Forex 4 Freshies

Announcement

2011-03-10T19:48:00.001+08:00

Hello everybody,
Sorry for the silence.
I'll be back soon!!!!
Thanks for visiting my Blog
DO COME BACK AGAIN!!!!

Bank of London and The Middle East launches fully Sharia'a compliant on-line FX trading platform

2010-12-07T11:33:00.003+08:00

Bank of London and The Middle East plc (BLME), London's leading wholesale Sharia'a compliant bank, today announced the launch of BLMEFX, one of the world's first Sharia'a compliant web-based FX trading platform to provide clients with direct access to multiple currencies in order to undertake overseas transactions.

In a Sharia'a compliant environment, currency trading is used to support cross-border transactions rather than to realise a profit. Under Sharia'a all currency transactions must be backed by a commodity, which has historically made currency trading, as well as related transactions, complex and expensive. Through BLMEFX, corporate and private clients have instant access to a large number of currencies as easily as if they were using a conventional system, thereby making the process much simpler and more cost effective.

Humphrey Percy, CEO of BLME, said, "Given the increasingly international scope of Islamic finance, there was an urgent need to develop a Sharia'a compliant FX platform to take the strain out of cross-border transactions. In addition, our expertise and local market knowledge within the GCC and European currency pairs in the Spot market meant that we were ideally placed to develop an FX product which fulfils the need of our customers and which offers the same functionality as a conventional product."

BLMEFX, which uses the latest secure Java-based technology with full audit-transparency, has been designed with the emphasis on ease of use. Once a client has been permitted access they can trade on the platform using any of the major Internet browsers available today.

Velsys Chairman and CEO Kevin Ashby said, "Velsys has worked closely with BLME to create a solution using our V-FX trading product to meet the specific needs of BLME and its clients. We look forward to expanding our relationship with BLME with a continued focus on enhancing the trading experience for clients."

The trading platform, which is fully approved by BLME's Sharia'a Supervisory Board, is non-commission based. Clients can trade without paying commission and receive the full amount of foreign currency purchased directly into their BLME account. BLMEFX can also be easily white-labelled for financial institutions wishing to provide their own Sharia'a compliant FX trading facility to their own clients.

Money management

2010-02-27T13:31:00.002+08:00

Many beginning FOREX traders are captivated by the allure of easy money. FOREX
websites offer 'risk-free' trading, 'high returns' 'low investment' – these claims have a grain
of truth in them, but the reality of FOREX is a bit more complex.
There are two common mistakes that many beginner traders make – trading without a
strategy and letting emotions rule their decisions. After opening a FOREX account it may
be tempting to dive right in and start trading. Watching the movements of EUR/USD for
example, you may feel that you are letting an opportunity pass you by if you don't enter
the market immediately. You buy and watch the market move against you. You panic
and sell, only to see the market recover.
This kind of undisciplined approach to FOREX is guaranteed to lose you money. FOREX
traders need to have a rational trading strategy and not allow emotions to rule their
trading decisions.
To make rational trading decisions the FOREX trader must be well-educated in market
movements. He must be able to apply technical studies to charts and plot out entry and
exit points. He must take advantage of the various types of orders to minimize his risk
and maximize his profit.
The first step in becoming a successful FOREX trader is to understand the market and
the forces behind it. Who trades FOREX and why? Who is successful and why are they
successful? This knowledge will allow you to identify successful trading strategies and
use them as models for your own.
There are 5 major groups of investors who participate in FOREX – Governments, Banks,
Corporations, Investment Funds, and traders. Each group has varying objectives, but the
one thing that all the groups (except traders) have in common is external control. Every
organization has rules and guidelines for trading currencies and can be held accountable
for their trading decisions. Individual traders, on the other hand, are accountable only to
themselves.
This means that the trader who lacks rules and guidelines is playing a losing game.
Large organizations and educated traders approach the FOREX with strategies, and if
you hope to succeed as a FOREX trader you must play by the same rules.
Money Management
Money management is part and parcel of any trading strategy. Besides knowing which
currencies to trade and recognizing entry and exit signals, the successful trader has to
manage his resources and integrate money management into his trading plan. Position
size, margin, recent profits and losses, and contingency plans all need to be considered
before entering the market.
There are various strategies for approaching money management. Many of them rely on
the calculation of core equity. Core equity is your starting balance minus the money used
in open positions. If the starting balance is $10,000 and you have $1000 in open positions
your core equity is $9000.
When entering a position try to limit risk to 1% to 3% of each trade. This means that if you
are trading a standard FOREX lot of $100,000 you should limit your risk to $1000 to $3000
– preferably $1000. You do this by placing a stop loss order 100 pips (when 1 pip = $10)
above or below your entry position.
As your core equity rises or falls you can adjust the dollar amount of your risk. With a
starting balance of $10,000 and one open position your core equity is $9000. If you wish
to add a second open position, your core equity would fall to $8000 and you should limit
your risk to $900. Risk in a third position should be limited to $800.
By the same principal you can also raise your risk level as your core equity rises. If you
have been trading successfully and made a $5000 profit, your core equity is now $15,000.
You could raise your risk to $1500 per transaction. Alternatively, you could risk more from
the profit than from the original starting balance. Some traders may risk up to 5% against
their realized profits ($5,000 on a $100,000 lot) for greater profit potential.

