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Hello and thanks for your visit. In the following i have added and structured alot of information about forex, it's a very good start for a beginner. Forex tutorial for beginners, complete list of forex indicators explained, forex methods and strategies, forex resources such as daily news, brokers, software, money management, forex tactics and predictions, all quite well explained.
Just follow the links from the right in order to read the tutorials. Some of them are not written by me, i have just selected the best of them in a single place. Being a trader myself, i have also posted my strategy, a simple and quite effective one, recommended for beginners. Please note that there is no such thing as a trading secret formula, holy grail, there is no method that enables you to make millions of pips overnight, anyone claiming that he/she has a secret formula that will make you rich overnight is a liar and wants your money. Most of the methods used by millionairs like Soros are publicly available. But a sword in your hands is not the same thing a a sword in a hand of a samurai. Enjoy reading! FXPALACE - Absolutely free forex books, tutorials, indicators, movies, articles very well written and easy to understand. Become your own broker right now! Highly recommended for beginners  Our partners Hitech Infosoft - Directory Forex Directory - link to forex related sites and more business information. Trending123.com Technical analysis on stocks, indices, and currencies using chart patterns and Elliot waves with daily stock picks and voice commentary. ForexStrategy Team - Trading Together in Real Time. Forex Signals in real time for the four main currencies pairs. Forex News Agency. Live Forex Market data. Real time forex charts, live quotes, live news, live forex signals and live forex education. Forex77 - one of the best forex directory Elite Forex Trading Course and Education - Elite forex trading course and forex trading education will boost your Forex trading profits. French secondhand trade- Le Grenier DayTradingTheMarkets.com The online community for day traders of stocks, options, futures, and forex. http://www.daytradingthemarkets.com/ The Investment Machine www.4x-directory.com - Everything about FOREX Blog search directory Blogs Directory forexpredictions.com article:
The ultimate research would show you in advance exactly what is going to happen at some future date. Of course this is not possible and never will be. It is possible, however, to consistently project currency prices within a range of acceptable margin of error. Forex Predictions delivers high and low currency forecasts for both daily and weekly time frames using advanced technology and market experience. Further, trade signals are offered on the majors, minors and crosses via 3rd party providers. A speculator day trading can use the daily high/low forecasts as a guide for entry and exit points. A position trader can also use the daily predictions for stop losses and trailing stops. Similarly, the weekly forecasts can be used by position traders to select those potential trades that offer the most reward. A corporate hedger can use the predictions to measure risk using both daily and weekly prediction modules and take appropriate action based upon their own proprietary risk tolerance criteria. If you need some good forex prediction websites, try this, but i wouldnt relay on any forex prediction: http://www.fxstreet.com/technical/forex-forecasts/ http://www.fxtoolkit.com/ In order to effectively spot those patterns the Zig Zag indicator is highly recommended, along with MetaTrader Platform which allows the most complex charts.
Symmetrical triangle pattern A symmetrical triangle pattern is considered to be a continuation pattern. They are formed by trend lines connecting higher lows, and lower highs which eventually meet to form the apex of the triangle.
Ascending triangle patern The ascending triangle pattern is a variation of the symmetrical triangle. They are generally considered to be bullish patterns, and have higher forecasting abilities when formed in an up-trend. The top of the triangle is flat, while the bottom section has an upward slant.
Parabolic curve pattern The parabolic curve pattern is probably one of the most sought after patterns, and often produces quick returns in a relatively short period of time. Most of the time this pattern will appear near the end of a major market move or advance, and often looks like a stair case which eventually ends and dives downwards.
Wedge pattern The wedge formation looks very similar to a symmetrical triangle pattern. Wedge patterns are distinguished by their apparent slant either up or down (rising & falling wedges).
Falling wedges are generally considered to be a bullish signal often found in up-trends. They are formed with a series of lower highs and lower bottoms.
Descending triangle pattern The Descending Triangle, also a variation of the symmetrical triangle, is generally considered to be bearish and is usually found in downtrends. The descending triangle pattern is characterized by a flat bottom with the top part having a downward slant.
Channel pattern Channel patterns are most of the time considered as a continuation pattern, and usually continue in the direction of the main trend. Channels are formed by two trend lines running parallel to each other forming a rectangle shape, where prices bounce up and down between often forming double tops and bottoms.
The Head and Shoulders pattern is considered as a reversal pattern, and is most often and most reliable up-trends. Head and shoulder patterns are formed when prices are pushed upwards then fall back down to what starts the neckline. Prices are then pushed back up forming a new high then once again are pushed back down. Prices then go higher but not quite reaching the previous high point. They are then pushed back down to the neckline, and the pattern is completed once the neckline is broken. The neckline is formed with a trend line connecting the two low points of the pattern.
Cup and Handle pattern As its name suggests, the cup and handle pattern is made up of two parts: the cup and the handle. The cup is formed after a strong market advance and has a rounded bottom. After the cup has been formed, the handle develops in the form of a trading range. Most consider duration of 2-4 months a good time frame for the cup to form and around 1 month for the handle. The handle section that is formed is generally around 5% below the old high point, and any lower than that is in most cases considered not to be a cup and handle pattern.
Pivot points are a form of support and resistance indicator, used by traders to anticipate price movement. Unlike fundamental analysis which relies heavily on economic indicators such as interest rates, trade balances, unemployment rates etc, pivot points provide traders with a visual tool to base their trading decisions on.
