The Fibonacci series is used in a number of technical analysis techniques providing strong signals for trade. Traders dealing in derivatives, futures or currencies rely on these pointers to place buy, sell and stop loss orders. We will discuss the more popular Fibonacci technical analysis techniques such as Arcs, Fans and Retracements in this article. However, other technical tools such as Extensions, Clusters, Time Zones, etc are also based on the Fibonacci Series and can be used by traders to identify supports and resistances. Before going on to discuss the more frequently used Fibonacci analyses, we have summarized the Fibonacci function below. The various Fibonacci levels such as 38.2% and 61.8% are ratios between various members of the Fibonacci series.
Fibonacci Fans:
Most Fibonacci charting techniques consist of first identifying a trend. The high and low point of a sizeable period of trend is joined by a straight line. The period must be sufficiently long in duration to be considered a trend. Typically, these trend lines are usually drawn on candlestick charts.
For plotting Fibonacci Fans, the vertical distance between the high and low of the trend line is divided into Fibonacci proportions of 38.2%, 50% and 61.8%. Lines are drawn from the bottom of the trend line, connecting the Fibonacci points in the vertical. These lines serve as crucial supports and resistances for the time series. Two things must be kept in mind while using Fibonacci Fans (and in fact most Fibonacci charting techniques). First, the trend line must be kept updated with the most recent and detectable trend. Secondly, the trend line has to be placed suitably – any small change in the tilt of the line completely alters the Fans lines.
Fibonacci Arcs:
To draw Fibonacci Arcs, first a line is drawn between two swing points on the chart – a line between two distinct highs and lows. Once the trend line is plotted, arcs are drawn from one end of the line at the 38.2%, 50% and 61.8% levels. Although 50% is not a technical level, it is still widely used in most Fibonacci technical analyses because of the historically observed support or resistance that this level provides. These arcs serve as critical supports and resistances for the time series. For the graph shown in the illustration, it is clearly seen how these levels work efficiently as both supports and resistances. Once a support is breached, it now serves as a resistance. Traders frequently use Fibonacci Arcs to identify entry and exit signals. Quite often, it helps traders to limit losses and maximize profits.
Fibonacci Retracements:
Fibonacci retracements are similar to the Fans and Arcs. In case of simple retracement charts, the vertical distance between the high and low is divided into Fibonacci proportions – 61.8%, 50%, 38.2% and occasionally even 23.6%. The difference from Fans is that, while a Fan line is drawn from the end point of a trend line to the vertical (making angular sections), here the lines are horizontal. A retracement is defined as a movement away from the current trend, before the series continues to move in the original direction. The retracement lines provide potential resistances or supports for a retracement movement, as observed in the illustration below.
A number of online tools are available for Forex traders. One of the post popular online trading systems is the Meta Trader 4 Automated Trading System. This interface provides easy-to use features and functionalities. Additionally, tools are available in this system to conduct technical analysis such as the ones explained. News bulletins are also available with this online trading platform, helping you to stay in touch with markets – using an efficient platform you can forget about the implementation hassles and concentrate on your trade solely, maximizing your profit potential.
Training is necessary if you want to avoid making mistakes and losses in Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market. Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
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When you make a loss, say even an astounding loss, what do you do? A mistake, however big it is, is not the end of the world. Every trader goes through a rough period – the ones that last rise above their mistakes and recover.
Own your mistake
There is no use not admitting your own mistakes. So, stop blaming events and people and accept your mistake. Once you have accepted the fault, half of the recovery process is underway. You have to realize that mistakes cannot be avoided; only minimized. Yes, you were at fault, but you can rise above it.
Learn from the mistake
You can learn a good deal from all mistakes, so try to find out what you can learn from yours. The reason may be your own ego, greed, or some defect in your strategy, so discover the reason and change the things which are in your hand. Sometimes, even if a mistake doesn’t teach you what to do, it teaches you what not to do.
Adopt a new way
Now that you know the fault in your strategy, re-evaluate it and decide whether you will modify it or take up a new path altogether. Failure gives us the opportunity to re-examine our strategy. Once the root cause if detected,, you can choose to adopt a wholly new way to implement your ideas.