Candlestick Patterns

2010-02-07T13:05:00.014+08:00

10 Best Candlestick Patterns
There are many candlestick patterns but only a few are actually worth knowing. Here are 10 candlestick patterns worth looking for.
Remember that these patterns are only useful when you understand what is happening in each pattern.
They must be combined with other forms of technical analysis to really be useful.
The following patterns are divided into two parts: Bullish patterns and bearish patterns. These are reversal patterns that show up after a pullback (bullish patterns) or a rally (bearish patterns).

Bullish Candlestick Patterns

Engulfing: This is a powerful candlestick pattern. This pattern consists of two candles. The first candle is a narrow range candle that closes down for the day. The sellers are still in control of the market but because it is a narrow range candle and volatility is low, the sellers are not very aggressive. The second candle is a wide range candle that “engulfs” the body of the first candle and closes near the top of the range. The buyers have overwhelmed the sellers (demand is greater than supply). Buyers are ready to take control of the market!

Hammer: The market opened, then at some point the sellers took control of the market and pushed it lower. By the end of the day, the buyers won and had enough strength to close the market at the top of the range. Hammers can develop after a cluster of stop loss orders are hit. That’s when professional traders come in to takeover at a lower price.

Harami: When you see this pattern the first thing that comes to mind is that the momentum preceding it has stopped. On the first day you see a wide range candle that closes near the bottom of the range. The sellers are still in control of the market. Then on the second day, there is only a narrow range candle that closes up for the day.

Note: Do not confuse this pattern with the engulfing pattern. The candles are opposite!

Piercing: This is also a two-candle reversal pattern where on the first day you see a wide range candle that closes near the bottom of the range. The sellers are in control. On the second day you see a wide range candle that has to close at least halfway into the prior candle. Those that shorted the on first day are now sitting at a loss on the rally that happens on the second day. This can set up a powerful reversal.

Doji: The doji is probably the most popular candlestick pattern. The market opens up and goes nowhere throughout the day and closes right at or near the opening price. Quite simply, it represents indecision and causes traders to question the current trend. This can often trigger reversals in the opposite direction.

Bearish Candlestick Patterns

You’ll notice that all of these bearish patterns are the opposite of the bullish patterns. These patterns come after a rally and signify a possible reversal just like the bullish patterns.

Let's figure out what is happening in each of the patterns above to cause these to be considered bearish. Look at each candle and try to get into the minds of the traders involved in the candle.

Kickers

There is one more pattern worth to mention. A "kicker" is sometimes referred to as the most powerful candlestick pattern of all.

You can see in the above graphic why this pattern is so explosive. Like most candle patterns there is a bullish and bearish version. In the bullish version, the market is moving down and the last red candle closes at the bottom of the range.

Then, on the next day, the market opens above the previous days high and close. This "shock event" forces short sellers to cover and brings in new traders on the long side.

This is the reversed in the bearish version.

Confirmation?

