Technical Summary

<div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;">  In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.[1] Behavioral economics and quantitative analysis use many of the same tools of technical analysis,[2][3][4][5] which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable. </div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/technical-summary.html"><img alt="technical summary" border="0" height="298" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrBRKycCFKxTXEMDyHrzECcnXQvFqtRND9Xc3g9nGQQH8ur0KcXJ9amV3dZPS96vl7R9F9CU-b5hCalqOYt_l96zos1mVwFnnIGcIqDTUviFjSn9mc6ta7Xun50ENwMU2yoRWB3GWmpYc/s640/VA.jpg" width="640" /></a></div> <div style="text-align: center;"> <br /> <div style="text-align: left;"> A fundamental principle of technical analysis is that a market's price reflects all relevant information, so their analysis looks at the history of a security's trading pattern rather than external drivers such as economic, fundamental and news events. Therefore, price action tends to repeat itself due to investors collectively tending toward patterned behavior – hence technical analysis focuses on identifiable trends and conditions.</div> <div style="text-align: left;"> </div> <div style="text-align: left;"> <a href="https://en.wikipedia.org/wiki/Technical_analysis#cite_note-28"><span></span></a></div> </div> <div style="text-align: center;"> <iframe allowtransparency="true" frameborder="0" height="215" marginheight="0" marginwidth="0" scrolling="no" src="http://fxrates.investing.com/index.php?force_lang=1&pairs_ids=1;3;2;4;7;5;8;6;&header-text-color=%23FFFFFF&curr-name-color=%230059b0&inner-text-color=%23000000&green-text-color=%232A8215&green-background=%23B7F4C2&red-text-color=%23DC0001&red-background=%23FFE2E2&inner-border-color=%23CBCBCB&border-color=%23cbcbcb&bg1=%23F6F6F6&bg2=%23ffffff&bid=show&ask=show&last=hide&change=hide&last_update=hide" width="453"></iframe></div> <div style="text-align: center;"> <br /></div> <div style="text-align: center;"> <br /></div> <div style="text-align: center;"> <iframe allowtransparency="true" frameborder="0" height="274" marginheight="0" marginwidth="0" scrolling="no" src="http://tools.investing.com/technical_summary.php?pairs=1,2,5,7,8,8830&curr-name-color=%230059B0&fields=5m,1h,1d" width="425"></iframe></div>

Technical Summary

 In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past mark...

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Index Exchange

<div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> A stock index or stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific </div> <div class="" style="clear: both; text-align: left;"> investments.</div> <div class="" style="clear: both; text-align: left;"> <br /></div> <div style="text-align: center;"> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/index-exchange.html" style="margin-left: 1em; margin-right: 1em;"><img alt="index exchange" border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOqeqbZbBNTnBWQ2vIMffhiVGS7eZG0TDZ-oiGkDhSPC4Dz_m703cCdzwY6YQxZKpHasW7s_vYUqbYsgUhNADLibsCvF_mNNuSe8FDeorht-1_if9NxZU9HO0drJT8piKP0tG7W40tLSs/s400/usdx-components.png" width="400" /></a></div> <br /> <div style="text-align: left;"> An index is a mathematical construct, so it may not be invested in directly. But many <a href="https://en.wikipedia.org/wiki/Mutual_fund" title="Mutual fund">mutual funds</a> and <a href="https://en.wikipedia.org/wiki/Exchange-traded_fund" title="Exchange-traded fund">exchange-traded funds</a> attempt to "track" an index (see <a href="https://en.wikipedia.org/wiki/Index_fund" title="Index fund">index fund</a>), and those funds that do not may be judged against those that do.</div> <div style="text-align: left;"> <br /></div> </div> <div style="text-align: center;"> <iframe align="middle" allowtransparency="true" frameborder="0" height="175" marginheight="0" marginwidth="0" scrolling="auto" src="http://fxrates.investing.com/index_exchange.php?params&inner-border-color=%23CBCBCB&border-color=%23f50c0c&bg1=%23F6F6F6&bg2=%23ffffff&inner-text-color=%23000000&currency-name-color=%23000000&header-text-color=%23FFFFFF" width="555"></iframe></div> <div style="text-align: center;"> <br /></div> <div style="text-align: center;"> <br /></div> <div style="text-align: center;"> <br /></div>

Index Exchange

A stock index or stock market index is a measurement of the value of a section of the stock market. It is computed from the prices of sel...