Assess the impact of your mistake
Try to think whether the mistake has altered your ideas completely. You will realize on most occasions that it was the implementation that went wrong – the idea was not that bad at all. However, if the gaffe really has extensive effects, then it is better to enlist them. This way, you can assess which of the impacts can be cured and which you can do nothing about. You may have lost your investments, but if list enlist the pros and cons of your implementation, you can find a way to recover them.
Be more systematic
Try to assess whether you lacked discipline before or whether you can become more disciplined. The time after a big loss can be used constructively and wisely to change your modus operandi or inculcate a more systematic approach. Learn to identify the revealing signals of the errors so that you can spot them the next time they come before the damage is done. A systematic approach simplifies work and increases chances of slipping in the future.
Do not cry over spilled milk – rise up
The best way to defeat a bad patch is to be stubborn and get back into the game. In the forex markets, if there as an adverse movement in one currency resulting in losses, there would have been another currency that moved favorably. Where you went wrong was in choosing your instrument. There is always a scope for making profit. With more discipline and proper timing, success is not too far.
One last point, you must know that you are not alone. Other traders have made similar or even bigger mistakes before you. In fact, people who have fallen once are more likely to be the ones who have learnt their lessons and are making profits now. Just one mistake is inconclusive. Forex trading is difficult and demanding, but you always get another chance.
Training is necessary if you want to avoid making mistakes and losses in Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market. Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
Filed under Forex Training by on Jan 31st, 2010. Comment.
Forex trading may initially look difficult to comprehend and complicated to execute. Beginners may end up making losses because they do study market trends adequately and ignore technical analysis tools available to find profitable trade. To make profits, Forex charts are a crucial tool and you need to understand how these charts are generated. The Forex market is a fast-moving environment and you have to be abreast of the developments if you aim to reap significant returns. Market indicators and technical analysis can aid you in this regard, if applied correctly.
Indicators are a useful tool to generate potential entry points for a trade in the Forex markets. Normally, these indicators represent the market’s probability behavior but it cannot be exact in terms of predicting currency prices.
Technical indicators are critical means of gauging the market in Forex trading. While standard indicators are available for use, you can formulate new indicators and formulate new strategies by combination various technical indicators and tuning them. To be an effective trader, you must be able to spot current major trends, short-term trends, and also intermediate trends; a trader who can spot these trends of varying investment horizons, is equipped to make profits in the Forex markets.
Since the Forex market is changing all the time, you need set a condition for employing technical indicators. To increase the probability of getting correct signals and making accurate forecasts you have to be able to mix the required indicators. Combinations of various technical charts help forecasting currency fluctuations correctly.
Your judgment may be correct, but in order to maximize profits you should still take a variety of factors into account. When you are having a bad day in the markets, book your profits and temporarily halt trading activities. It is often a smart decision to even accept losses because if you hold on to your positions (hoping to recover the losses), you might end up losing more money. When the currencies are trading within a contracted range and is not going anywhere, don’t wait in anticipation of a big favorable movement. Move out of your existing position and trade in currencies which can yield higher returns.
With many technical indicators available for use, you will definitely find a blend that work best for you. Don’t be discouraged if you come across significant losses in trading because it is normal and happens to most traders. Just ensure when taking decisions that you spend sufficient time in analyzing the technical indicators. There are a number of things to evaluate and analysis cannot be done in minutes. However, don’t be too slow either, as the currency markets are fast-paced and your analysis may be invalid by the time you place your trade. Adjust to the speed of the currency market and be neither too fast in taking decisions nor too slow to render your analysis ineffective. You have to outsmart other traders also in the markets to make profits; your analysis has to make the difference.
You will need all the help available to get your technical analysis right. You can check with a broker or various online trading tools if you want to study more about technicals and trading basics. Nowadays, the internet provides a wide repertoire or information for your benefit. Use the web well learning various aspects of technical trading so that you can identify market trends early and effectively.
Training is necessary if you want to avoid making mistakes and losses in Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market. Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
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A trading mindset is the cornerstone of any successful trader’s skills – know how to build up your approach to trading.
Taking a chance in trading is equivalent to trying your luck in a card game, you venture by placing your bet on your aces and other strong cards, try to set up a retreat arrangement by managing risks and plan how to use your cards to maximize your winning potential at all junctures of the gamble. This remains your strategy whether you triumph or fail.
Here are some useful guidelines on how you can approach your trading outlook.
• Be fully accountable for all your trading decisions.