Determining pivot levels begins with the calculation of the actual pivot point, which is simply an average of the previous days high, low, and closing price. This number will be the basis from which all other pivot points will be calculated from. If the market rallies above this pivot point for example, this might indicate some strength in the market and vice versa. From this point you would then refer to the other 3 main pivot points to determine what the price may do next.
To calculate the actual pivot point (P) = (H+L+C)/3. Where H is the highest price, L is the lowest price, and C is the closing price of the previous days trading. In 24 hour markets such as the forex market, the high, low and closing prices are often calculated by using the Once the daily pivot number has been calculated, the next step is to calculate the initial support (S1) and resistance (R1) levels. Resistance Level 1 = (2*P)-L Support Level 1 = (2*P)-H A second pair of support and resistance points are used when the price breaks the previous day’s trading range, and continues in the same direction until it comes to a second higher level of resistance or lower level of support. The calculation of these second pivot points are as follows: Resistance Level 2 = P + (R1 – S1) Support Level 2 = P - (R1 - S1)
These are the main pivot point levels used by traders around the world. Although you can have as many pivot levels as you want, it is most of the time unpractical, since the volatility that is needed to reach further pivot point levels would not often be adequate enough. Pivot points are a very widely used technical analysis tool, especially in the forex market. Hello and thanks for your visit. In the following i have added and structured alot of information about forex, it's a very good start for a beginner. Forex tutorial for beginners, complete list of forex indicators explained, forex methods and strategies, forex resources such as daily news, brokers, software, money management, forex tactics and predictions, all quite well explained.
Just follow the links from the right in order to read the tutorials. Some of them are not written by me, i have just selected the best of them in a single place. Being a trader myself, i have also posted my strategy, a simple and quite effective one, recommended for beginners. Please note that there is no such thing as a trading secret formula, holy grail, there is no method that enables you to make millions of pips overnight, anyone claiming that he/she has a secret formula that will make you rich overnight is a liar and wants your money. Most of the methods used by millionairs like Soros are publicly available. But a sword in your hands is not the same thing a a sword in a hand of a samurai. Enjoy reading! Our partners FXPALACE - Absolutely free forex books, tutorials, indicators, movies, articles very well written and easy to understand. Become your own broker right now! Highly recommended for beginners Hitech Infosoft - Directory Forex Directory - link to forex related sites and more business information. Trending123.com Technical analysis on stocks, indices, and currencies using chart patterns and Elliot waves with daily stock picks and voice commentary. ForexStrategy Team - Trading Together in Real Time. Forex Signals in real time for the four main currencies pairs. Forex News Agency. Live Forex Market data. Real time forex charts, live quotes, live news, live forex signals and live forex education. Forex77 - one of the best forex directory Elite Forex Trading Course and Education - Elite forex trading course and forex trading education will boost your Forex trading profits. French secondhand trade- Le Grenier DayTradingTheMarkets.com The online community for day traders of stocks, options, futures, and forex. http://www.daytradingthemarkets.com/ The Investment Machine www.4x-directory.com - Everything about FOREX  My own strategy is a very simple and very effective one. I use it on the H4 and D1 timeframe. Buy and sell signals are provided by two exponential averages, having 10 and 80 period, short ema(10) and long ema(80) . This is combined with a Zig Zag indicator in order to spot elliot waves. The picture speaks for itself, no need for further explanations. Download the strategy+complete indicators, instructions and templates from here dukascopy
Free historical data, you can download them instantly and use them in your analysis. dailyfx FXCM is one of the largest Forex Dealer Members (according to the financial data posted on the CFTC website). With substantial operations around the world, the FXCM Group has serviced over 78,000 accounts to date and in addition, services over 400 institutional clients from more than 80 countries. FXCM has a proven track record of reliability and success with over 1,500,000 trades executed each month via the FX Trading Station. fxstreet Live forexs news, great site, highly recommanded. ac-markets The latest forex news. Registered broker also. reuters Forex and economic news, live update. yahoo Yahoo news system. northfinance Some of the latest forex news provided by North Finance broker. forex-markets Another trusted site providing forex news The following sites provide automated trading services and software for the forex market:
FX Engines About FX Engines: "FX Engines is the only trading platform built around trading the news. Our feature set and internal expertise can arm you for trading success, and we make it easy with our no-worry fee structure - no fees! Along with our execution speed, our automation system stands at the forefront of the tools needed to trade the news effectively." MetaTrader 4 About MetaTrader 4: "As well as many technical indicators and line studies, there is built-in language for trade strategies programming MetaQuotes Language 4. Using this language, you can create Expert Advisors, Custom Indicators and Scripts. Expert Advisors can analyze the situation on the market, make decisions, put pending orders, and open positions in on-line mode without trader's participation." OneDayTrades About OneDayTrades: "With our total automation you can simply open up a brokerage account at our premiere forex broker and automatically have the account traded for you to the exacting standards of the OneDayTrades EURUSD & GBPUSD system." ProSignal About ProSignal: "ProSignal delivers an Automated Forex Trading System and Charting Software/Alert package that makes trading the foreign currency market a reality for everyone. A simple automated trading system you can implement within hours." Strategy Runner About Strategy Runner: "Strategy RunnerTM is a leader in fully automated system trading solutions. Strategy Runner Ltd. offers financial institutions and private traders a complete trading solution that brings definition and execution of trading strategies to a new level." TradeBolt About TradeBolt: "TradeBolt™ is the world's premier fully automated system trading application. TradeBolt will take buy/sell order signals from any signal-generating system and automatically send them to any broker for execution within milliseconds. Enjoy hands-free trading™ with TradeBolt!" We have selected the best forex trading platforms and brokers for you, so that you can shop around, test with a practice (demo) account or open a live account. For our services we are compensated by the forex brokers; So you won't be confronted with any additional pips, costs, fees or any other surcharges. The only addition we offer is a personal service and support, where you can count on if you need it. If you want to open a live account, you always make your agreement directly with the broker of your choise. Your initial investment has to be transferred to that broker. Account opening forms or online opening procedures can be found on this website.