Most traders are taught to "wait for confirmation" with candlestick patterns. This means that they are supposed to wait until the following day to see if the market reverses afterward..

Seriously, think about it for a second. If a market pulls back to an area of demand (support) and we have a candlestick pattern that is telling us that buyers are taking control of the market, then that is all the confirmation we need.

As a swing trader we need to get in before the crowd piles in, not when they get in! In other words, We want to be one of the traders that make up the pattern itself! That is the low risk, high odds play.

Reading Candlestick Charts

How to interpret candlestick patterns

Reading candlestick charts is an effective way to study the emotions of other traders and to interpret price. Candles provide a trader with a picture of human emotions that are used to make buy and sell decisions.

On a piece of paper, write down the following statement with a big black marker:

There is nothing on a chart that matters more than price. Everything else is secondary.

Take that piece of paper and tape it to the top of your monitor! Too often swing traders get caught up in so many other forms of technical analysis that they miss the most important thing on a chart.

You do not need anything else on a chart but candles to be a successful swing trader! There is nothing that can improve your trading more than learning the art of reading candlestick charts.

Buyers And Sellers

There are only two groups of people in the market. There are buyers and sellers. We want to find out which group is in control of the price action now. We use candles to figure that out.

The picture above shows how candlesticks are constructed. The highs and lows of the time period are called the "wicks" and the open and close form the "body". The candle itself is the "range". When market close at the bottom of the range we conclude that the sellers are in control. When market close at the top of the range we conclude that buyers are in control.

Note: In the market, for every buyer there has to be a seller and for every seller there has to be a buyer.

If a market closes at the top of the range, this means that buyers were more aggressive and were willing to get in at any price. The sellers were only willing to sell at higher prices. This causes the market to move up.

If a market closes at the bottom of the range, this means that sellers were more aggressive and were willing to get out at any price. The buyers were only willing to buy at lower prices. This causes the market to move down.

Where a market closes in relation to the range, it tells us who is winning the war between buyers and sellers. This is the most important thing to know when reading candlestick charts.

We can classify candles in two categories: wide range candles (WRC) and narrow range candles (NRC). Wide range candles state that there is high volatility (interest in the market) and narrow range candles state that there is low volatility (little interest in the market).

Wide Range Candles

If we know that market tends to move in the direction of wide range candles, we can look to the left of any chart to gauge the interest of either the buyers or sellers and trade in the direction of the trend and the candles.

The importance of this cannot be overstated! You want to know if there is interest in the market and if it is being accumulated or distributed by institutional traders.

Narrow Range Candles

Narrow range candles imply low volatility. This is a period of time when there is very little interest in the market. Looking at the charts you can see that these narrow range candles often lead to reversals (up or down) because:

Low volatility leads to high volatility and high volatility leads to low volatility. So, knowing this, doesn't it make sense to enter a market in periods of low volatility and exit a market in periods of high volatility? The answer is Yes.

Hammers, Doji's and Shooting Stars

The number one rule when reading candlestick charts is this: You want to buy only when nobody wants it and sell only when everybody wants it! This is the only way to consistently make money swing trading!

I know what you’re thinking. You thought about hammers, doji’s, and shooting stars. Knowing all of the different types of candlestick patterns is really not at all necessary once you understand why a candle represents the struggle between buyers and sellers.

In this picture above we see a classic candlestick pattern called a hammer. What happened to cause this? The market opened, then at some point the sellers took control of the market and pushed it lower. Many traders were shorting this market thinking it was headed lower.

But by the end of the day, the buyers took control, forced those short sellers to cover their positions, and the market had enough strength to close the market at the top of the range.

When we are reading candlestick charts, why would we need to know the name of the pattern? What we do need to know is why the candle looks the way that it does rather than spending our time memorizing candlestick patterns!

Happy trading and good luck!