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Index Single Crosses Currency

<div style="text-align: center;"> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <span style="color: red;"><b>DEFINITION of 'Cross Currency' </b></span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> A pair of currencies traded in forex that does not include the U.S. dollar. One foreign currency is traded for another without having to first exchange the currencies into American dollars. </div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> </div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/index-single-crosses-currency.html"><img alt="index single crosses currency" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgj1W2tWXvy0ptrFPyBSIZZAAbdTAYRpTZqKbD-e0MyKp7yWF-vxMVetI9SMg54tLCgyBm7SHRF0FHs8UF5DhKuPhmLST9IKTtD9QbjuXWu0LoPf0yHJHLHE3yIqSmmjgV-hWYIsdUqDEs/s1600/flow-currency-strength-meter-below.png" /></a></div> <br /> <h2 style="text-align: left;"> <span style="font-size: small;"><span style="color: red;">BREAKING DOWN 'Cross Currency'</span></span></h2> <div style="text-align: left;"> Historically, an individual who wished to exchange a sum of money into a different currency would be required to first convert that money into U.S dollars, and then convert it into the desired currency; cross currencies help individuals and <a href="http://www.investopedia.com/terms/t/trader.asp">traders</a> bypass this step. The GBP/JPY cross, for example, was invented to help individuals in England and Japan who wanted to convert their money directly without having to first convert it into U.S dollars.</div> <iframe allowtransparency="true" frameborder="0" height="652" marginheight="0" marginwidth="0" scrolling="auto" src="http://fxrates.investing.com/index_single_crosses.php?currency=12&header-text-color=%23FFFFFF&curr-name-color=%230059b0&inner-text-color=%23000000&green-text-color=%232A8215&green-background=%23B7F4C2&red-text-color=%23DC0001&red-background=%23FFE2E2&inner-border-color=%23CBCBCB&border-color=%23cbcbcb&bg1=%23F6F6F6&bg2=%23ffffff&bid=show&ask=show&last=show&open=show&high=show&low=show&change=hide&change_in_percents=show&last_update=show" width="579"></iframe> </div>

Index Single Crosses Currency

DEFINITION of 'Cross Currency'  A pair of currencies traded in forex that does not include the U.S. dollar. One foreign curr...