• Do not follow the crowd as a rule. Understand each move and then take a plunge – successful investors always reason out rather than just follow.
• Listen to good advice from experts, just to reinforce your moves – but do base your decisions on advice from others. The final decision should come from you irrespective of the advice.
• You can focus on the opportunity to learn, but don’t let it blur your viewpoint or influence your decisions completely.
• Avoid the downsides of over-trading. There are essentially two types of over-trading; trading too frequently and trading too many entities. If you trade regularly, remind yourself that there’s no rationalization to trade always, since intense over-trading creates strain, and often leads to losses. Market forces are not everlasting and experienced traders know that over a period of time the law of gravity never fails in the market- whatever goes up must come down.
• Instead of focusing on too many currency pairs, find out whether the currency you are trading on suits your trading plan; don’t be too brash or too selfish.
• Use risk calculators to estimate suitable size of your positions before placing a trade. This will prevent trading too many shares. It relieves stress to recognize the basic tenets of asset management – that the amount at risk for each position held is balanced to the size of your total account.
• Don’t blame yourself when results are unfavorable. Traders tend to be hard on themslves, in trying to take responsibility for their actions. This hardly helps when you overdo it – ‘do not cry over spilled milk.’
• Even the best make errors and mistakes. Do positive self-criticism where the opportunity exists, but don’t criticize yourself too hard or too frequently. Criticize constructively, learn from errors without straining yourself and then let it go.
• Avoid shouting at yourself – self-inflicted psychological harm is difficult to rise above, so it’s best to keep away from it.
• Think like a winner – it makes you a winner. The effect of your thoughts and outlook eventually show up in what happens to you.
• Your thoughts also can be developed by putting it into effect. The parts of your thoughts that you use most will grow stronger. The thoughts you work on regularly have a propensity to transform into actions, actions become habits and these habits yield results.
• Think positively and positive things start happening to you.
• Lastly, take every attempt to unwind, when required. Trading is serious business – but even the most successful traders know how to laugh and relax and stay fit for the next trade.
• Having fun at work and liking what you do is the best motivator to keep you going.
So, try to keep these suggestions in mind, know how to develop a trading attitude and be on your way to success.
Training is necessary if you want to achieve Abundance from Forex Trading. Invest in yourself first through Forex Training. Learn more about Forex Trading Strategies with http://www.SingaporeForexSeminars.com
Filed under Forex Training by on Jan 30th, 2010. Comment.
Being a trader in the Forex market comes with its own upsides and downsides. There are periods when you book significant profits but there are times when you lose a great deal too. Foreign Exchange is a profitable endeavor, but it is complicated and risky. If you do not have a risk appetite, you can’t be an efficient and successful trader.
The Forex market is the biggest market in the world to conduct trade. The Forex market never sleeps and provides you with an opportunity to earn more money because of it size and volumes. Forex markets deal with trading currencies. The Forex market was formed to meet the demand and supply needs of different kinds of currencies by individuals, companies, and government. Exporters and importers also benefited from the currency market setup. Most of the Forex traders are businesspersons, investors, speculators and participants from the banking world.
Typically, every country has its own currency. The various currency values also keep fluctuating. In Forex trading, currencies are traded in pairs called ‘trading pairs’. While you are selling a currency, you’re also purchasing another. For instance, you can procure British pounds by using US dollars. You will need to pay more US dollars if the British pound is in short supply. In such a case, the trader who is long on the British pound will try to sell it at a price more than what he/she acquired it for and make profits. Currency speculators are exposed to the inherent risk of any unfavorable movements in the exchange rate. In the case of a positive currency movement, the speculator earns profits.
All traders and novices in the currency markets should build up their own trading system. For beginners, start with a small investment. When you have your own trading system, you can easily detect entry and exit signals. The transaction costs are negligible and you can trade frequently in a day without pushing up the overall costs; the Forex market is also open round the clock and there is no limit on the number of potential trades in a day.
It is difficult to influence or manipulate the Forex market because of its size. The market is typically influenced by global events and news. Because of these factors, possibilities of insider trading are effectively eliminated.
Avoid entering the Forex market with inadequate knowledge. You must be aware that roughly 90% of all Forex traders are unsuccessful. Only 5% of Forex traders end up with profits while the residual 5% only break-even.