 Online currency trading with GFFOREX: always getting the price you've clicked on! 2-3 Pips on all majors. At the real-time online trading platform "WYCIWYG" (What You Click Is What You Get), requotes and slippages are belonging to the past. We are the first and only foreign exchange broker to offer Straight Through Processing (STP) on a fully Executable Streaming Price feed (ESP) and guarantee every valid order. Choose between our 1. Flash based trading platform (you can log in, where ever you are; no downloading of the online trading platform is needed), our 2. Java based dealing platform incl. WAP trading, with additional forex orders and other functionality and the 3. HTML based trading platform. This is the beautiful combination of portability and functions, with all the ordertypes of the Java based platform. No download needed and trade wherever you like. All 3 platforms are very user friendly and easy to use. 2-3 Pips spread on all majors and chose EURO, USD, GBP, CHF or JPY as base currency. 1% Margin and free multiple forex charts, news, analysis and one-click-dealing. Minimum account opening USD5000. Multiple language (11 languages) trading platforms. More information -->GFFASTFOREX: Click and Deal for all forex traders, NO dealer intervention. NO requotes and tight spreads in all market conditions. The "platinum" platform is one the most advanced online currency trading platforms today. You can trade 32 currency pairs plus gold and silver. Traders receive live streaming prices, a very high level of liquidity and instantaneous executions, with "double" click dealing for your safety. The platform is easy to use, fast and efficient, made by traders for traders. No dealer intervention; you can trade the way you want. NO requotes and tight spreads in all market conditions. Due to size and institutional clientele, we are able to offer tight rates provided by our relationships in the interbank market. Use Market, OCO, Stop, Limit, If Done and Trailing Stop orders. Free live, streaming financial news and commentary, extended actual analysis about currencies, metals, fundamentals and indices. News highlights will be displayed on your screen directly. Free professional enhanced charting and studies. The dealing rates presented on the demo platform are exactly the same as on the live platform; You will be able to see the consistent rates and liquidity offered. Minimum account opening USD1000. Leverage 100:1. You can also trade FX Options, with auto execution, via the same account. More information -->One World Capital Group LLC: Execute your trades directly from real time streaming quotes, provided by the largest banks in the FX market OWCG offers a user friendly FOREX trading platform, designed for quick and instantaneous executions. Clients have the ability to execute trades directly from real time streaming quotes, provided by the largest banks in the FX market with superior customer service for all types of forex market participants. 2 Pips spread on EUR/USD & USD/JPY, 3 pips on other majors. No commissions, leverage up to 200:1, 24-hour non-stop trading facility and customer support. Free extended charting, analytical tools and on-line streaming news from financial markets. Orders may be entered at any rate - inside or outside the existing spread - using the following ordertypes: Limit orders, Stop Loss orders, Trailing Stop Loss, One Cancels Other orders (OCO's). Multi-Language program interface. API protocol. One World Capital Group offers you a Mini and a Standard (100K) Account. Minimum investment from USD300 resp. USD5000. More information -->Exclusive Interbank Forex by DUKASCOPY Suisse SA. Attention Professional traders: over USD100 Million at one click and slippage control. Dukascopy provides active professional traders, banks, hedge Funds and institutions, with exclusive access to the Swiss biggest FOREX Interbank liquidity network . If you are a news trader, you will enjoy this platform: Real interbank pricing and excellent liquidity provided by over 50 banks worldwide. For every USD100 Mio at one click, there is a liquidity of over USD200 Mio. From "0" pips spread on majors. Choose from 2 online trading platforms: JAVA based and Web (html) based (loading within seconds, no software downloading, trade where ever you like). Dukascopy offers proprietary software, which makes them very flexible and not depending from others. Use market, entry, stop/loss and limit orders. “Slippage Control” define the maximum slippage you accept at execution of your order. The platform is perfectly suitable for all kind of traders, from forex scalpers to news traders. Built-in charting, news streams from AFX and Dow Jones, technical analysis, studies, hedging, market depth (level II) etc.. Minimum account opening USD50,000, minimum trading size USD250,000. Commission USD10 – USD30 per Million traded, depending on your trading volume. API Protocol offered, managed accounts and many more. More information-->. GFX SA Group: Trade 33 currency pairs, gold, silver, platinum, palladium, crude oil and 14 stock market Indices. NOT for US residents. The proprietary GFX "GlobalTrader" software sets a new standard in online trading functionality, performance, and ease of use. The secure trading environment, and superior trading conditions make GFX SA one of the fastest growing Forex dealers today.Clients can trade 33 currency pairs, 4 spot metals, crude oil and 14 stock market Indices incl. Dow Jones, Nikkei and Hang Seng, with one click of the mouse on the easy to use, clearly structured platform.. GFX accepts all trading strategies. FREE realtime charts, news, quotes, profit and equity tracking, fast accessible from the menus. Instant order execution and guaranteed fills. Mini and standard account on 1 platform; Clients can trade .5 of a lot, 1.2 lot, or any other amount. The platform takes only seconds to download and install, and performs flawlessly on all Windows operating systems. Incl. Trailing stop, hedging and entry orders. GFX offers you a leverage of up to 200:1. More information --> Trading currency directly on the charts with GFCURRENCY. Equal price feed on the charts and the price feed box.  