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Trading Moving Averages

<span id="docs-internal-guid-221f144f-86a0-7e1d-5cf0-d3e4939f4d58"> </span><br /> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">As traders, we have to take into consideration many things. We have to implement different factors and indicators in our analysis in order to succeed in this business, no matter if you trade short or long term. These might be fundamental indicators, technical indicators, or both. On the other hand, we shouldn´t overcrowd the charts with too many indicators that will contradict each other and cloud our judgment. I have seen many traders, especially newbie ones that overload their charts with all sorts of lines and indicators, </span><br /> <div style="text-align: center;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"> </span></div> <center> <iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/ufWHbWqlmIM" width="560"></iframe> </center> <center> <style> .adstop { margin: -70px; opacity:0; position: relative; top: -270px; cursor: pointer; cursor: hand; onclick:target[_blank];} </style> <div class="adstop"> <script async="" src="//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script> <!-- ADSFOREX --> <br /> <ins class="adsbygoogle" data-ad-client="ca-pub-7435606037402931" data-ad-slot="8537323404" style="display: inline-block; height: 250px; width: 400px;"></ins><script> (adsbygoogle = window.adsbygoogle || []).push({}); </script> </div> </center> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">becoming a burden for traders instead of helping them. When you look at these charts you don´t really know what you´re looking at, they look more like matrixes from the future. We shouldn´t complicate trading more than it already is. Charts should be easily understandable and the indicators should be simple to interpret. Simple indicators work better because more traders use them, therefore the possibility of trades based on these indicators going the right way increases. </span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/trading-moving-averages.html"><img alt="trading moving averages" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4d9sgwQBBIk4ESEIg3OuaNPnrHCGjDzYO0kY3nSYqVAOHf-BKkvHzz92RxtR65XZyGVLLjsb5_-wIkxIbw5KDLFYAOw4vINu1QuA0nVS-JDrVEyeNK88m9aZC_5I6I4q4Ctb-D4ljQCg/s1600/tf_3.gif" /></a></div> <br /> <br /> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"> One of the simplest indicators is the moving average (MA). It is easy to interpret and can be placed on the chart so you don´t have to make calculations, you just wait until the price gets close to it and then decide whether to buy or sell. They act as cushions to the price, providing support and resistance. There are four types of moving averages; simple, smoothed, exponential and linear weighted. You don´t have to guess what moving average to use, you just look at the chart history and see which ones have worked best in the past, that´s what makes this indicator so easy to use. Personally I use three or four moving averages on my charts. As we said above, we should keep it simple even when it comes to moving averages, so I use round numbers for them. I put in my charts 50 simple MA, 100 simple MA, 100 smoothed MA and 200 smoothed MA. Sometimes during strong trends and in the smaller time frame charts I throw in the 20 exponential MA as well. They can be applied to the opening or the closing price of a candle, but it is advised that you apply them at the closing price. The numbers for the moving averages show the number of candles used to calculate them. For example, for the 50 MA in the hourly chart, the closing price of last 50 candles has been calculated. But you don´t have to know how to calculate them, because all brokers offer this indicator with their platform, you just need to know how to use them for trading. </span></div> <h2> <span style="font-size: 18px;">Defining trends</span></h2> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">Ok, so let´s start with the important part, which is how to trade based on moving averages. A moving average is a useful tool for indicating a trend. If the MA is below the price we are in an uptrend, if it is above the price then we are in a downtrend. If the price is below then moves above the moving average, we can consider a change in the direction of the trend. For a better confirmation we should wait to see it move past a higher timeframe MA, that´s why I use more than one moving average. The USD/CHF daily chart below shows that during the first few months, the price was ranging below the 50 MA in yellow and 100 simple MA in green. It broke the 50 MA on the fourth month, which indicates that an uptrend might begin. But as we can see it had done so a few times before, that´s why we should wait for a break of the 100 MA to be sure that an uptrend is being formed. About one week later it broke the 100 MA, confirming the uptrend. Later that year the price pierced the 50 MA three times during the uptrend, which means that the trend might reverse, but it hasn´t closed below the 100 MA, therefore the trend remains intact. These are fake outs that we should be aware of and this is another reason why we should use more than one moving average. </span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <i> The break of 50 and 100 MAs confirmed