You will need to have sufficient knowledge when you enter the Forex market. Do research online for valuable information about Forex trading. Choose a Forex software program wisely – many alternatives are available and you have to ensure that your pick is efficient and suits your requirements. The software is important because it aids you in monitoring activities and fluctuations in the Forex market online. You can make well-informed transactions from home if you are equipped with an internet connection and competent trading software. Do not rely on absolute luck if you want to do well as a trader. Study and examine market trends, consider market indicators and technical analysis. Ask your broker to help you out in the issues you face while trading. If you want to make money in the Forex markets, be well-informed and know what strategies work best.
Training is a must if you want to achieve Abundance from Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market.
Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
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Candlesticks are tools used for technical analysis of financial instruments such as securities, derivatives or currencies. A candlestick chart converts a continuous time series into a series of discrete technical symbols. The density of candlesticks in a candlestick chart depends on the period of analysis- for instance, when converting intraday data to candlestick charts, one can chose the interval period for each candlestick as one hour (or any other value). This would convert the continuous intraday line graph to a candlestick pattern with a candlestick for every hour.
Each candlestick comprises four data points of the instrument for the period of analysis – the open, high, low and close values. The body of the candle is capped by the open and close prices. If the open is lower than the close the candle is usually indicated in white, green or occasionally blue. For a closing value below the opening value, the body is indicated in black or red. The other components of the candlestick are the upper and lower shadows (or wicks). The upper shadow is a line extended from the top of the candlestick body and extends up to the high price of the instrument. The lower shadow extends from the bottom of the body to the low value of the instrument for the period. Either of these components – the body or the wicks – may be absent in any candlestick when a few data points match. In the particular case of all points being identical, the candlestick does not exist at all.
Exhibit A: A Typical Candlestick with various components
Candlestick
Exhibit B: A candlestick chart with a 30 min interval period
Candlestick Chart
A number of complex patterns and technical analysis techniques have been formulated on candlesticks. We emphasize on a few simple patterns for starters.
A white, green or blue candlestick is a bullish signal indicating uptrend. The more number of consecutive white candlesticks and the longer the bodies, the more bullish the signal. Similarly, a black or red candlestick (or a series of such candlesticks in progression) signify selling – a bearish signal indicating downtrend.
A long upper shadow with a length of at least equal to the body indicates a bearish signal. This signal is strengthened if the body is black. Similarly, a long lower shadow with length more than the body indicates an uptrend, reinforced by a white body.
A Doji is a pattern where the open and close coincide reducing the body size to zero. This is normally a neutral sign used in conjunction with other signals. A Doji pattern above a white candlestick is a possible reversal signal (bearish), strengthened by a subsequent black candlestick. This kind of a candlestick pattern is called a Doji Star. A bullish Doji Star is a Doji subsequent to a black candlestick and placed below it.
Exhibit C: Bearish Doji Star and a Morning Doji Star
Bearish Doji Star and a Morning Doji Star
A Morning Doji Star is an extension of the Doji Star where a Doji follows a long black body. The candlestick following the Doji is a white body where the upper limit of the white body is beyond half of the black body’s length. This indicates a reversal of a bearish trend. A Morning Star is the same as a Morning Doji Star except that the Doji in between the two candlesticks is replaced by a small body (open and close values are close together). This is also a bottom reversal signal. Reversing a Morning Doji Star or a Morning Star, we get Evening Doji Stars and Evening Stars which are considered top reversal signals.
A Harami is a combination of a large white body candlestick followed by small black body. The following black body needs to have the open and close limits of its body i.e. contained within the preceding white body’s limits. This is considered a bearish signal when preceded by a Bull Run. For a bullish Harami signal, a large black body is followed by a contained small white body with the same conditions as a bearish Harami.
A Hammer is a small bodied candlestick (black or white) with a very small or non-existent upper shadow and a long lower shadow indicative of an uptrend. An Inverted Hammer is a bottom reversal signal with a small body and long upper shadow.
Exhibit D: Other candlestick patterns (Spinning Tops, Hammer, Inverted Hammer, Harami)
Another key technical candlestick pattern is a Spinning Top, which is neutral in nature and typically used with other technical signals. This pattern consists of a single candlestick with a small body and tiny shadows.