Pin Bars- Advanced

2010-01-31T08:27:00.009+08:00

Setting the initial stop loss
This section talks about setting a more aggressive stop loss initially. This means that the stop loss will be closer to the entry point and will allow a better return on a successful trade but it
will be more likely that the trade will be stopped out.
There are three methods of setting the initial stop more aggressively based on the:
1) eye
2) fib retracements
3) confluence
Slightly more aggressive or experienced traders may decide to put their stop above the level
of the first eye. Again, the stop may be placed just above the level of the eye.
Looking at Figure 1 the stop loss would be placed 10 pips above the high formed by the eye
In Figure 2 the stop has been set just beyond the eye. This is for GBPUSD, dailychart,
for 25 Jan. 2006. After the pin bar the price fell nicely and failed to hit the stop!
Alternatively a trader may place their stop just beyond the 61.8% fib retracement of the
pin bar. If prices do go past this point then there is a good chance that they will continue
to go further. See Figure 3 for how this stop loss is set. Again, Figure 2 can be inspected
to see how the trade ran after this point. We see that the prices retrace the pin to where
they may just hit the stop loss point. An alternative aggressive approach is to place stops
just beyond a fib level or moving average (or confluence of these) that passes through the
nose of the pin bar (this has notbeen illustrated). This will produce a tighter stop than setting
the stop beyond the pin bar; however it is still more prone to being stopped out. Under these circumstances the trader is hoping that the confluence of factors will exert enough resistance
to prices to prevent their stops from being hit.

Entering the trade early
There are several aggressive ways to enter a trade rather than waiting for a break of
the pin bar. They get you in at better prices but there is a greater chance that the trade
will not work out. The two key methods are:
1. entering on the close of the pin, and,
2. waiting for a retracement of the pin bar.
If the trader decides to enter on the close of the pin bar they will get a better price than
waiting for a break of the pin. It is higher risk, however, as the trade is more likely to
fail. One benefit is that it will get the trader into the trade. Entering on the retracement
might not. (Prices may not retrace the pin bar at all – they may just shoot off in the
right direction!)
When a trader decides to enter on the retracement of the pin bar they can get a very
good price. It is higher risk than waiting for a break of the pin. It also has the danger
that prices may not make it to the retracement level chosen, in which case the trader
will miss out on a good trade!
The position of the close of the pin bar will determine which of these methods would
be more profitable. If they are coupled with the more aggressive setting of the initial
stop loss it is possible to have some good trade setups, even if they are riskier.
Finally some traders may decide to enter on multiple points. They may decide to enter
a half of the trade on the close of the pin, then another half of the trade on a 50%
retracement if the prices reach this level. This way they will certainly get a half
position in place (on the close of the pin) but if the prices retrace 50% then they will
get a second half of the trade on at an even better price.
It is also possible to place a sell stop below the bottom of the pin bar as though the pin
bar was going to be played conservatively. This means that the trade will be entered
and the trader will not miss out. However, prices may first retrace some of the pin bar,
allowing an opportunity for the trader to get in at a better price than they would if they
took a conservative approach. If this happens the trader may adjust the sell stops so
that their overall risk is managed effectively.

What to do if you get an ‘almost pin bar’
This section details what to do if the pin bar does not ‘look right’.
Shown in Figure 4 is a setup that does not qualify as a pin bar. This chart is of
October 2005 through February 2006 of the USDCAD, weekly chart. Note that the
close of the ‘almost pin bar’ is below the eye formed by the previous bar.
So, now what? It is not a true pin bar. However in Figure 5 we see that there was an
earlier bar (which was coincidently a pin bar) which has a low that is low enough that
it would make a good eye (the low for this bar is below the open/close of our ‘almost
pin bar’). This bar can be used as a ‘proxy eye’ in place of the eye that is normally
formed by the bar previous to the pin bar. Note how the ‘proxy eye’ is now level with
the current new eye (note that in this case the bar forming the new eye has not
finished yet - it may still close lower).

In Figure 6 we can see the pin bar setup using this ‘proxy eye’. The image has had the
bars between the new ‘proxy eye’ and the current pin bar cut out so that the pin bar
setup can be clearly seen. This pin bar can now be traded as a ‘regular’ pin bar.
Traders may treat this setup with caution and accept that it has a higher risk than an
ideal pin bar setup. (If you go back and check this trade you will see that it was good
for quite a few pips but was not fantastic.)