the uptrend. Later we see 3 fake outs of the 50 MA, but the 100 MA has held the uptrend intact. </i><br /> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">Another safer way to spot trends using moving averages (MA) is the cross over strategy. In this strategy only two moving averages are used, usually 10 and 20 MAs. We know that the smaller MA moves faster and it is bound to cross over the other MA once a trend begins, hence the name of the strategy. In our case the green line crosses the red one. When this happens the trend is confirmed and we should enter in the same direction. This is a more lagging strategy than the first one, which means that there´s some delay in spotting the trends. So we might get in a trade when the trend is nearly over, that´s why this strategy is usually used on long term trading. </span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <i> The trend is confirmed when the green MA crosses the red MA. </i><br /> <h2> <span style="font-size: 18px;">Providing support and resistance</span></h2> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">Both strategies we explained above are lagging ones and moving averages work well on them, but I'd like to use MAs especially as leading indicators. Moving averages are very useful tools for providing resistance and support to the price on an uptrend or downtrend. Again, it is better to use at least 2-3 moving averages for this strategy; because once one MA is breached another one comes into play. We all know that the price doesn´t go up or down in a straight line. Instead, it makes a move up, corrects for some time, then it resumes the up move again. Quite often corrections are bigger than our equity so, if we want to buy in an uptrend we should wait for the correction to be over. But how do we know when the correction is done? That´s when moving averages come in handy. It works best when we add another indicator like Stochastics or RSI to this strategy. The GBP/USD chart below displays this strategy perfectly. During the uptrend on the daily chart, the price has made several corrections, retracing to the 50 or 100 MAs. It might touch the MA or get close to it; nothing works exactly to the pip in this game, that´s why we need to give it some room when placing the stop. On the same time Stochastichs have reached the oversold level. This is the confirmation that the retrace is over, so that´s when we should buy. We should place the stop to a reasonable level below the MA, depending on the pair and on the timeframe. </span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"> 50 and 100 MAs provide support in the daily chart</span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div style="text-align: justify;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"><i><span style="color: black;"> 20 exponential MA provides support in the weekly chart</span></i></span></div> <br /> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">It would be safer if these corrections correspond with the price touching a moving average on another timeframe chart. The weekly chart above is of the same pair during the same uptrend. We see that the price touches the 20 exponential MA at the same time when the corrections seem to be over on the daily chart. Some traders use daily charts, while others use weekly ones, so when they correspond it makes the resistance even stronger, because both groups buy the pair, therefore sending it higher. During strong trends, the smaller period moving averages are the ones that provide support/resistance. Then when the trends get weaker, these MAs are broken and the bigger period MAs do their job, so we should be careful when we decide to open positions after the trend has slowed. The EUR/GBP chart below shows that the 20 exponential MA has provided resistance and good sell opportunities during the strong downtrend. When the trend slowed, the 50 and 100 simple MAs, as well as the 100 smooth MA took their turn to provide resistance. </span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;">20 MA acts as resistance during the strong downtrend in the first half of the chart. The 100 simple and smoothed MAs act as resistance when the trend gets weaker</span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 0pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div style="text-align: justify;"> <span style="font-family: "arial"; font-size: 13px; font-style: italic; vertical-align: baseline; white-space: pre-wrap;"><i><span style="color: black;">20 and 50 MAs provide resistance in the beginning, but turn in support after they´re broken</span></i></span></div> <br /> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt;"> <span style="font-family: "arial"; font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">We can say the same thing for trends that are slower but pick up the pace later. In the beginning the longer period MAs provide support, but when the trends get stronger the smaller period MAs take their place. Another thing we should know is that the MAs provide resistance, but after they´re broken they turn into support and vice versa. We can see this in the very beginning of this chart, where the 20 and 50 MAs have acted as resistance in the beginning, but have turned into support after the price moved above them. </span></div> <span style="font-size: 13px;"><br /></span>

