Trend lines main purpose is to identify a trend and confirm its validity until trend changes.
It is not difficult to see a trend without a trend line, but still Forex traders find it very useful to draw trend lines to analise Forex charts.
To draw a trend line they simply connect price bottoms in an uptrend and price tops in a downtrend. Traders need at least two bottoms/tops to touch a trend line in order to make it valid.
While a trend line stays intact, and by intact Forex traders mean that no price bar has managed to close on the other side of the trend line, the trend is not going to change.
The more time price comes and bounces off a trend line the stronger the trend line is.
Signal of a possible trend reversal comes only when a trend line gets broken.
And while traders prepare for a trend change usually it is not enough to rely only on a tend line signals itself. It is absolutely without a doubt a helpful tool, but other studies and/or indicators are needed to confirm trend changing signals received from a trend line breakout.
11/25/07
Couple of words about Forex trend lines
10/29/07
Forex Daily and Weekly trends Oct 29, 2007
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10/6/07
How to select the best Forex trading platform
While selecting the best Forex trading platform, try to think about the next criteria:
1. Timeliness - Is the forex trading platform a high-edge system that employs the established but highly sophisticated technologies in order to provide you the real time, up-to-date quotes? This is very important, as a real time streaming quote platform will allow you to check your account and positions in real time, and more importantly 24 hours a day, as forex trading never ceases. With real-time information via the trading platform, you as a trader can be in full control of your funds whenever you wish.
Some brokers also slow the execution of the orders. This is really a big issue as this will impact negatively on your trades because the rate of the currency pair would change during this period of time, causing you to enter the market at a different rate than the rate you wanted.
2.Easy to Use software- Preferably, no software download. Look for a platform that enables users to start deals immediately, without the need to download proprietary software, or to spend weeks to learn how to use an unwieldly possibly outdated system.You should not have to install any software on your own computer, and you should be able to log in from any computer that has an internet connection. There are also desktop solutions or trading platforms, but unless they allow you real time information and the ability to be in control of your trades, they are not desirable.
3.Trading Rates - Some preferred trading platforms have a freeze and trade system involving a "freeze-the-rate you see" for buying and selling for a few seconds, irrespective of rates movement. This means that the rate you see and freeze is the rate you get, and there is no lag that can cause you to lose out due to fluctuations and lapse of even a few seconds.
4.Easy Money Deposits - Are there easy mechanisms for payment of money deposits into your account and are these immediately reflected in your trading account? Some preferred trading platforms allow you the possibility to make money deposits for margins and pay premiums using credit card, so that you are not hindered from making physical deposits, or have to attend to make deposits at your local bank.This is a real time saver and allows you to trade immediately without delay after a deposit or payment has been made.
5. Competitive Spreads: Currencies, unlike futures and stocks, are not traded through a central exchange. Thus, the spread can be different depending on the broker. Some brokers adopt a variable spread, which might appear to be nice and small when the market is quiet, but when things get busy they can widen the spread which means the market must move more in your favor before you start to make a profit.This makes it harder for you to be in profits. So always check this out before selecting such a trading platform and broker. Fixed spreads built into the trading platform is good for you especially if you are using stop loss in your trading strategy because if the broker changes the spread according to prevailing market conditions, you may find your trades hitting their stop levels where they should not!
6. Technical Support- The forex market is a 24 hours market, and your broker should provide 24 hours support for the use of their trading platform. Ask questions about their support because some brokers may not give equal support to retail clients as compared to institutional clients.
As you go over this checklist of criteria, always bear in mind the broker and the trading platform should assist you to eliminate or reduce risk of trading while allowing you to maintain control over your funds in real time. Spend time to check your trading platform to be used, and you will not regret it later.
9/30/07
Trading Forex Flag Pattern
Flag pattern is on of the most common patterns on Forex charts.
It appears after big moves such as rallies and sell offs.
How to spot it visually?
It looks next way:
How to find it using theory?
Let's take uptrend: after a big rally the market starts to lose its momentum temporarily allowing sellers to press the price down. Here the market is starting to make lower lows and lower highs , but the overall progress is quite insignificant.
After two lower highs traders may draw a trendline above those highs and draw additional parallel to it trendline below the price action. Two trendlines will form a channel. Visually it will look like a flag on a flagpole.
The theory suggests that the market that was trading up and formed a flag pattern will break out of that pattern in direction of a previous trend, which means upwards.
So traders can place buy orders above the flag pattern.
The profit target is calculated based on the length of the flagpole, which is projected from the break out point. Stop loss is placed below the lower trend line.
That's it. Very effective and easy to trade Flag pattern in Forex.
9/19/07
Is it a TREND or a TRADING RANGE?
Can you tell a trend from a trading range?
Trading ranges don't have a neat picture of higher highs and higher lows, or lower highs and lower lows. They are rather a price tops/bottoms randomness, where it is very difficult to focus and choose a market direction, not to mention make any trading decision.
That's how a trading range looks like:
So, what do you think? What's easier: trading with a TREND or trading in a TRADING RANGE? I bet you know the right answer. And if so, you should be clear out of trade when you spot a "mess" on the chart. Remember that when you not trade you are actually also making a decision and it is to preserve your capital and not take a risk.
9/18/07
Are you trading with a TREND?
To make stable profits trading Forex, you need to know market trends.
Why traders want to know trends in Forex? Because when they know what is the current trend (up or down) now, they can open a trade in the direction of this trend. Going against the trend is not wise as well as can be costly.
How to identify a trend in Forex? Good question. Look at charts and you will see waves. the price goes up and down making Tops and Bottoms.
when you have higher tops and higher bottoms - you've got an uptrend. When you see lower tops and lower bottoms - that's a downtrend.
I know you will now say "that's easy!". Awesome! We've covered the most important topic about Forex trading: "Trend is your friend, trade with it".