Which pins to trade?
This section gives some examples of pins that are ‘good’ and would be good to trade
as well as pins that might be avoided. Traders may combine pin bars with other
methodologies, particularly technical analysis. Pin bars off support/resistance or
channels can be particularly effective.
Traders may decide not to take a trade into an area of support or resistance. Better
probabilities will be found trading away from areas of resistance / support. Remember
that a pin bar with a higher probability of success will be bouncing off these
areas! Sometimes it is tempting to play a pin bar on a 4H chart until you realise that
on the daily chart there may be some serious resistance that would need to be
overcome for the pin bar to be successful.
If there is a weekly pin that suggests that long trades should be taken, traders may be
cautious about taking a short position based on a daily or a 4H pin bar soon after this.
Remember that pin bars on longer time frames give more powerful and longer-term
indications of price movements.
You can be patient and take only the best pin bar trades. Take them at swing low /
swing high and when the pin bounces off confluence of fib levels and moving
averages or other areas of support / resistance. These are the best setups. Be selective
and make sure that the pin bar ‘looks right’. As a trader plays more pin bars they will
gain experience and understanding of how price reacts with pin bars. Over time this
experience will help traders to trade pin bars more successfully in the future in similar
circumstances.
When investigating pin bar setups you may find yourself unsure about a specific pin
bar setup. Traders may decide not to take questionable pins that they have doubts
about. You might think that you are trading into heavy resistance but the pin bar does
look good. Do not trade it. Be selective and take the best.

Trading using multiple time frames
As suggested in the previous section, it is often profitable to trade using multiple time
frames. Use a pin bar on the longer time frame to set the probably direction of the
trend that trades may be taken in. Then switch to a smaller time frame to fine-tune
your entry and stop. By doing this you can achieve much tighter stops which can
allow greater profits. Trading on the smaller time frames might be using price action
and pin bars, or other methods. Traders may use a long-term pin bar setup to
determine near-term price movements and trade using different methods on a shorter
time frame in this new trend direction.
If Figure 6 is investigated and daily charts for USDCAD are pulled up there is soon a
pin bar forming on the daily chart with the nose pointing UP in the opposite direction
to the weekly pin bar! In this case it may be wise to pay more attention to the weekly
pin bar because these tend to be more reliable so prices will probably continue up for
a while, despite the daily pin bar suggesting that prices may head down.

Closing remarks
In closing I would like to remind readers that it is important to practise good money
management while trading. Trade less often and take only the best setups. Trading is
a probabilities game. The outcome of each trade is going to be random and you
cannot know the outcome in advance but over time you can make consistent profit
if you can tip the odds in your favour. You can do this using pin bars.I hope that some
readers will find these files helpful and that they will learn to trade pin bars and enjoy it.

(Pin Bars tutorial extracted from James 16group)

Introduction to pin bars- Continue

2010-01-24T09:06:00.009+08:00

Playing the pin bar
This section details how the pin bar can be played.
Traders that are new to pin bars may put a limit/stop order under the bottom of the pin
bar. It is placed 10 pips under to account for a false break-out (unlikely to be 10 pips). When this order has been triggered then the trend will probably be heading in the opposite direction of the nose. This approach also means that the trade does not need to be monitored so closely.One question that traders may want to ask themselves as they contemplate entering a trade is this: “When will I know if the trade has gone against me and this setup is not working?” When you know how to tell whether or not your trade setup has failed and is not going towork you can begin to calculate how much risk you can take. These calculations are performed before placing orders so that the appropriate level of risk (on the basis of account size) may be determined so that an appropriate position size may be taken. The conservative approach to placing stops is to place stops 10 pips from the end of the pin-bar/nose (the point where the prices are not going, far from the eyes). This level is acting as resistance now. The stop loss and entry orders are placed 10 pips away from highs and lows because sometimes prices will creep a little big past these highs or lows which can have a negative impact on the trade setup. Traders need to discover their own preference for stops and risks based on the pin bar.

