00.000-08:00

Whenever someone is in the beginning process of learning forex, they usually fall in love with indicators. It's understandable that they would, because it definitely reduces the learning curve. But is it worth it?
Instead of just plugging indicators like MACD, Stochastics, Moving averages, etc... what if you left your charts completely alone? This is what forex trading using solely price action is all about.
Most people would be really hesitant to do that, just simply because they think that they don't know how you are supposed to trade without indicators? They are so used to having these tools that give you these signals when to open and close a trade.
There are a couple of problems with this.
For starters, these indicators are completely lagging. They are letting you know what has already happened. If you were to back test them, they would look amazing. They seem to catch every single move. BUT it's a completely different story when you are trading live.
I'm sure many of you forex veterans know what I am talking about. There are a lot of whipsaws. If you are not sure what these means, then I recommend you trade using only your indicators on a demo account, and then you'll know what I am talking about.
The other problem with just using indicators, is that you are not really the one who is trading. Your indicators are. You're just hoping that they are correct. So in essence, you are only as good of a trader as the indicators that you are using.
That's not the way it should be. In trading, especially technical trading, success requires some kind of analysis. It's your responsibility to fill in the blanks, not your indicators.
That's where price action comes in. If you can grasp the idea that a simple price chart has more information on it, then all of your indicators combined, you will be light years ahead of your fellow traders.

What is Price Action?

Price action is essentially the closest relative to order flow in Forex and across all markets. It is the direct result of order flow. Thus, it has the fingerprints of bias, speed of buying/selling, where buying and selling is occurring (support/resistance) when a breakout is genuine and where a likely reversal is occurring. From the continuous flow of price action which pours onto our charts, all indicators are born and thus dependent upon it. Hence, understanding and being able to interpret price action becomes an essential component to our trading. It is a way to get into the essence behind what creates the indicators and most technical signals in the markets.

The 4 Staples

Since there have been countless books, articles, etc. written on how to find and use support and resistance levels, lets dive into four unique methods or staples for understanding price action.

1) Impulsive vs Corrective

Although I dont promote the use of Eliot wave, Elliot Wave theory had the wisdom and insight to examine the difference between moves. The two essential moves everyone sees is either an Impulsive move or a Corrective move.

Impulsive Moves

An impulsive move is characterized by a forceful or strong move in one direction. It is quite fast and powerful, thus producing some of the larger candles in a set albeit any time frame. It is also usually followed by several candles moving in one direction, or the bulk of them in a move. The candles are often signified by closes towards the top or bottom of the candle, depending upon the direction of the impulsive move.

They are ultimately created by a large amount of capital with the buyers/sellers coming in at a particular level with a specific direction in mind. The other scenario is they are created due to a price cascade, via tripping up large stops and, thus, removing the defenses to the upside or downside of a support or resistance level, creating an imbalance to the order books. Impulsive moves can happen on any time frame.

Figure 1 illustrates a recent impulsive dive in the EUR/USD. In this 1 hr chart, notice how the move starts with the largest candle in the entire down move and the close being towards the bottom of the candle (signaling constant selling pressure for the entire hour).

EURUSD Impulsive Move Chart

Also notice how before, the move is a mix of red/blue candles, but once the impulsive move begins, we have six red candles in a row.

This move sends this pair on a capitulaiton lower from 1.5928 to 1.5756 (172 pips) in a matter of 6 hours. The daily ATR (average true range) for this pair was clocking in at 133 pips from top to bottom on a daily basis, but in 6 hours it moved more than the average daily range by almost 22%. This is a great example of an impulsive move.

These are the types of moves we want to be in. They are the moves where the order flow is most consistent and heavily biased in one direction. Its no secret the larger players move the market. Thus, being able to identify impulsive moves and riding such waves give us some of the best trading opportunities.

Congested Corrective Moves

Corrective moves are the most common moves to follow an impulsive move. They are practically the inverse of impulsive moves. The candle bodies are usually smaller in nature with closes not particularly aligned to the top or bottom. They are usually a mixed bag of fruit with both up and down candles and generally have little or no bias. It is important to identify these because they are the prelude to the next impulsive move.

From an order flow perspective, they are usually created by one of two scenarios: 1) profit taking after an impulsive move with few significant buyers/sellers coming in to challenge the previous move, or 2) a clear mix of buyers and sellers residing at the same place and a potential reversal point. More often than not, a corrective move following an impulsive move is usually a continuation move.

In Figure 2 we are looking at the same EUR/USD move which displays the corrective move before the large triple landing dive for this pair, followed by another corrective move and then further selling.

EURUSD Corrective Move Chart

Remember, when trading, we want the order flow bias to be heavily in our favor. Corrective moves offer little bias with order books closely aligned to 50% buyers and sellers. Even in the better case scenarios with a 60/40 tilt, you still have a much higher percentage of players on the other side of the market, moving the price action in the opposite direction of your trade. Ideally, we want the highest tilt available and corrective moves in and of themselves do not offer this for us as forex traders.