Trading Moving Averages

As traders, we have to take into consideration many things. We have to implement different factors and indicators in our analysis in orde...

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Head and Shoulders- Forex Trading Strategy

<div style="text-align: justify;"> <span style="font-size: 13px; vertical-align: baseline;"><span style="line-height: 1.5; white-space: pre-wrap;">We already discussed </span>‘Candlestick Trading Strategy’<span style="line-height: 1.5; white-space: pre-wrap;"> which allows us to understand the candlestick charts and what each candlestick indicates. But in order to really become a master of the charts we must learn about a few common patterns that can be formed on the charts and what information we can draw from them about the future.</span></span></div> <div style="text-align: justify;"> <span style="line-height: 19.5px; white-space: pre-wrap;"></span></div> <span style="font-size: x-small; line-height: 1.5; text-align: left; white-space: pre-wrap;"> </span><br /> <div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-small; line-height: 1.5; text-align: left; white-space: pre-wrap;"><a href="http://forextopprofits.blogspot.com/2015/10/head-and-shoulders-forex-trading.html"><img alt="head and shoulders forex trading" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIZI97TCvqqrUXp4bQH__QJo1S3njDGWl1iJvLt_ddtVp0vCIQCmYfapLTLLaGdXbM3NzUdFwm6H96KpiRxwJf8EPNcgVSWXQYMYA1-khoOGJip15gyljcbdZYb_n4YynIbdNmRVuF3M4/s1600/head.PNG" /></a></span></div> <span style="font-size: x-small; line-height: 1.5; text-align: left; white-space: pre-wrap;"> <div style="text-align: justify;"> <span style="line-height: 1.5;">‘Head and Shoulders’ is one of many recognizable and tradable chart patterns. On the Forex jargon they are known as “Shampoo” because of the shampoo with the same name and they consist of a high peak in the middle and two double peaks on either side of that one as can be seen in the illustration below. The higher peak is the head and the other two lower ones are the shoulders. The pattern itself looks like a head between two shoulders, hence the name.</span><br /> <span style="line-height: 1.5;"><center><iframe width="560" height="315" src="https://www.youtube.com/embed/duRuZ0sco0M" frameborder="0" allowfullscreen></iframe></center></span></div> </span> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt; text-align: justify;"> <span style="font-size: 13px; vertical-align: baseline; white-space: pre-wrap;">Head and shoulders patterns are relevant when the neckline is broken. Once the neckline is broken, we may look to open the trade on the opposite side of the head and shoulders, which means we have to sell. Some traders enter immediately and some prefer to enter on a pullback and the retest of the neckline. The latter option is safer, because now we know that this is not just a fake-out. The amount of pips targeted in this strategy is the same as the amount of pips between the top of the head and the neckline, although we must not be dead strict. When the market is feeling right and there is more room to go after reaching the target, we might let the trade run, aiming for bigger profits.</span></div> <div dir="ltr" style="line-height: 1.5; margin-bottom: 10pt; margin-top: 0pt; text-align: justify;"> <br /></div> <div> <span style="color: #999999; vertical-align: baseline; white-space: pre-wrap;"><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;">The pictures above are very clear and allow for a very clear recognition of the head and shoulders pattern, don’t expect the real charts to be as clean, they will provide more of a challenge. To be able to trade these patterns we have to spot them on real time charts as they happen and not after they are no longer relevant. The bottom line, which is called the neckline and is actually a support level<a href="http://www.fxmarketleaders.com/forexstrategies/supportandresistancelevels" target="_self"> </a><a href="https://www.blogger.com/null" target="blank">(read more about ‘Support and Resistance Levels’)</a>, might not always be a straight line. It might be an ascending or descending line, which makes it much more difficult to spot. Therefore we have to see the bigger picture and junior traders should probably switch to a line chart which makes some patterns more visible, instead of the candle chart. The picture below is a real chart showing a head and shoulders pattern.</span></span></div> <div> </div> <div> <span style="color: #999999; vertical-align: baseline; white-space: pre-wrap;"></span></div> <div> <span style="color: #999999; vertical-align: baseline; white-space: pre-wrap;"><span style="font-size: x-small; font-style: italic;"></span></span><a href="https://www.blogger.com/null" name="3229"></a> </div> <div> <span style="color: #999999; vertical-align: baseline; white-space: pre-wrap;"><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;">As we mentioned above, according to the trader’s textbook the neckline must be broken in order for this pattern to be usable. But real life trading doesn’t follow the textbook rules so strictly. We have to be flexible and clever to spot these patterns early as they are forming, in order to minimize the risk and maximize the profits. One trick which helps spot this kind of pattern early and be sure we are entering a high probability winning trade is to look at the volumes. No matter the timeframe, the volume is supposed to decrease with each peak, although keep in mind that this isn’t always the case. The lower volume on the second peak which is the head means that buyers had a try on the upside, but without much force behind it and the price eventually goes down. The buyers have another go with even less volume and without being able to push to the previous highs. When we are at the top of the second shoulder and the volume is low, we should check other indicators such as RSI and Stochastics to see if the pair is overbought. If that’s the case and if pins, dojis or inverted hammers are forming on the candlestick chart, then we might enter the trade with a stop above the head. This way we almost double the profit target and increase risk-reward ratio. The chart below illustrates the use of this strategy on an ascending head and shoulder pattern. </span><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;"> </span><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;"> </span></span></div> <div> </div> <div> <span style="color: #999999; vertical-align: baseline; white-space: pre-wrap;"><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;"> ‘Inverse Head and Shoulders’ are the opposite of head and shoulders; all the rules apply exactly the same but upside-down. In this case the neckline is also resistance. This means we must look to buy upon the break of the neckline. Like head and shoulders they might be straight, ascending or descending. The same rules apply to trading the inverse head and shoulder, but the opposite way.</span><span style="background-color: white; color: #333333; font-family: "arial" , "lucida grande" , "tahoma" , "verdana" , sans-serif; font-size: 13px; line-height: 1.5; text-align: justify; white-space: pre-wrap;">Head and shoulders patterns are not a Forex trading strategy on their own but they help us to get a better picture of what is going on and more importantly, what is going to happen next. Being able to spot these patterns can be the difference between a winning trade and a losing one and as you gain more experience as a trader try incorporating as many of these techniques into your trading technique basket to gradually improve performance and make more money. </span></span></div> <br /> <table border="0" cellpadding="0" cellspacing="0" id="FXCleancontainerM" style="width: 100%px;"><tbody> <tr></tr> <tr> <td valign="top"><table border="0" cellpadding="0" cellspacing="0" style="width: 100%px;"> <tbody> <tr><td><br /></td> </tr> <tr> <td class="con_pos" id="dnn_ctr3229_ContentPane" valign="top"><div class="DNNModuleContent ModDNNHTMLC" id="dnn_ctr3229_ModuleContent"> <div class="Normal" id="dnn_ctr3229_HtmlModule_lblContent"> <div> </div> </div> </div> </td></tr> </tbody></table> </td></tr> </tbody></table>

Head and Shoulders- Forex Trading Strategy

We already discussed ‘Candlestick Trading Strategy’ which allows us to understand the candlestick charts and what each candlestick indicat...