Trading the pin and managing risk
This section discusses what to do once the trade has been entered and how to manage the risk during the trade.
So, you’re in the trade - congratulations! Unfortunately entering the trade is simpler than exiting it correctly. Very often several traders in a forum will enter a trade based on pin bars yet one trader will make twice as much profit as another trader because of the differences in the way they exited the trade. The recommendations in this section are based on the following four premises:
1) Very few good pin bars (swing high/low or bouncing off confluence) will move directly to hit the initial conservative stops that trader has placed, without first giving the trader the chance to take some profits (this may happen roughly 10% of the time or less),
2) Traders should take the profits as they are offered by the market,
3) Traders should NOT let a winner turn into a looser. Hell, you’ve earned this profit; do not let the market take it back, and,
4) There are PLENTY of opportunities to trade pin bars, be patient and take only the best pin bar setups!
In essence is it important to close out part of the position early and learn to shift the stop loss to the break even point quite quickly.
The first thing that a trader should try to do when playing a pin bar is close out the trade incrementally. This means that the trader closes part of their position early, at small profit. The benefits of doing this stem from the fact that it banks some profit (consistent winners are those that bank profit); the corollary of this is it reduces the number of lots that can then hit the stop loss (so it has reduced the remaining risk for the trade). The trader can achieve this objective by splitting the total position into several distinct trades or lots. (Remember that no matter how it is split the total value at risk should not exceed your threshold.) The preferences of how the trade is split up and where the targeted profits are depend on the individual trader. It is best to take
some profit initially at 20-30 pips profit (depending on the expected range of prices on the currency pair you’re trading and the time-frame you’re trading), then take more profit a little further on.
It is always uncertain how far a trade will run. Trades resulting from pin bars might run from one bar before the prices turns back, or they may run for many bars. Lock some profit in and leave a portion (1/2, 1/3 or 1/4) of your trade to run until completion. When you lock in your profit by closing out a portion of your trade early you have banked profit (realised profit as opposed to unrealised profit through having the position un-closed) and your total open position size has decreased, meaning that if there is a sharp reversal to your initial stops then the loss has been reduced by a reduced position size and already having banked some profit. (If you do not
understand this concept then please take a pen and paper and fiddle with some numbers and prove it to yourself.)
After a trader has initially banked some of their profit they will want to consider shifting the position of the stop loss. Exactly how this is performed is up to the trader and will depend upon their own trading style. It is an important part of playing the pins, however, as successful traders do not want their winning trades to turn into losers!
Once a trader has taken some profit and shifted the stop loss to the break even point they are in a “free trade”. All pressure is now off the trader, no matter what happens they have banked some profit on this trade and made some money. The trade can now run for large profits without the trader worrying about making a loss on the trade. Because we cannot know what will happen to the price in the future it is necessary that some profit be taken early. Selecting the BEST pin bars and exercising patience will mean that a trader can cherry-pick the pin bars with the highest chance of success. Around 70% of these will be quite profitable. If 10% just reverse to hit the initial stops, then these losses are more than made up for by the profits taken early on many other trades. Around 20% of good pin bar trades will good winners where the price runs and the final portion of the trade will be chasing big pips and bigger profits. Can a trader prevent losses that may occur while you trade the pins? No. This is why it is wise to use the initial stops at the start of the trade. This means that the trader has defined the circumstances under which they know their trade setup has failed and they do not want to lose more money. Doing this indicates that the trader has accepted that there is some risk of the trade failing. These losses are the cost of doing business in the forex market – traders need to accept them.

Finding the pin bars
The purpose of this section is to give several examples of what a pin bar looks like.
The chart shows the daily charts for the GBPUSD pair for aperiod from the 20th January 2006 to the 23rd February 2006. Look at the image and decide whether the numbered bars are good pin bars to trade, based on how they look and where they are. Decide which of these bars, if any, you would trade. See if your comments match those made below.