The next two forex methods are interesting

2) Pips Gained vs. Pips Lost

Looking at figure 3, we can see the NZDJPY pair was on a heavy decline from just above 85.00, falling all the way down to 68.00. The pair had bounced off the lows 400 pips to challenge the 72 figure. After a little dip, the pair re-attacked the 72 level and looked to break to the upside. There was also the presence of a small Inverted Head and Shoulders pattern which is a clear reversal pattern.

NZDJOY Pips Gain VS Lost Chart

In front of all this, I would stil feel bearish. Regardless of the top from this down move (87.05), the pair had started the year at 80.48 with the current price being 72.15 on the close of the then current day. The pair had ultimately lost 833 pips on the year. The price action had suggested for the bulk of the year, traders were much more apt to be selling instead of buying. Furthermore, using our impulsive vs. corrective analysis, the most impulsive moves for the six months of price action were clearly to the downside, with the series of moves having more consistency in the sell-offs vs. the buy-ups.

Given the chart, you would umtimatley be favoring selling this forex pair. The pair then further declined 340 pips over the next two weeks. Being long the pair at that time was clearly not the option.

Thus, we can see how measuring pips gained vs. lost gives an insight into where the previous buying and selling had occurred and where the next likely move is. Another stellar example of this is the USD/CAD.

In the late summer of 2007, the USD/CAD (figure 4) had started to show some bottoming after a torrential sell-off. After some consolidation, the pair sold off from 1.1800 to 1.0400 in a period of 4 months. This was a merciless move that could find nobody willing to step in front of the locomotive selling. The pair finally found a decent floor after bouncing off the 1.0400 handle and settled between 1.0500 and 1.0700. At this time, hundreds of technicians and economists, still baffled by the overextended downtrend and momentum of this move, were calling for a reversal, at least in the short term. Now consider some very important questions using the pips gained vs. lost method.

USDCAD Pips Gain VS Lost Chart

The pair sold off roughly 1400 pips in 4 months and was down about 1100 for the year. On top of that, it was only 4.5 years ago the pair was at 1.6000 (5500 pips ago) and had yet to complete anything greater than a 50% retracement of any major leg, with each retracement going to its corresponding extension. In light of all that, why in the world would anyone be paying attention to indicators and their over-extension since the pair had no regard for them? Furthermore, who in the last 4 years made significant money buying the USD/CAD? And since the order books/price action were completely dominated by an overwhelming pips lost vs. pips gained, who could even think about buying or a reversal until we have a clear bottom, albeit an activated reversal pattern or a 61.8% fib break of any major leg? The answer was obvious – keep selling until proven otherwise since that is where the price action had reigned king and had yet to be dethroned.

Measuring pips gained vs. pips lost gives us a pure look at where the order flow is most consistent leading up to the current day/time. This method is very powerful over longer time frames, but is incredibly helpful on shorter intraday times as well. Be wary of trading in front of serious moves where the pips gained vs. lost is against you.

3) Counting Candles

Counting candles in a series or leg of a move can be useful on many fronts. First, it can tell you how many weeks/days/hours/minutes a pair has been bought up or sold off. If you are looking at an entire year, this can be very helpful in identifying where the clear buying/selling pressure is likely to continue. Even on intraday moves, this has potency. It also gives you a rough idea for a particular leg, what the percentage is you will make money on that candle, or lose money.

A look at figure 5 ushers some insight into this. Looking at our NZD/JPY daily chart, while heading into this trade, for the year the pair had 59 red candles and 52 blue candles. That meant on any given day up till that point in 2006, there was about a 50% chance of making money if you entered and exited the position on the beginning and ending of each day. However, using the pips gained vs. lost method, the 50% became much more heavily weighted to the downside suggesting if you sold on any day and were correct, you would make more money. The counting candles gave us an initial % value to the likelihood of our trade being successful, but combined with another method, increased the value of our short position significantly.

NZDJPY Counting Candles Chart

4) Time Variables

Pattern recognition and Elliot wave methods do a solid job of bringing in time variables into trading, but they leave many details into question. Two methods to working with time variables are listed below.

a) Time lapse/display for patterns

When looking at a pattern, albeit Head and Shoulders or IHS, wedges/triangles, or even consolidations, it is important to examine the time lapse/display involved and how it should play itself out.

The GBP/JPY from late 06’ to the beginning of 08’ was forming a large Head and Shoulders pattern. This was heavily watched by technicians as the break was suggestive to be massive with the distance between the head and neckline roughly 2900 pips. What was more interesting was the time displayed in the formation of the pattern.

Looking at figure 6, notice the vertical lines which identify the touchdowns where the beginning and ending of each shoulder was made. The left shoulder from initial floor around 221.41, to its rise and fall back down to the same level took about 4 months and 3 weeks. What was tough for traders to figure out was when the right shoulder was forming, particularly if the second touchdown on 221.41 in late November was going to be the last stand at the OK Corral. Notice how the pair bounced just a bit, and then re-attacked the same price level to easily break it the 2nd time around. When the RS was forming, the space or time displayed between the 1st/2nd touchdown was only about 3 months, yet the initial LS took 4 months and 3 weeks suggesting the RS should take about the same amount of time to form.