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Scalping - Short Term Forex Trading Strategy

Many novice traders find scalping to be a very appealing Forex trading strategy.<br /> <br /> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/scalping-short-term-forex-trading.html"><img alt="scalping-short-term-forex-trading" border="0" height="211" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWGW6JNYr1ShlOV63yJ_DsmxiAWW5YF371Ub-CfhtpNhHjVOGE0ulJHEXM6VM5ILBUcXNAqvXb3Mzn0_u2hAYsxSNFAyVy32T6OZbX3WbLMg-5Y3jvuV5mOPL7euBkMODH8N6rrZ6Oozo/s320/scalping-forex.jpg" width="320" /></a></div> <br /> The scalping strategy is an intraday trading strategy and it allows a successful trader to make a lot of money in no time. It is so appealing because it allows for a relatively low risk and can yield very big profits. Although scalping is considered a low risk strategy, it relies on the trader being very attentive and composed as emotions can get in the way when it comes to this Forex trading strategy.<br />  <center><iframe width="560" height="315" src="https://www.youtube.com/embed/tQ-76eJiNC0" frameborder="0" allowfullscreen></iframe></center><br /> Traders who choose to use this strategy will also have to pay close attention to the market, especially during peak trading hours throughout the day. <br /> <b> <span style="font-size: 18px;"> <br /> What is scalping? </span> </b> <br /> Scalping is a Forex trading strategy which relies on placing a large number of very short term trades. Each trade on its own doesn’t have the potential to bring in big money but as a whole, if played right, they can add up to quite a lot. Trades are constantly opened and closed and can last as little as just a few seconds or minutes. The recommended charts to use in scalping strategy are 1 minute and 5 minute charts. Some traders also use 15 minute charts but anything above 15 minutes would not be considered scalping. Take a look at a scalping example on the chart (1 min. gbp/jpy chart):<br /> <div style="text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/scalping-short-term-forex-trading.html"><img alt="scalping strategy" src="http://www.fxmarketleaders.com/portals/0/scalping%20strategy%20%28500%20x%20375%29.gif" style="height: 260px; line-height: 1.5; margin-top: 3px; text-align: left; width: 350px;" /></a><br /> <br /></div> Not all traders will have success with scalping as it requires certain skills and a lot of self discipline. Beginners should not try this Forex trading strategy until they have acquired some experience and traders who have a hard time controlling their emotions should also steer clear of scalping and focus on longer, safer trades. Using scalping, a trader can find quick trading opportunities during the day without having to spend all day in front of the computer. The best time for scalping is when the European and American markets are both open, or during the morning hours of the European market.<br /> <br /> <b><span style="font-size: 18px;">Advantages and Disadvantages of Scalping Strategy </span> </b> <br /> <b>Advantages:</b><br /> <div style="margin-left: 18pt; text-indent: -18pt;"> 1.    Scalping involves fairly low risk as the losses are low.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 2.    Scalping opportunities are plentiful, throughout the day.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 3.    Scalping allows for diversity in markets, trading in several different markets at once.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 4.    Scalping can be profitable even if you trade only a small amount each day.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 5.    Over time, profits add up and can reach great value.</div> <b> Disadvantages:</b><br /> <div style="margin-left: 18pt; text-indent: -18pt;"> 1.    Scalping requires that a trader be very attentive and enter and exit trades rapidly.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 2.    In scalping emotions must be ignored as they can get in the way of making sensible, logical decisions.</div> <div style="margin-left: 18pt; text-indent: -18pt;"> 3.    A trader must be able to deal with a lot of pressure when using scalping strategy.</div> <b> <span style="font-size: 18px;"> </span></b>

Scalping - Short Term Forex Trading Strategy

Many novice traders find scalping to be a very appealing Forex trading strategy. The scalping strategy is an intraday trading strategy...