1. This bar has good form. The open and close are nearly equal and they are very close to one side of the bar (in this case, the bottom) and are lower than the previous eye. But the nose is not very long and it doesn’t protrude much from the prices of the previous eye and the bar before it.
2. The open and close are nearly equal and are quite close to one side of the bar (in this case, the high) and are also higher than the previous eye. The nose is not very long and it does not protrude much from the previous eye.
3. The open and close for this bar are nearly the same but they are getting quite close to the middle of the bar – it is almost a neutral bar. It is good that the open and close are above the previous eye. The nose is not very long because of this. (Note that if you played this pin on a break of the pin bar (taking a long position) there would have been no trade as prices went down on the next bar.)
4. The open and close are nearly the same but they are also right in the middle of the bar. It is also an inside bar (or very close to it) where the bar makes a lower high and a higher low than the previous bar – so prices are not protruding.
5. The open and close are near the same price and are right near one end of the bar and are lower than the previous eye. The nose is nice and long, which is good, and protrudes nicely from previous prices. This would have been a good pin to play on the break and we can see that for the next two bars if we had taken a short position there would have been good opportunity to profit from the setup.
6. For this bar the open and close are near one end of the bar and are higher than the eye. Note that the nose doesn’t stick out much beyond the low of the bar that has been numbered 4, so prices have not protruded much. If we look at the next bar we see that prices only go 5 pips above the high of bar number 6, so we would have not entered a long trade anyway.
7. The open and close are not at nearly the same level and the close is nearly half way down the bar and is not higher than the low of the previous eye! The nose does protrude from the prices, but because of the position of the close this is not a pin bar!
8. In contrast, the close of this bar IS within the previous eye, but it is still half way up the bar! The nose also doesn’t protrude much beyond the previous prices. Overall, this would not be a good pin bar to play.
9. Open and close are near one end and are enclosed by the previous eye. The nose is nice and long but fails to protrude from the surrounding prices much, so it would not be a good pin bar.
10. The open and close are near one end of the bar. However, the nose does not stick out. Not a pin bar.
11. This looks promising with open and close near one end of the bar. They are well placed compared to the first eye on the left. The nose sticks out a bit. This bar isn’t at a swing high or swing low or at confluence, though.
Which of these pin bars should a beginner play?
The bars numbered 1 and 5 seem to have the best form and have the best long noses that stick out from the surrounding prices. If you are patient over this one month period two pin bars would have been played. They both would have worked well with lots of potential for profit. YES it is easy to say this in hindsight but LOOK for the good pin bar formations while you are trading and try it out.

Some final thoughts
Remember that it is fine to trade less frequently than everyone else. If 90% of forex traders will fail it is because many of these traders have ‘an itch’ to trade and feel that they need to be making many trades to make good money. Do not be like them. Select the best pins and aim for longer time frames if you want to gain money. Good traders should be hunting with a rifle from the bushes – they wait for the best setup (using pin bars in this case) then
nail the trade. Over a one month period you may only find one good pin bar setup for each currency pair. If you look at six currency pairs this would be six good pin bars in a month. This might be all you trade for the month but traders can still make good money by exercising patience this way.
Traders who are new to using pin bars use the 4-hour time period as the minimum time period and only try trading on time frames smaller than this when more experienced. Daily and weekly pins are better and are more reliable. Also note that if you trade with longer time periods you will have much larger stops; the range of price movement in a 1 week period is considerably greater than the range of price movement in a 4 hour period. It may be necessary to carefully select a broker that allows you to have micro-lots ($1000 lots) so you can put on a position size that suits your risk.Playing daily or weekly pins also means that you are not glued to your computer. You can check in a couple of times a day to monitor your trades and shift your stop losses as appropriate.
Demo trade pin bars first. When you can trade them profitably for 3 months then open a small account.Trade with the money in this account until you can trade profitably for three months. Make sure you are using small position sizes when you start to trade using real money. Then begin to trade with your full size account or with larger position sizes. An appropriate level to start at may be 0.5% (yes, half a percent) of the trading capital. This allows new traders to become used to the emotional and psychological aspects of trading real money. Each week the amount risked may be increase by 0.1% until the trader reaches a position size that they are
finally comfortable risking on each trade (probably 2-3%).