GFCURRENCY offers you a revolutionaly online forex trading platform, where you can trade currency directly on the chart. No more swapping from page to chart and back, but executing your decision right on the chart. Make the waves, swings and trends visual and trade them directly from the chart with the same price feed as the dealing box. With over 100+ tools and technical indicators, enhanced charting, and more customizable options and Intraday information on the currency market, such as news, events, and technical levels that directly impact currency prices via real-time charts and streaming news. It even allows you to build and program your own instruments for technical analysis, using your own formulas, which will then automatically execute orders based on your custom indicators! 3 Pips on EUR/USD and USD/JPY even on the MINI account. Interest on unused margin and Instant pip rebate. Hedging, mini forex account opening from USD200, 10 different base currencies. Leverage of up to 400:1! More information -->You may wish to take a look at MARKETIVA and NORTH FINANCE also. E-gold accepted as payment method. Here is a site that offers a complete tutorial about how to choose a forex broker, and much much more useful info. Forex Money Management
By FX Master Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is. It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade. There are different money management strategies. They all aim at preserving your balance from high risk exposure. First of all, you should understand the following term Core equity Core equity = Starting balance - Amount in open positions. If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$ It's important to understand what's meant by core equity since your money management will depend on this equity. We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts. Money management strategy Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2% We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3% 1% risk of a 100,000$ account = 1,000$ You should adjust your stop loss so that you never lose more than 1,000$ per a single trade. If you are a short term trader and you place your stop loss 50 pips below/above your entry point . 50 pips = 1,000$ 1 pips = 20$ The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$ If the trade is stopped, you will lose 1,000$ which is 1% of your balance. This trade will require 10,000$ = 10% of your balance. If you are a long term trader and you place your stop loss 200 pips below/above your entry point. 200 pips = 1,000$ 1 pip = 5$ The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$ If the trade is stopped, you will lose 1,000$ which is 1% of your balance. This trade will require 2,500$ = 2.5% of your balance. This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions. High return strategy This strategy is for traders looking for higher return and still preserving their starting balance. According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern: 1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit) In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit. In the following i shall present Martingale method: Assumptions: * You are using a discretionary or mechanical trading system. * You know your system well therefore you know how many consecutive losses your system has ever had. For this example, we'll assume your system has had at most 10 consecutive losses. * You trade 3 lots. Scenario: * You have had 10 losses in a row trading 3 lots per trade. Conservative Martingale Method I Example: 1. On your very next trade after losing 10 in a row, increase the lot size to 4 2. If this 4 lot trade is a winner, go back to normalcy trading 3 lots. Your done using Martingale for now 3. If this 4 lot trade is a loser, increase the lot size to 5 4. If this 5 lot trade is a winner, go back to normalcy trading 3 lots. Your done using Martingale for now 5. If this 5 lot trade is a loser, increase the lot size to 6 6. etc, etc, etc Keep increasing lot sizes by 1 until you win. I think you get the point. Martingale Method II Assumptions: * You are using a discretionary or mechanical trading system. * You know your system well therefore you know the average number of losses your system has before turning a winner. For example, we'll say that on average, your system has 3 losses before turning a winner. * You trade 3 lots. Conservative Martingale Method II Example: 1. You are currently not in a trade. You will wait until your system has 3 consecutive losses before doing anything. You WILL NOT trade. 2. Once your system has 3 losses in a row, start trading your system again. Your first trade will be a 3 lot trade. 3. If you win, great. If you lose, increase the number of lots to 4. 4. Increase the number of lots until you win. Aggressive Martingale Method II Example: The only change here would be to enter your first trade with a larger lot size than normal after your system has 3 losses in a row. So instead of just trading 3 lots, trade 4. Money management general advices * Trade pairs, not currencies * Don't place very tight orders * Use reasonable stop losses * Increase your leverage in line with your experience and success * Don't trade during off peak hours * The best time to trade is when news is released * If you place a trade and it's not working out for you, get out * Trade in the direction the price is going * Learn the business before you trade - possibly the most important tip * Focus on your current position(s) and place reasonable stop losses at the time you do the trade * Focus on one cross at a time * Don't trust demos - demo trading often causes new traders to learn bad habits. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose (new traders - remember that!) * Stick to your strategy and invest profits on the next trade that matches your long-term goals * Don't trade if you are bored, unsure or reacting on a whim * Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker The Moving Average (MA) indicator is the most frequently used indicator in technical analysis. One of the oldest technical indicators in existence. The moving average line will be plotted directly in the price movement chart. The moving average is calculated with a certain predefined period. The shorter the period is, the higher the probability of false signals is. The longer the period is, the weaker the sensibility of the moving average is.