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More and more traders are switching to the forex market trading. From the stock exchange market, traders move to forex market trading. Unlike in stock markets, traders buy and sell shares. These shares have different values depending on the performance of the company. In forex market, currencies around the world are being traded. Different countries have different currency values. The value of the currencies depends on the economic and political stability of a country and not just a single company.
Similar to stock market trading, forex market trading must go through a broker. A broker may be a bank working with the country representing the currency. Forex market trading involves an investor and a broker to make the deal work. Round the clock the forex market is always open. This trade is global and therefore needs to be open twenty four hours a day.
Investors pick currencies to pair and monitor the increase and decrease in value of the paired currency. The concept of buying and selling is very much similar to that of the stock market. When a currency value goes down, investors buy. When the time that currency value goes up, then it’s time to sell.
There are several factors that an investor monitors in order to determine if it is timely to enter a trade or not. Strategies need to be studied carefully to minimize the risk involved in this complex currency trading.
Forex trading is no doubt risky to a certain degree. However, with proper training, you can achieve Abundance from Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market.
Why? Because they invest in themselves first through Forex Training. For your Abundance, click Singapore Forex Seminars
Filed under Forex Training by on Dec 9th, 2009. Comment.
When entering the forex market trade an investor needs to be armed with strategies. Strategies should be tried and tested over a specific period of time. This is to ensure that such strategy works. Forex market is like a playing field and you need to play smart in order to win. There are two strategies known and used by many seasoned forex traders. And these strategies are the fundamental and technical analyses.
Veteran forex market traders recommend the use of both strategies. And statistics show that forex traders using the combination of both strategies are the successful players in the global forex market. Ask a couple of financial experts and they will agree in using both strategies in combination.
With the use of both strategies, an investor will be able to decide wisely on when to enter or end a trade. Strategies can also help a trader to project a trend in the long run. This can help traders predict on where the forex market trend is going. Knowing all these enables a forex market trader to set points on when to stop a trade. This is very crucial in preventing further loses.
Different traders have different experiences using the combination of both well known strategies. Differences don’t really matter as long as a trader earns a decent income from his forex investments. As a trader learns and gains more experience, success will soon follow.
Moving closer to your Financial Freedom. Learn to trade Forex with Singapore Forex Seminars
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If you have read the previous posts, you should have a better idea by now, after a good Forex training course, on how to start your forex broker hunt. As always mentioned, forex trading is a complex process. You need someone to assist you with your trading needs especially if you are a new investor. And forex brokers will do this job for you.
If you are a new investor, you are considered fortunate if you have a lot of money to invest in the forex trade. You can have a higher leverage options when you have a large amount of money to invest. However, not all investors have the same financial capacity. What if you only have a small amount of money to invest in this ever popular forex trade?
A good broker can give you several leverage options. Regardless of the amount of money an investor is willing to invest in this forex trade, a good broker should provide higher leverage options. Moreover, a good broker should offer several types of accounts. A mini account, standard accounts and premium accounts should all be offered to every investor who wants to join the global forex trade. This will provide an investor more options with regards to the money available for investment.
Training is a must if you want to achieve Abundance from Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market. Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
Filed under Forex Training by on Nov 23rd, 2009. Comment.
With proper Forex training, Forex trading is showing great signs of progress. Advancement in technology has got a lot to do with its popularity. Now almost everyone that has interest in forex trading can invest their money in this global currency trade. From the previous article, you have read about choosing a broker. It is the first step in starting out your venture in this ever popular forex trade.
Today you will be introduced to spreads. As defined by forex experts, spread is the difference in buy and sell price at any given point in time. It is how brokers are actually paid. In simple terms, the higher the spread, the higher the broker charges you for his services. The lower the spread, the lower the broker charges you for his services.
However, you should always remember that you should be paying a broker an amount equal to his services provided. If a broker is not doing you any good and you are asked to pay him a higher spread, then it’s time to think again.
A good broker charges just enough for his services. And also, you should try to look for brokers who can give you a lot of options when it comes to different trading methods. He should be laying down every fact and data that you need to know and explain several options for every situation. A good broker should guide you to a wise investment decision.
Training is necessary if you want to achieve Abundance from Forex Trading. New investors around the world are becoming wealthy thanks to The Forex Market. Why? Because they invest in themselves first through Forex Training. For your Abundance http://www.SingaporeForexSeminars.com
Filed under Forex Training by on Nov 23rd, 2009. Comment.