GBPJPY Time Lapse Chart

If you look at when the pair finally activated the break of the neckline, the time lapse or display was 4 months, and 2.3 weeks. This is very common amongst patterns - to have a consistent time lapse or display within themselves. Some other notables are wedges and triangles which usually complete or exit their patterns between 2/3rds and 3/4ths of the move. Rarely ever do they go to completion.

b) Length of consolidation

One other important time variable is how long a consolidation is forming. The larger the consolidation, the greater the probability the ensuing breakout will be legitimate and powerful. Breakouts are such a mystery to so many traders. Measuring the length of the consolidation can provide us powerful insights into this trading conundrum.

Taking a look at the EUR/USD in figure 7, on July 10th, 2008 the pair had opened the European session at 1.5724, dipped to the round number at 1.5700 and then come early NY session was bought up in solid fashion up to the 1.5800 handle. This 100 pip move occurred over 3 hours, where it not surprisingly tapered back a bit at the London close. The pair then consolidated from 9am PST within a 36 pip range for the next 18 hours.

While it is not surprising there was no breakout during the Asian session, what is interesting is that from Noon – 4pm EST, where there is still plenty of liquidity, the pair could not find any new buyers/sellers. For the next 13 hours, the pair still trotted in place not just through the Asian order books, but also through the first four hours of the European session. That means through three sets of different order books/interest, the pair was hemmed in a 36 pip range and nobody could alter this for a total of 18 hours. When you see a consolidation for that long a period of time, expect a significant breakout to occur.

The following breakout gave us a nice retest of the previous resistance level and then generated a 160 pip move in roughly 4 hours. This was the largest single day climb of the week and ironically followed the longest consolidation of that week.

One last example of this method can be delivered via the EUR/CAD (figure 8). In the fall of 2006, this pair had entered a really tight consolidation between the end of August to the beginning of November, encroached between 1.4060 - 1.4350 (290 pip range). This was the tightest 60 day plus range over the last 4 years. With the Bollinger Bands applying their python like constriction, a large breakout was calling out to most traders. When the pair finally did breakout, it gave us a handsome retest of the previous 70day resistance level, and then went on a Himalayan trek for a 1000 pip climb in only one month. Being able to identify long consolidations can point us towards legitimate and powerful breakouts.

In Summary

Although there are many great methods for gleaning solid information out of price action (candlesticks, Elliot wave, pattern recognition), it is important we reach deeper into one of the most unexplored areas of technical analysis – that of understanding and interpreting price action. Being the closest relative to order flow and the mother of all technical indicators, a continual and intensive study of price action can only provide us with some of the most important gems of information to support our trading decisions.

The 4 staples or methods listed above are designed to give the traders a unique set of tools for approaching their charts and building a recipe for solid trades. Through the lens of these and other methods, ones trading can be vaulted to another level of insight, ability and success in trading the Forex market. More in depth information on price action and real world trading examples can be found throughout this website.

2009 NEW YEAR GREETING

2008-12-30T20:22:00.000-08:00

The management of FOREX OH FOREX Blog and ISIS Connects 2U Store wishes all our valued clients, affiliates and guests A VERY HAPPY AND PROSPEROUS NEW YEAR and may this new year all of us will reach out for the new opportunities available. Thank you for you support

Setting-up Your Trading System

2008-12-27T07:07:00.000-08:00

So finally you have GRADUATED from your DEMO School and is now ready to engage in the real battle. Before you start charging forward, let me show how you can set up your very own trading system to ensure you will win each battle:

1.Choose Your Desired Time Frames

Decide what type of trader do you wish to be: a Day Trader or a Swing Trader.This will help you to determine the appropriate time frames.( For further information, you may read the article on this subject in this blog)

2.Find The Indicators That Help To Identify A New Trend

This is to ensure that you are able to exactly identify the emergence of a new trend as early as possible before you enter any trade.There are many indicators that you may choose and one of the most popular one is the MOVING AVERAGE.Note: like the other indicators, MA is not perfect.

3.Find Indicators That Help to Confirm The Trend

MACD, Stochastics or RSI are used by traders to confirm a given trend. You may have used other indicators during your DEMO session so the choice is yours.

4.Don't Forget To Look At Today's Economic Calendar

A professional trader NEVER miss to check the ECONOMIC CALENDAR before he starts his day. Those technical indicators alone WILL NOT help you to close a winning trade unless you enjoy scalping. Please read an article on the ECONOMIC CALENDAR in this blog to help you understanding further.

5. Define Your Risk

A good trader thinks about what he/she may potentially loose BEFORE thinking about how much he/she can win.So always remeber the 2% LIMIT RULE i.e trade only 2% of your equity. If you start with USD 10,000, then 2% is 10,000 x 2%=USD 200. NEVER exceed this percentage or you may end up with a margin call from your broker.

6. Define Entry And Exit

You should wait until a candle completely closes before entering a trade.

Set an exit target and exit when the price hits this target.

Choose Support & Resistance Levels as your price target.

7.Write Down Your System Rules And FOLLOW it strictly
HAPPY TRADING!!!