Moving averages is one of the most useful indicators and tag them right up there with RSI and Stochastics. A basic definition of a moving average is that it is the average price of a market at a specific point in time. A moving average shows a trend. The purpose of the moving average is to show the trend in a smoothed fashion. The moving average is one of the most versatile and widely used of all technical indicators. Because of its method of construction and its susceptibility to quantification and testing, it is the basis for most "mechanical" and "discretionary" trading systems in use today. As its name implies, a moving average is an average of a changing body of data. A 10-day moving average, for instance, is obtained by adding closing prices for the last ten periodsbeing measured (ie. days) and dividing by 10. The term "moving" is used because only the last 10 days are used in the calculation. Therefore, the body of data to be averaged moves forward with each new trading day. In essence the moving average is a smoothing device. By averaging the price data, high and low prices are obscured and the basic underlying trend of the market is more easily discerned. By its very nature, however, the moving average line lags the market action. A shorter period moving average, such as a 3 or 5 day, would hug the price action more closely than, say, a forty day moving average. Shorter term moving averages are more sensitive to day-to-day movements. In general, a Moving Average is an indicator that shows the average value of a security's price over a period of time. When calculating a moving average, a mathematical analysis of the security's average value over a predetermined time period is made. As the security's price changes, its average price moves up or down. There are five popular types of moving averages: simple (also referred to as arithmetic), exponential, triangular, variable, and weighted. Moving averages can be calculated on any data series including a security's open, high, low, close, volume, or another indicator. A moving average of another moving average is also common. The only significant difference between the various types of moving averages is the weight assigned to the most recent data. Simple moving averages apply equal weight to the prices. Exponential and weighted averages apply more weight to recent prices. Triangular averages apply more weight to prices in the middle of the time period. And variable moving averages change the weighting based on the volatility of prices. The most popular method of interpreting a moving average is to compare the relationship between a moving average of the security's price with the security's price itself. A buy signal is generated when the security's price rises above its moving average and a sell signal is generated when the security's price falls below its moving average. Indicators which are especially well-suited for use with moving average penetration systems include the MACD, Price ROC, Momentum, and Stochastics. Some indicators, such as short-term Stochastics, fluctuate so erratically that it is difficult to tell what their trend really is. By erasing the indicator and then plotting a moving average of the indica-tor, you can see the general trend of the indicator rather than its day-to-day fluctuations. In this report, we will look at the history and background of Fibonacci numbers and The Golden Ratio. We will then outline three specific money management tips that can help increase your profit potential. Support and resistance levels are an important consideration for most traders to help identify entry and exit points when trading. Fibonacci percentage "retracement" levels based upon the Fibonacci number sequence and golden ratio are very popular with many traders but what are they exactly? What are Fibonacci Numbers and the Golden Ratio? The Fibonacci sequence first appeared as the solution to a problem in the Liber Abaci, a book written by Leonardo Fibonacci in 1202 to introduce the Hindu-Arabic numerals used today to a Europe still using Roman numerals. The original problem in the Liber Abaci posed the question: How many pairs of rabbits can be generated from a single pair, if each month each mature pair brings forth a new pair, which, from the second month, becomes productive. The Golden Ratio After the first few numbers in the Fibonacci sequence, the ratio of any number to the next higher number is approximately .618, and the lower number is 1.618. These two figures are the golden mean or the golden ratio. Its proportions are pleasing to the human senses and it appears throughout biology, art, music, and architecture. A few examples of natural shapes based on the Golden Ratio include DNA molecules, sunflowers, snail shells, galaxies, and hurricanes. Important Retracement Levels The two Fibonacci percentage retracement levels considered the most important in trading are 38.2% and 62.8%. Other important retracement percentages include 75%, 50%, and 33%. Three Profit Tips for Using Fibonacci Numbers 1. Fibonacci Defines Stop Loss Levels A trader can use Fibonacci numbers to set stop loss orders. For instance, if at least three Fibonacci price levels come together in a relatively tight zone, a stop loss placement just below or above the zone may be set. A Fibonacci number helps define stops in the following way, if a trader trades against a support zone, if the support zone is violated and the price trades below that zone, the reason for the trade is negated and the position should be closed. Setting stops using Fibonacci retracements takes the emotion out of trading and gives a pre defined exit point. 2. Fibonacci Defines Position Size Depending on the risk you are prepared to take per trade, Fibonacci numbers can also define position size. For instance, if prices are right on a specific level, you may wish to have more positions than if the price is further away. 3. Fibonacci Defines Objectives With Fibonacci numbers, once a pattern completes against a Fibonacci price zone you can use them to set profit objectives to bank partial profits or tighten stop loss levels. This clear objective for traders helps them to lock in profits. The great advantage of Fibonacci numbers and the golden ratio is the fact that they take the emotion out of trading and can define not only stop losses to exit a market, but also set profit objectives as well. W D Gann and Fibonacci - The Perfect Trading Combination! One trader who incorporated Fibonacci numbers and The Golden Ratio into his trading was the legendary trader W D Gann. We feel that the use of Fibonacci numbers with the Gann trading method provides traders with the best possible combination to seek long term trading profits.  