Introduction to pin bars

2009-11-08T20:36:00.006+08:00

Figure 1. The anatomy of a pin bar

This section explains what the pin bar is. Following sections explain how it may be
traded. Generally examples are only given for pin bars pointing one way. The same
concepts can be applied to pin bars pointing the other way (just reverse the concepts!).
Trading is a probabilities game. There is always risk of loss and the trade going ‘the
wrong way’ after the pin bar has formed. All we can expect to do is to tip the odds in
our favour. When good pin bars are traded then a trader can tip the odds in their
favour. Some trades will result in losses; such losses will occur with any trader from
time to time. (Even a good pin bar setup may result in a loss!)
Looking at Figure 1 we can see what a completed pin bar looks like. See that this
Pinocchio bar (which is abbreviated to ‘pin bar’) is poking his long nose outwards and
is telling you a lie (an untruth) about where the price is going. The name is based on
the old European story about the wooden boy, Pinocchio, whose nose grew longer
every time he told a lie. The bigger the lie the bigger the nose! For us this means that
we want a nice long nose when we see a pin bar. We trade in the opposite direction to
where the nose is pointing (so the pin bar in Figure 1 indicates that traders should be
taking short positions while trading EURUSD). The high of the bars on either side of
the pin are the ‘eyes’ for the pin bar. Note that the open and close of the pin must be
within the left eye. For a nose pointing up, this means that if the high of the eye is
roughly at the 1.2175 level (as shown in Figure 1), then the open and close of the pin
bar must be below this level of 1.2175 (as is the case here). If the open/close is
outside of this level then it is not a real pin bar.
The pin bar means that the price is going to move in the opposite direction to where
the nose is pointing. In Figure 1 the nose is pointing up so the trader should expect
prices to move down.
A pin bar must:
• have open/close within the first eye,
• protrude from surrounding prices (‘stick out’ from surrounding prices); it
cannot be an inside bar.
A good pin bar has:
• a long nose (and a long nose relative to the open/close/low),
• a nose protruding a long way from the prices around it (it ‘sticks out’),
• the open / close both near one end of the bar.

USEFUL STATISTICS

2009-08-02T09:48:00.004+08:00

Today I will show you how to set the targets depending on the Movement of each pair by using the following table: -

Pairs average movement
SR PAIR HOUR 4 HOUR DAILY
1 AUD/JPY 14 26 83
2 AUD/USD 11 26 75
3 CAD/JPY 17 33 77
4 CHF/JPY 13 27 88
5 EUR/CHF 8 26 62
6 EUR/GBP 5 12 55
7 EUR/JPY 17 37 114
8 EUR/USD 18 42 114
9 GBP/CHF 24 45 110
10 GBP/JPY 28 57 195
11 GBP/USD 22 51 142
12 NZD/JPY 17 32 76
13 NZD/USD 14 30 64
14 USD/CAD 15 32 94
15 USD/CHF 16 39 153
16 USD/JPY 15 36 113

 Benefits of using the above table: -
1- For example we can set our targets as follows: -
Aud/jpy the target will not be less than 26 pips (4 hours) and not more than 55 pips (4 hours+daily/2).
2- If we are thinking to enter the market on a specific pair we have to look for the last movement of the day and compare it with the table if the pair is still in the beginning stage that means we have more chances to achieve our targets.
3- We can rely on the 4hours movement for all the pairs as a suitable target for the daily trading.

Forex trading basics

2009-06-13T21:54:00.000+08:00

Forex Market Basics

The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.

What to trade in Forex Market?

In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.

Understanding Forex quote

Base currency: The first currency in the pair.
Counter Currency: The second currency in the pair. Also known as the terms currency.

The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.

BID and ASK Prices

When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).

Commission-free, but with spreads

Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.

Rollover - What happens to my open positions at the end of the trading day?

Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.

Leverage & Margin

The leverage available in forex trading is one of main attractions for many traders. Leveraged trading, or trading on margin, simply means that you are not required to put up the full value of the position. Forex brokers provide more leverage than stocks or futures. In forex trading, the amount of leverage available can be up to 400 times the value of your account.

What is Forex ?

2009-06-13T21:52:00.000+08:00

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

FOREX 4 FRESHIES

2009-03-22T15:14:00.000+08:00

This blog is intended for forex starters only.
Share your views and any information about forex.
For experienced forex individuals, you are welcomed to contribute and share your expertise.

See you on top

Warning:-
Forex is very risky.Before you decide to invest in forex, equip yourself with the neccessary knowledge to better understand the pros and cons about forex investment.