Forex Economic Calendar

2008-12-27T06:03:00.000-08:00

It is important to know the time of High impact data release if you trade affected currency pair.

During actual news release market becomes volatile. The strength of the volatility depends on the "factor of surprise" brought in the news.

"Factor of surprise" can be defined as a level of unexpectedness, where traders compare Forecast data to Actually released data.

Medium impact economic data should also be kept in mind in case the factor of surprise turns to be high. Low impact data most of the time do not shift Forex market significantly.

Column Previous in Forex Calendar — provides data from last release.
Column Forecast indicates numbers that economists are predicting and expecting for the upcoming release today.
Column Actual is updated only after the data is out. At the very second when data becomes available it is instantly

Economic News impact — increased market volatility — usually lasts for 1-3 minutes (highest volatility); next 5-10 minutes market experiences corrective/adaptive volatility, where price settles in summarizing new market shift.

What moves EUR/USD?

1. US Non Farm Payroll — measures new jobs created in States.
2. Interest rates — FOMC rate decisions.
3. US Trade Balance, European Trade Balance — a proportion between exports and imports in US economy.
4. U.S. Current Account
5. US Treasury Inflow Capital (TIC) Data — a measure of how much foreign buying of country's securities takes place.
6. US Gross domestic product (GDP) — a measurement of growth in economy.
7. Federal Open Market Committee (FOMC) Rate Decisions — data about changes in currency rates.
8. US Retail Sales — a measure of strength of consumer expenditure.
9. Consumer price index (CPI) — a measure of inflation in Europe.
Note, that because the US dollar is involved in over 80% of all currency trades, US economic data tends to be the most important in the Forex market.

Forex News Trading

Economic news releases often evoke strong moves in the currency market, creating a lot of short-term trading opportunities for breakout traders. However, not all news reports are tradable. Some of them may not have significant effect on the market while others do. So, before deciding on trading the upcoming news traders may want to find out whether the news is worth trading or not. Traders can find about the significance of the news by looking at the economic calendar's special features, such as, for example, marking all important news in red.

There are two general approaches to trade news:

1 — By "guarding" the breakout channel

Traders simply set Buy and Sell limit orders on both sides of a price channel, so when the news comes out one of the orders will probably be hit. Although this method is very simple, it also carries real risks of potentially hitting two orders: Buy and Sell as the market is shaken by the news report. In such "double-hit" situation traders will face losses on one or sometimes even both trades.

2 — By actually analyzing the data

Traders can predict most probable outcome of the news by looking at such economic calendar fields as: "Forecast" and "Previous". Figures in those fields can give an idea about the current situation...

Then, traders would watch the news report and pay attention to the actual numbers released. If the numbers come as a surprise — means they are not close to what was expected / forecasted, then traders would consider opening trading position regarding to the situation. If the data carries positive surprise — they would open Long position, negative — Short. This news trading requires more attention from traders, but is also more effective as it carries lesser risks. position regarding to the situation. If the data carries positive surprise — they would open Long position, negative — Short.

This news trading requires more attention from traders, but is also more effective as it carries lesser risks.

When are economic news released?

USD - United States - 8:30 am — 10:00 am EST

GBP - United Kingdom - 2:00 am — 4:30 am EST

EUR - Germany - 2:00 am — 6:00 am EST

EUR - Italy - 3:30 am — 5:00 am EST

EUR - France - 2:30 am — 4:00 am EST

CHF - Switzerland - 1:30 am — 5:30 am EST

AUD - Australia - 5:30 pm — 7:30 pm EST

CAD - Canada - 7:00 am — 8:30 am EST

JPY - Japan - 6:30 pm — 11:30 pm EST

What you should know about trading the news in Forex

1. Even if you do not trade news it is important to know about the date and time the news are due, to be able to prepare to possible short-term extreme market conditions. Some traders, actually, prefer not to trade at all during economic news releases.

2. The fewer the price moves before news releases (when it may seem like everybody has abandoned trading), the greater is a potential for the market to burst out after the news report.

3. Breakouts following the economic news reports exist for very short period of time — from several minutes to several seconds — it is a first reaction of the world to the news.

4. Generally, if the news did not carry any "surprises" — unexpected data — there will often be no significant reaction in the Forex market.

Reproduced from Forex Fundamental Analysis

DAY TRADER Vs SWING TRADER

2008-12-26T21:06:00.000-08:00

Day traders typically buy and sell currencies throughout the day, in the hope that the currency price will fluctuate during the day, thus providing them opportunities to make quick profits. A day trader can hold an open position anywhere from a few seconds to a few hours, but will close out his position before he goes to sleep. Therefore, the day trader does not hold any overnight positions.
On the other hand, swing traders have a a slightly longer time horizon than day traders for holding an open position. Just like day traders do, swing traders also try to speculate the short-term fluctuations of a currency price. Swing traders, however, tend to hold open positions for more than one day, but could also hold them for a few hours to several days, if that is necessary in order to capture a larger movement. I will highlight some differences between day trading and swing trading Forex below:

1. Choice Of Time Frames -

Day Trading is carried out on lower time frames such as 5 min chart, 15 min chart or 30 min chart etc, the amount of pips that can be made per trade are typically not as high since the day trades last only for few min to few hours. However, the swing trades on the other hand are carried out on bigger time frames (1 hr chart, 4 hr forex chart , 8 hr chart etc.) ad they sometimes last for as much as few days. As a day trader your primary concern is to catch intraday swings. Your trades start and finish the same day. Your world is the day you are trading in. You don't care what will happen in the market tomorrow or the day after tomorrow. Your objective when trading is focusing on the appropriate time frame chart. My opinion is that day trading should be done on a 1, 5 or 10 minute bar chart. Remember, you are looking to capture several fast and short moves during the day and hence you must focus on the charts that best illustrate events as they happen in a short period of time. However, the fact that you are day trading on a 1,5 or 10 minute bar chart does not mean you cant use a larger time frame chart for the purpose of analysis. This however, is very subjective and depends very much on the traders' strategies and methods of trading. As an example, many day traders would look at one hour bar charts in order to have a view of how the market has been behaving in the last week. Is it moving sideways (and so maybe I should only place trades between support and resistance areas)? Is it trending (and so maybe I should only be looking at placing trades in the direction of the higher time frame trend)? Are there any major support and/or resistance levels I should be aware of (areas where I should refrain from placing trades since it is uncertain how the market will react when reaching them)? Did the market brake out of a congestion area? Again, it is very subjective. Some day traders believe that with proper larger time frame analysis they can select better their day trades. My personal opinion is that the more you analyze the more conflicts you will have and the more uncertainties will appear (especially if you are new to trading). I like making things simple and I found it very useful when trading (proof of this is that all of the trading systems I use are 100% mechanical). Don't get me wrong, this is not to say that larger time frames should not be used at all for analysis purposes. But, try to keep it simple and if you see that looking at larger time frame charts interferes with your correct decision process when placing day trades then simply stop.
However a swing trade lasts between 4 hrs to 1 or 2 days depending on the timeframe. If you are a swing trader holding a position for more than one day, 5 and 15-minute charts will generate too many short-term signals. The most reasonable time frames to follow are the daily charts, the 240-minute charts (which break down to a 4-hour time frame), and the 60-minute charts. As far as using pivot points, it is important for swing traders to pay attention to the daily pivots as well as to the weekly and monthly numbers to help give a potential entry or exit target price but also to help be aware of any confluence of support or resistance for those various time periods.

2. Risk Needed Per trade -

Since the Day trading is done on lower time frame and lower profits can be made, the amount of pips risked per day trade is also very less as compared to Swing Trade. In day trade, the risk is in tune of 15 to 30 pips depending on the time frame being used to place the trade. Swing trade on the other hand requires risk ranging from40 pips to as high as 80pips.

3. Application of Technical Analysis -

Both Forex Day Trading and Swing Trading are typically carried out using Technical Analysis. However it is said that the higher the time frame, the more accurate the technical analysis becomes. Due to this, technical analysis is more accurate in Swing Trading than in Day Trading. There are day traders who trade solely based on intraday technical signals, and disregard fundamental aspects completely, and there are those who take the larger picture into consideration when deciding their intraday trades. This contrasts to swing traders who adopt a combined approach of longer-term analysis of technical and fundamentals when trying to determine good entry opportunities.
Swing traders, whose aim is to capture a larger move rather than small tick movements, are thus more concerned with the overall fundamentals of the currencies that they are focusing on. For those day traders who ignore fundamentals, and trade only according to their tick-by-tick system, their myopic trading eyesight may adversely affect their overall trading performance, and this is due to the fact that it is primarily fundamentals that move the markets.
They could be entering in the market at a time when important news are being released, or when most traders are sitting by the sideline and nervously waiting for data releases, and such bad timing would most likely stop their positions out.
So, no matter which style you are trading, whether day or swing trading, it is definitely more beneficial if you take note of fundamentals in general.
For both form of trading there are some specialized technical indicators. For e.g. Use of Daily Pivot Points is used in Day trading to identify Support and Resistance levels.( I will supply you with these datas on the daily basis. Just check my blog site daily)

4. Overall Costs -

Since a day trader places many more trades than a swing trader would, he incurs higher fixed costs in the form of spreads for every trade he places. He must make sure that the currency pair that he trades has a very tight spread so as to increase his chances of profit for each trade. The quality of fills is extremely important to a day trader because he can't afford to suffer any slippage.
A swing trader, on the other hand, will incur less transaction costs due to the low frequency of trades, but may be subjected to rollover fees if he sells a currency with a higher interest rate against one with a lower interest rate, and holds that position overnight. However, the rollover fees are very little compared to the spreads and the potential profits.

Summary

When choosing a particular trading style, it should be seen which form of trading are you more comfortable with and how much are you ready to risk in each trade.
The above points can help you choose a form of forex trading.
But choosing a form of style to trade forex is just one part of the game, the next and important point is to find a reliable Forex trading system that can make money consistently. And if you can come across a course that not only teaches you such a reliable system, but also explains you the important money management principles, that is fantastic.