The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism, are creating specific and always measurable patterns. The idea is that if you can identify repeating patterns in prices, and figure out where in those repeating patterns you are today, then you can predict where you will be going in the future. The Elliott Wave Principle is named for its discoverer, Ralph Nelson Elliott (1871 - 1948), who completed the bulk of his work in the 1930s and 1940s. This principle interprets market actions in terms of recurrent price structures. The wave is a movement in the market, either up or down. The size of the wave depends upon the period of time that is being analyzed. Basically, market cycles are composed of two major types of Waves: A. The Impulse Wave: It is a wave that moves in the direction of the main trend of the market. Every impulse wave can be sub-divided into a 5 - wave structure (1-2-3-4-5). B. The Corrective Wave: It is a wave that moves counter to the direction of the main trend of the market. Every corrective wave can be sub-divided into a 3 - wave structure (a-b-c). An important feature of the principle is that it is "Fractal" in nature. "Fractal" means market structure is built from similar patterns on a larger or smaller scales. Therefore, we can count the wave on a long-term yearly market chart as well as short-term hourly market chart. The stock market has three attributes of the principle that make it quite applicable: 1. It is a true free market. 2. It provides consistent and regular metrics that can be measured. 3. It is manipulated by a statistically significantly large group of people.  There are two assumptions behind the Elliott Wave Principle:1. The market is not efficient. It is an inefficient market place that is controlled by the whims of the masses. The masses consistently overreact and will make things over and under priced consistently. 2. If the above is true, then you should be able to do a "sociological" survey of stock prices independent of other news that effects stock prices. The general explanation for this behavior is that the masses tend to listen for the news they are ready to hear, and that the movement that actually happens depends on other effects. When doing wave studies of stocks, one of the most difficult things to overcome is the personal ability to separate your own emotions from affecting your analysis. As an individual you have the same fear and greed internal mechanisms that affect the entire market place as a whole. Without being able to work to dismiss those emotions you will not be able to stay in a position that will allow you to fully understand and profit from the sociological effects that you are measuring. The following wave description applies to a market moving upwards. In a down market there are generally the same types of behavior in reverse: Wave 1: The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden feel that the previous price of the stock was cheap and therefore worth buying, causing the price to go up. Wave 2: The stock is considered overvalued. At this point enough people who were in the original wave consider the stock overvalued and start taking profits. This causes the stock to go down. Wave 3: This is usually the longest and strongest wave. More people have found out about the stock, more people want the stock and they buy it for a higher and higher price. This wave usually exceeds the tops created at the end of wave 1. Wave 4: At this point people again take profits because the stock is again considered expensive. Wave 5: This is the point that most people get on the stock, and is most driven by hysteria. People will come up with lots of reasons to buy the stock, and won't listen to reasons not to. At this point is where the stock becomes the most overpriced. At this point the stock will move into one of two patterns, either towards a correction (a-b-c) or it will start over again with wave 1. A correction (a-b-c) is when the stock will either go down or up in preparing for another 5 way cycle. During this time volatility is usually much less than the previous 5 wave cycle, and what is generally happening in the market is taking a pause while fundamentals catch up.  "On a moderately philosophical level, the Wave Principle suggests that the nature of mankind has within it the seeds of social change." * (*www.elliottwave.com) Prosperity ultimately breeds reactionism, while adversity eventually breeds a desire to achieve and succeed!The social mood is always in flux at all degrees of trend, moving toward one of two polar opposites in every conceivable area, from a preference for heroic symbols to a preference for anti-heroes, from joy and love of life to cynicism, from war to peace, from love to hatred, from a desire to build and produce to a desire to destroy. Most important to individual investors, portfolio managers and investment corporations is that the Wave Principle can sometimes indicate in advance the relative magnitude of the next period of social progress or regress. Living in harmony with those trends can make the difference between success and failure in financial affairs. As the Easterners say: "Follow the Way" An important feature of Elliott Wave is that they are fractal in nature. 'Fractal' means market structure are built from similar patterns on a larger or smaller scales. Therefore, we can count the wave on a long-term yearly market chart as well as short-term hourly market chart.  Among Wave 1, 3 and 5, only one should unfolded into extended wave. 'Extension' means the wave is elongated in nature and sub-waves are conspicuous in relation to waves of higher degree.  Most successful traders develop a strategy and perfect it over time. Some people focus on one particular study or calculation, while others use broad spectrum analysis to determine their trades. Most experts suggest trying a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. But in the end, it is the individual trader who needs to decide what works best for him or her (most often through trial and error).