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Fibonacci Indicator - Forex Trading Strategy

The ‘Fibonacci indicator’ Forex trading strategy is one of the most well known and commonly used long term Forex trading strategies. This method relies on what is called a ‘Pullback’ and to fully understand how it works we must discuss the more fundamental concept ‘the trend’.<br /> <br /> <div class="separator" style="clear: both; text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/fibonacci-indicator-forex-trading.html"><img alt="fibonacci indicator forex trading" border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpiJmwDMS_jU7xTNHKyvLWLSwAQbWFHkNdk3Bpdpti065unoj5uyX4VqOBHktMXGMGFm9pD13NOpxs9GoGjf8Da-RG_tcAr3gLt9h5onwL2TUQ3TJtW6vjEr3_Vm_bk4xhR_CeZN6RWIU/s320/fabinacci.jpg" width="320" /></a></div> <div style="text-align: center;"> <br /></div> When we look at each price change individually it is very hard to explain them and find a pattern as there are so many of them. Looking at the bigger picture allows us to see trends on a larger scale.<br /> <br /> <div style="text-align: justify;"> <div> <span style="font-size: 13px;"></span><br /></div> </div> <div style="text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/fibonacci-indicator-forex-trading.html"><img alt="forex trading strategy - fibonacci indicator" src="http://www.fxmarketleaders.com/portals/0/stra3.gif" style="height: 233px; line-height: 1.5; text-align: left; width: 317px;" /></a></div> <span style="font-size: 13px;"></span><br /> <span style="font-size: 13px;"></span><br /> <br /> The image above shows a moderately short trend which is the kind of trend that we will focus on for this trading technique. The trend is made up of three parts, two going up and one going down. Since the overall direction of the trend is up, the middle part where there is a momentary downfall is called a ‘pullback’.<br />  <center><iframe width="420" height="315" src="https://www.youtube.com/embed/wMH7850mtdE" frameborder="0" allowfullscreen></iframe></center><br /> The problem is that when we see a trend start to reverse it is very hard to establish if what we are witnessing is a pullback or a reversal of the trend. This is where Fibonacci comes in and allows us to very simply analyze the data and make a decision. <br /> <br /> <table> <tbody> <tr> <td style="width: 55px;"><br /></td><td style="width: 55px;"><br /></td><td><br /></td></tr> </tbody></table> The Fibonacci numbers and ratios have been famous among mathematicians and artists for hundreds of years. They represent many things in nature and in financial markets and can be used as great analytical tools. No math is required to use these numbers as the trading platforms do all the calculations for us. All that we must do is make a decision based on these lines which appear on the graph. <span style="font-size: 16px;">The three most important Fibonacci numbers are <b>0.382, 0.5, and 0.618. </b></span><span style="font-size: small; line-height: 1.5; text-align: left;">Also keep in mind </span><b style="font-size: medium; line-height: 1.5; text-align: left;">0.764 </b><span style="font-size: small; line-height: 1.5; text-align: left;">and </span><b style="font-size: medium; line-height: 1.5; text-align: left;">0.236</b><span style="font-size: small; line-height: 1.5; text-align: left;">.</span><br /> <div style="text-align: center;"> <a href="http://forextopprofits.blogspot.com/2015/10/fibonacci-indicator-forex-trading.html"><img alt="the most popular fibonacci levels in forex trading" src="http://www.fxmarketleaders.com/portals/0/stra4%20%28321%20x%20252%29.gif" style="height: 252px; line-height: 1.5; text-align: left; width: 321px;" /></a></div> <span style="font-size: 13px;"><br /> </span> The Fibonacci ratios are the purple lines drawn on the chart above. By examining how far the pullback has reached on the Fibonacci scale we can determine whether the price will pull back up again or turn into a bearish trend. As long as the price remains above the 61.8% line we can expect the trend to rise back up indicating a pullback. Once the price crossed the 61.8% line we must treat it as a start of a bearish trend which would indicate that it is time to close the position. For example, in the chart above the pullback forms a bottom at around the 50% Fibonacci marker. This indicates that the price will most likely rise and the overall upward trend will continue.

Fibonacci Indicator - Forex Trading Strategy

The ‘Fibonacci indicator’ Forex trading strategy is one of the most well known and commonly used long term Forex trading strategies. This m...

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