Forex Day Trading Secrets for Success

2008-12-23T07:12:00.000-08:00

Forex day trading secrets for success are all over the internet as vendors sell systems but when buying them you need to be aware of this secret which will save you a lot of money and put you on the road to success...

Day trading simply doesn't work and you should try another short term method of trading that does.

So Why doesn't day trading work?

Simple - it's a proven fact that in today's world of instant communications, all short term volatility is of a random nature therefore, you can't use support and resistance in these short time frames as there not relevant, so the odds are against you and you will lose.

In days gone by, the floor trader had an advantage has he had the information first but with the rise of online trading this no longer applies.

The Proof!

Take any of the day trading systems online that claims to make profits, then, look at the small print on the track record and you will see the following words:

"Back test", "simulated" and "hypothetical" and this means in simple English - made up, with all the closing data known in advance and of course that's easy.

The vendors who sell these systems want you to trust a made up track record - but don't trade it themselves!

Doesn't inspire confidence does it?

Short Term Strategies for Profit

If you want to trade short term try swing trading.

This method takes advantage of overbought and oversold scenarios which last a few days to a week or so. In these periods you can get the odds on your side and you win because support and resistance is valid.

So if you want to win the secret of Forex day trading the vendors of systems don't tell you is - it doesn't work and focus on Forex swing trading, a short term strategy where you can get the odds on your side and can enjoy forex trading success.

Swing trading, is easy to understand and learn and you could soon be making big profits, in around 30 minutes a day or less.

By : Sonia Kristina

A full list of retail Forex broker companies that offer on-line Forex trading services:

2008-12-23T06:33:00.000-08:00

Forex Broker Name	Min. Account Size	MT4	Browser - Based Platform	Registered with any regulator	Easy Online Account Opening
Forex Broker Name	Min. Account Size	MT4	Browser - Based Platform	Registered with any regulator	Easy Online Account Opening
FXOpen	$1	+	-	+	+
Ava FX	$100	-	-	-	+
LiteForex	$0.01	+	-	+	+
InstaForex	$10	+	-	-	+
eToro	$50	-	-	-	+
Finexo	$100	-	+	+	+
MasterForex	$1	+	-	+	+
Marketiva	$1	-	-	+	+
FXcast	$10	+	-	-	+
Easy-Forex	$200	-	+	+	+
Forex WebTrader	$25	-	+	-	+
FastBrokers	$500	+	-	+	+
Forex Capital Trading	$100	-	+	+	+
ForexYard	$100	-	+	-	+
Alpari	$200	+	-	+	+
FXCM	$300	-	-	+	+
GFT Forex	$250	-	-	+	+
OANDA	$1	-	+	+	+
Saxo Bank	$2,000	-	-	+	-
Interbank FX	$250	+	-	+	-
Forex.com	$250	+	+	+	-
Realtime Forex	$3,000	-	-	+	+
ACM	$2,000	-	+	+	-
Deutsche Bank FOREX	$5,000	-	-	+	-
FX Solutions	$250	-	-	+	-
CMS Forex	$200	-	-	+	+
Interactive Brokers	$5,000	-	+	+	+
X-Trade Brokers	$2,000	+	-	+	-
MB Trading	$400	-	-	+	-
Tadawul FX	$1,000	+	-	+	-
Forex.CH	$2,000	-	-	+	-
Finotec	$200	-	-	-	+
Hotspot FX	$7,500	+	-	+	-
EFX Group	$400	-	-	+	+
ECN broker	$200	-	-	+	+
PFG Forex	$1,000	-	-	+	+
Dukascopy	$50,000	-	-	+	-
High Street Networking	$100	-	+	-	-
Real Trade	$20	+	-	-	+
Forex Club	$10	-	-	+	+
Crown Forex	$300	+	-	+	-
MIG Investments	$5,000	+	-	+	-
RCG fxtrader	$5,000	-	-	+	-
Questrade FX	$250	-	+	+	-
IKON GM – Royal Division	$2,500	+	-	+	-
ODL Securities	$2,000	+	-	+	+
MGFOREX	$200	-	+	+	+
MF Global	$10,000	-	-	+	-
IG Markets	$200	-	+	+	+
IFX Markets	$500	+	-	+	+
Pip Forex	$200	-	-	+	+
CMC Markets	$2,000	-	-	+	-
IFC Markets	$1	-	-	+	+
Neuimex	$400	+	-	+	+
MFN	$500	-	-	-	+
Invest2Forex	$1,000	+	-	+	-
iFOREX	$100	-	+	-	+
FIBOGroup	$300	+	-	-	+
FXDD	$500	+	-	-	+
Synthesis Bank	$10,000	-	-	+	+
iTradeFX	$300	-	-	+	+
ActivTrades	250	+	+	+	+
ABN AMRO marketindex	£1	-	+	+	+
GCI Financial	$2,000	+	-	-	+
Forex Trading Edge	$1,000	+	+	+	+
Xforex	$50	-	+	-	+
CitiFX	$10,000	-	-	+	-
VarengoldBankFX	$1,000	+	-	+	-
FxPro	$100	+	-	+	+
GFS Forex & Futures	$500	-	-	+	+
DeltaStock	$100	-	+	+	-
Forex-Metal	$1	+	-	+	+
TradeView Forex	$2,500	+	-	+	-
One Financial	$1,000	-	+	+	-
Exto Capital	$5,000	-	+	+	-
NobleTrading	$250	-	+	+	+
NordMarkets	$1,000	-	-	+	-
GDI Markets	$10,000	-	-	+	-
FXCM Micro	$25	-	-	+	+
FXD24	$250	+	-	-	+
Fit Markets	$500	-	+	+	-
Ingot Brokers	$100	+	-	+	-
ForexGen	$250	+	-	-	+
Latitude FX	$1,000	+	+	+	+
Prime4x	$100	+	-	-	+
FXTSwiss	$2,000	+	-	-	+
InvestTechFX	$100	+	-	+	+
Apex FX Trading	$2,000	+	-	-	+
GOMarkets	$100	+	-	+	+
ATC Brokers	$3,500	+	-	+	-
Windsor Brokers	$100	+	-	+	-
HY Markets	$50	-	+	+	+
Arab Financial Brokers	$2,000	+	-	+	+
WH SelfInvest	2500	-	+	+	-
Sucden	£5,000	-	-	+	-
FOREX UKRAINE	$100	+	-	-	+
FX\|Clearing	$10	+	-	-	+
Admiral Markets	$10	+	-	-	+
EMPFX	$300	-	-	-	+
Advised Trading	$10,000	+	-	-	-