So basically speaking, a strategy consist in using proper indicators in order to analyze a chart. Strategies are simple ones or more complex ones. In the following i will show you some of the most used strategies. That should help you in developing your own strategy. While there are many ways to achieve currency-trading success, all methods have the following salient points in common:
1. Simplicity Most of the best trading systems are simple. There is no correlation between how complicated a strategy is and how successful it will be. In fact, the simpler a system the more likely it is to be robust in the face of changing market conditions. Some of the most successful systems of all time have been extremely simple and you don’t need much mathematical knowledge to understand them. 2. Liquidate Losers Quickly and Run Big Profits: The basis of any successful trading systems that deals in leveraged products is: You need to be able to run the big profitable trends and exit losers quickly. All good trading methods do this, and use strict money management rules, to ensure preservation of equity. 3. Understand your Method This may sound obvious, but you need to understand your trading method, and the logic behind it, so you can execute it with confidence and discipline. 4. The Importance of Discipline Currency trading success is rooted in a successful method applied with discipline. This means a trader has a method and follows it. This however is much harder in practice than many traders believe. When money is on the line all traders emotions come into play and unless they can maintain discipline, currency-trading success will elude them. Let's look at some ways to maintain self-control and discipline when making trading decisions: Firstly, you must be confident in your trading method. You should know exactly what you are going to do: · When a signal indicates that you should enter a trade · When a signal tells you to exit You must execute your trading method in a disciplined fashion; if you don’t, you won’t have a method in the first place! Secondly, and perhaps the best way to maintain self-control and discipline, is to feel confident in your trading method from the start. If you have confidence when you execute your trades, you will "know" that over time they will be successful - even if you are suffering a string of short-term losses. You must execute the buy and sell signals with confidence - these signals will lead to currency trading success in the long run, as you rigidly adhere to your method. You need to stick with your method through good and bad times, and confidence in the underlying logic, will help you remain disciplined. The more disciplined you are in trading, the more profits you will make longer term. You should not underestimate the need for discipline, if you want long-term currency trading success. If you read Jack Shwager’s Market Wizards, and the New Market Wizards, where he interviews the top traders of all time, you will see how all of them place an influence on discipline. Currency trading success relies on a number of factors and these are: Robust trading method + discipline = currency trading success Remember, when trading any method, it will be of little use to you, unless you have confidence in it and can execute it with discipline. There are a number of variables involved in longer-term currency trading success and the above are the salient points to keep in mind when deciding how to trade currencies. A technical indicator is created by applying a certain formula to the price data of a currency or other financial security. This data can include any combination of the open, high, low, and close over a period of time.
Technical indicators provide traders with a different perspective from which to analyze price action. Technical indicators can be derived from both simple formulas such as moving averages, while others can be more complex such as stochastics. The good news is that you do not need to know how these formulas are applied since the majority of indicators are shown in a graphical format allowing the trader to easily compare it with the corresponding price chart of the currency or security they are analyzing. All forex indicators are presented below: A Advance/Decline (A/D) Line Advance/Decline (A/D) Ratio Absolute Breadth Index (ABI) Accumulation Swing Index (ASI) Accumulation/Distribution (A/D) Accumulation/Distribution of volume Advance/Decline Line Breadth Advancing-Declining Issues Alligator Alpha Alpha Jensen Andrew's Pitchforks Arms Index (TRIN) Aroon Oscillator Aroon Average Directional Movement Index (ADX) Average Directional Movement Rating (ADXR) Average True Range (ATR) B Beta Bollinger Bands Bollinger Bands Histogram Breadth Thrust C Candlestick Chaikin Money Flow Chaikin Oscillator (CHO) Chaikin Volatility (CHV) Chande Momentum Oscillator (CMO) Chaos Gator Commodity Channel Index (CCI) Commodity Selection Index (CSI) CP volumentum trend Correlation Analysis Cumulative Volume Index (CVI) Cutler's RSI D DeMarker (DeM) Detrended Price Oscillator (DPO) Directional Movement Index (DX) Disparity index Displaced MA Double exponential moving average (DEMA) Dynamic momentum E Ease of Movement Ehler's Fisher Transform Elder-rays Elliot oscillator Envelope Exponential Moving Average (EMA) F Fast stochastic Fibonacci Arcs Fibonacci Fans Fibonacci phi-Channel Fibonacci Retracements Fibonacci Spiral Fibonacci Studies Fibonacci Time Goals Fibonacci Time Zones Force Index (FRC) Forecast Oscillator Four percent model Full stochastic H Haurlan index Herrick Payoff Index Historical volatility I Ichimoku Kinko Hyo (IKH) Inertia Intraday Momentum Index (IMI) K Kagi chart Kairi Keltner channel Klinger Oscillator (KO) L Linear regression channel Linear regression indicator Linear regression slope Linear Regression Trendline Linear regression M Market Facilitation Index (BW MFI) Mass Index (MI) McClellan Oscillator McClellan Summation Median Price MESA Sinewave Modified moving average Momentum Momentum percent % Money Flow Money Flow Index (MFI) Moving Average Moving Average Convergence/Divergence (MACD) MACD 2 lines MACD Histogram Moving Average Envelope N Negative Volume Index (NVI) New Highs - Lows Cumulative New Highs - Lows Ratio New Highs - New Lows Norton high-low indicator Notis %V O On Balance Volume (OBV) Open-10 TRIN Oscillator of moving averages (OsMA) Overbought/Oversold (OB/OS) P Parabolic SAR (pSAR) Percent change Percent of resistance (PCR) Percent R Percentage Volume Oscillator (PVO) Polarized Fractal Efficiency (PFE) Positive Volume Index (PVI) Price action indicator Price and Volume Trend (PVT) Price channel Price Oscillator Q Qstick R Random Walk Index (RWI) Range Expantion index (REI) Range Indicator Rate of Change (ROC) Relative Momentum Index (RMI) Relative Strength Comparative Relative Strength Index (RSI) Relative Volatility Index (RVI) Ribbon Study R-squared S Schaff trend cycle Simple Moving Average Slow stochastic Speed Lines Standard Deviation Standard Deviation Channel Standard Error Standard Error Bands Standard Error Channel STIX Stochastic Momentum Index (SMI) Stochastic Oscillator Stochastic RSI Stoller Average range channel (STARC) Swing Index T Ichimoku Kinko Hyo (IKH) Time Series Forecast Tom Demark Moving Average Tom Demark Range Projection Trade Volume Index Trend Line Triangular Moving Average Triple exponential Moving Average (TEMA) Triple exponential Moving Average (TEMA) True Strength Index (TSI) Typical Price U Ultimate Oscillator (UO) Upside/Downside Ratio Upside/Downside Volume V Variable Moving Average Vertical Horizontal Filter (VHF) Volatility Volume Volume Accumulation Volume by price Volume Oscillator Volume+ Volume Rate of Change (VROC) W Weighted Close Weighted Moving Average Welles Wilder RSI Welles Wilder Smoothing Welles Wilder Volatility Index Williams� Accumulation/Distribution (WA/D) Williams %R Z Zig Zag In the FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold. Exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar. Currencies are always quoted in pairs, such as EUR/USD or USD/CHF. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar: GBP/USD = 1.7500 The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).. When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound. When selling, the exchange rate tells you how many units of the quote currency you get for selling one of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound. The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency. You would buy the pair if you believe the base currency will appreciate (go up) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (go down) relative to the quote currency. First, you should determine whether you want to buy or sell. If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position". Just remember: long = buy. If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Short = sell. Forex terminology Ask: Price at which broker/dealer is willing to sell. Same as "Offer". For example, if EUR/USD is quoted at 1.1850/1.1854, the 1.1854 is the "Ask" or "Offered" price. Bid: Price at which broker/dealer is willing to buy. For example, if EUR/USD is quoted at 1.1850/1.1854, the 1.1850 is the "Bid" price. Bid/Ask Spread (or "Spread"): The distance, usually in pips, between the Bid and Ask price. A tighter spread is better for the trader. Cost of Carry (also "Interest" or "Premium"): The cost, often quoted in terms of dollars or pips per day, of holding an open position. Currency Futures: Futures contracts traded on an exchange, most typically the Chicago Mercantile Exchange ("CME"). Always quoted in terms of the currency value with respect to the US Dollar. Parameters of the futures contract are standardized by the exchange. Drawdown: The magnitude of a decline in account value, either in percentage or dollar terms, as measured from peak to subsequent trough. For example, if a trader's account increased in value from $10,000 to $20,000, then dropped to $15,000, then increased again to $25,000, that trader would have had a maximum drawdown of $5,000 (incurred when the account declined from $20,000 to $15,000) even though that trader's account was never in a loss position from inception. EBS: "Electronic Brokerage System", the electronic system on which major banks trade with each other. This is considered to be the most definitive indicator of prices at which currencies are "really" trading, at least for EUR/USD and USD/JPY. Fundamental Analysis: Macro or strategic assessments of where a currency should be trading based on any criteria but the price action itself. These criteria often include the economic condition of the country that the currency represents, monetary policy, and other "fundamental" elements. Leverage: The relationship between the notional contract value and the margin required to trade. For example, if the notional amount traded (also referred to as "lot size" or "contract value") is $100,000 dollars and the required margin is $2,000, the trader can trade with 50 times leverage ($100,000/$2,000); or "50:1" leverage. Leverage is the inverse of the percentage margin requirement. Limit: An order to buy at a specified price when the market moves down to that price, or to sell at a specified price when the market moves up to that price. Liquidity: A function of volume and activity in a market. It is the efficiency and cost effectiveness with which positions can be traded and orders executed. A more liquid market will provide more frequent price quotes at a smaller bid/ask spread. Long: A market position that has been bought. It will generate profits as the market moves up and losses as the market moves down. For example, if you bought Euros, you will be "long" Euros. Margin: The amount of funds required in a clients account in order to open a position or to maintain an open position. The percentage of the contract value required as margin is inversely related to the leverage. Margin Call: A requirement by the broker to deposit more funds in order to maintain an open position. Market Order: An order to buy at the current Ask price. Offer: Price at which broker/dealer is willing to sell. Same as "Ask". Pip: The smallest price increment in a currency. Often referred to as "ticks" in the futures markets. For example, in EURUSD, a move from .9015 to .9016 is one pip. In USDJPY, a move from 128.51 to 128.52 is one pip. Premium (also "Interest" or "Cost of Carry" or "Roll"): The cost, often quoted in terms of dollars or pips per day, of holding an open position. Short: A market position that has been sold. It will generate losses as the market moves up and profits as the market moves down. For example, if you sold Euros, you will be "short" Euros. Spot Foreign Exchange: Often referred to as the "interbank" market. Refers to currencies traded between two counterparties for "spot" or current delivery rather than future delivery. Generally more liquid and widely traded than currency futures, particularly by institutions and professional money managers. Stop: An order to buy at the market only when the market moves up to a specific price, or to sell at the market only when the market moves down to a specific price. For example, if EUR/USD is trading at around 1.1850, you could place a stop order to buy at 1.1870. This order would be filled only if the market moved up to 1.1870 or higher. Technical Analysis: Analysis applied to the price action of the market to develop trading decisions, irrespective of fundamental factors. |
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