Getting To Know Your Forex Broker

2008-12-22T23:06:00.000-08:00

1- Offshore Forex Broker

An Offshore forex broker may sound appealing and may possibly have tax advantages. However, the big issue can be the lack of regulation. If the offshore broker goes bankrupt, what will happen to your funds? It’s always important to find out before going offshore.

2- Regulated Forex Broker

It is almost important to understand the type of regulation that your broker has. Some offshore brokers are not even regulated at all. So in theory they could do whatever they like with your money! In the US, a brokerage house should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) and a NFA member. The CFTC and NFA were made to protect the public against fraud, manipulation, and abusive trade practices. UK based brokered are regulated by the FSA (Financial Services Authority). You can do a check with CFTC registration and NFA membership status of a particular broker and check their disciplinary history by checking the NFA's Web site at http://www.nfa.futures.org/basicnet/. In Singapore a brokerage house should be registered with Monetary Authority of Singapore (MAS) holding a Capital Markets Services License. You can also do a check at MAS's Web site http://www.mas.gov.sg/fi_directory/index.html

3- ECN Forex Broker

An ECN Forex broker actually links buyers and sellers together and charges a commission fee. ECN brokers often have lower spreads than standard retail brokers. They can be ideal for scalping strategies.

4- Forex Broker Web Based Trading

Some brokers offer web based trading platforms, some of them can be used be mobile phones giving you the opportunity to monitor your trades wherever you are!
5- Automated Forex Brokers
FX Brokers that use the popular Metatrader platform have the option to run Expert Advisors. These are automated forex trading strategies.

Note:
There are a lot of scams involving forex investments on the Internet, and since it is easy to find a forex broker online than offline, all the reason you ought to be more careful. It’s advisable that you investigate and learn about the forex broker with whom you are planning to open an account. Don’t let yourself to be sucked into a scam.

Tips on Choosing A Forex Broker

2008-12-22T21:08:00.000-08:00

There are some basic notices that you should consider when you want choosing online forex brokers. There are a lot of scams involving forex investments on the Internet, and since it is easy to find a forex broker online than offline, all the reason you ought to be more careful. It’s advisable that you investigate and learn about the forex broker with whom you are planning to open an account. Don’t let yourself to be sucked into a scam.

1- Spread Amount

The spread is the difference between the ask price (the price you buy at) and the bid price (the price you sell at) quoted in a decimal value called pips (or basis points). Most currency pairs are quoted to the fourth decimal place. For example, if the EUR/USD rate is 1.2105/7, the spread, or difference, between the bid and ask price is 2 points or pips (1.2107 - 1.2105 = 0.0002). It is important to pay close attention to spreads because they are the true cost of trading (and the way the broker makes a profit).

Spread will be your main payment to the broker for using its services. Don't overpay for anything - try to find a broker which offers low spreads. For example, trading with a Forex broker with 5 pips spread on EUR/USD currency pair is unacceptable, while the average spread for this pair on most brokers is 2 pips. If you find a broker that offers spreads below average, don't forget to read its Terms Of Service to see if there are any hidden commissions in it.

As a trader, your sole interest is buying low and selling high. But wider spreads mean buying higher and having to sell lower, making it more difficult to realize a profit. A half-pip lower spread doesn't sound like much, but it can easily mean the difference between a profitable trading strategy and an unprofitable one.

Some of them their spread depends to the position of market. When market is quiet the spread is small and when market is busy the spread is high. I prefer forex brokers that have fixed spread, because over the long term fixed can be safer.

2- Execution

- How fast is the broker's order execution?

- Do they offer automatic execution?

- How much can you trade before having to request a quote?

- Do they trade against their clients?

3- Leverage

Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. While some brokers offers 1:50 trade margins others offer 1:200 and it varies with different brokerage firm. For example, when you have a ratio of 100:1, your forex broker will lend you $100 for every $1 of actual capital you have. Higher trade margin will give you a better chance to win big when the opportunity comes along. It’s also important when you have very little capital invested in forex. Before choosing an online forex broker check what is their leverage. Many brokerages offer a flexible margin that allows you to choose the leverage that's right for you.

4- Account Types

Notice the forex broker you choose has mini account or not. Mini account is designed for those new to online Forex trading and those with limited investment capital. There is a smaller deposit required to start trade of just $300 or less.

5- Trading Platform

Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature - they mean you can set up your trade and then leave the software to get on with it. Trading via a Forex broker with some lousy platform is a real pain for any trader. Check if the broker's platform is good enough (through the demo trading) before registering a real account. MetaTrader 4 platform is offered by many Forex brokers and it's one of the best of the available platforms for the on-line trading.

6- Dealing tools and value-added services

Different Forex brokers will offer different trading tips and tools. When selecting Forex broker, check what kind of trading tools and analysis data they are offering. Not all brokers offer the same set of tools and data thus careful consideration is necessary. A good Forex brokerage firm should offers real-time charts, technical analysis tools, real-time trade alerts, and website support. If you are new to Forex trading, you also look for broker that offers demo account before opening up a real account.Find out online forex broker that offers the best resources and information to help you make the smartest trading decisions. Be weary of any company that refuses to share information or trial versions before opening up an account. You will want to try out their system before you choose to invest money in it.

7- Support

Forex is a 24 hour market, so your online forex broker should offer 24 hour support. You should also check if you can close positions over the phone - essential in case your PC or internet connection crash at a critical moment. You could contact to their Internet help desks to see how quickly they respond to enquiries.

8- Get Referrals

Ask around and read forex forums to find out which forex brokers other people use and why they selected a specific broker.

9- Terms of Service.

The first thing at which trader needs to look before joining a broker is its Terms of Service. They should be free from anything that would put trader's money in danger and should give him freedom to manage his account without any serious obstacles. Don't forget to check Terms Of Service to know if the broker forbids your trading style - e.g. scalping, news trading, etc.

10- Payment methods.

Most of the traders deposit and withdraw their trading funds via wire transfer. But there are plenty of other methods of payment that can be used to trade Forex; PayPal and WebMoney are among them. If you prefer electronic payment systems choose a Forex broker that accepts them.

11- Minimum deposit.

Trading with small amounts of money won't make you rich, but it's a good way to check your broker's real account handling before trading big, so the minimum deposit amount for the Forex broker shouldn't be too high. Some of them accept deposits only from $10,000 and higher - that's not a very good practice, since many traders would prefer to start trading with just hundreds of dollars before depositing such a higher amount.

Economic Calendar - Sample # 1

2008-12-22T20:04:00.000-08:00

Date	12:40	Currency	Impact		Forecast	Previous
Tue Dec 23	5:45	NZD		GDP q/q	-0.5%	-0.2%
	7:00	AUD		CB Leading Index m/m		-0.4%
	All Day	JPY		Bank Holiday
	15:45	EUR		French Consumer Spending m/m	-0.1%	-0.4%
	17:00	EUR		Current Account	-7.3B	-10.6B
	17:00	EUR		Italian Retail Sales m/m	-0.4%	0.0%
	17:30	GBP		Current Account	-11.9B	-11.0B
	17:30	GBP		BBA Mortgage Approvals	21.0K	21.6K
	17:30	GBP		Final GDP q/q	-0.5%	-0.5%
	17:30	GBP		Index of Services 3m/3m	-0.6%	-0.4%
	21:30	USD		Final GDP q/q	-0.5%	-0.5%
	21:30	USD		Final GDP Price Index q/q	4.2%	4.2%
	22:55	USD		Revised UoM Consumer Sentiment	58.5	59.1
	22:55	USD		Revised UoM Inflation Expectations		1.7%
	23:00	USD		Existing Home Sales	4.90M	4.98M
	23:00	USD		New Home Sales	417K	433K
	23:00	USD		HPI m/m	-1.3%	-1.3%
	23:00	USD		Richmond Manufacturing Index	-40	-38

Week 50, 2008: EUR/USD COT

2008-12-21T23:44:00.000-08:00

A: Net Long/Short Position (Black Line)

If the line is above the signal line, then:		Bullish EUR/USD
If the line is below the signal line, then:		Bearish EUR/USD

B: Trader Sentiment Position (Red Line)

If the line is above the signal line, then:		Bullish EUR/USD
If the line is below the signal line, then:		Bearish EUR/USD

C: Trader Sentiment Trend (Red Line)

If the line is pointing up, then:		Bullish EUR/USD
If the line is pointing down, then:		Bearish EUR/USD