FOREX EDUCATION THE EASY WAY

Forex Trading Robots

2012-07-12T18:34:00.001-07:00

www.facebook.com/diosforex It is very important for anyone getting into the Forex trading market to have a good understanding of what Forex robots are and how they work. Forex robots are like advisors; they are bits of software that actually open and close trades which are on the foreign exchange market in accordance with current conditions on the market. Robots are good because they take out the need for a person to stick to their strategy; this is an important factor when it comes to success and something many people have a hard time with. With the use of a Forex robot, a plan is executed without second thoughts or double guesses. This is something that a lot of people struggle with and that can be detrimental to their success.

The Forex software is able to be programmed to search out trades which show a potential for winning in a selection of currency crosses. The software will also analyze minute changes and use the information in order to identify any trends affecting the pricing movements. When trends are found, the Forex software will be able to place a trade automatically through the traders account. The trade will then be constantly monitored until a profit is recognized. The software will then close out the trade with no regards as to whether the market is rising or falling. This is where the Forex robots are very helpful when it comes to taking emotions out of the equation.

Basics of Forex

2012-07-12T18:27:00.003-07:00

Just as with any market, the idea is to buy when the market is low and sell when it is high. This is how profits are made, but knowing what and when to buy and sell can be a very technical and difficult thing for someone without enough understanding and knowledge. In Forex, the goods that are being traded on this market are actually rates of currencies from different countries. These currencies have their own prices, just as any other type of goods does. In order to settle transactions which take place between businesses that are located in different countries, banks worldwide execute currency trades on the Forex market. The market is constantly changing and this means traders need to know how to understand everything taking place in order to make good decisions. People who are new to Forex trading will have their work cut out when it comes to learning everything they should know in order to see success and make it well worth their while. It is a very bad idea for someone to jump into Forex without the knowledge necessary to have a clear understanding of everything involved. Many people think they have just found the golden key to success and jump in too soon only to walk away only to experience financial devastation.

Online Forex Basics

2012-07-12T18:26:00.000-07:00

Forex Common Chart Indicators

2012-07-08T19:54:00.001-07:00

Common chart indicators in the Forex trading system are used by Forex traders as tools to help evaluate the market and minimize trading risks. There are several common charts that are read and evaluated by Forex traders to help them make knowledgeable trading decisions in the market. The charts include Bollinger Bands, MACD, Parabolic SAR, Stochastics, and Relative Strength Index, or RSI.

Bollinger Bands are common charts that are used to measure the volatility of the market. These bands act as mini resistance and support levels. Two trading strategies that involve the Bollinger Bands are the Bollinger Bounce and the Bollinger Squeeze. The Bollinger Bounce strategy goes with the idea that the price generally always returns to the center of the Bollinger Bands. The Bollinger Squeeze is a trading strategy that is utilized to catch breakouts early in the game. Bollinger Bands are best used in markets that are ranging.

MACD

is used to catch trends early on and can also help traders to spot trend reversals. The MACD is made up of two moving averages, one slow and one fast, and a histogram, which consists of vertical lines that measure the distance between the two averages. Because of the fact that the MACD uses so many moving averages, there is a lag involved.

Parabolic SAR

is an indicator that spots trend reversals, and the SAR stands for Stop And Reversal. This common chart indicator is the easiest of them all to interpret, because this indicator only gives signals that are bullish or bearish. The candlestick chart is used with this indicator, and when the dots are above the candles it is a signal to sell. If the dots on the chart are below the candles, it is a signal for the trader to buy. This common chart indicator is used best in trending markets that consists of downturns and long rallies.

Stochastics

are common chart indicators that are used to indicate oversold and overbought conditions. When the moving average lines go above seventy it is an indication to the trader to sell because the market is overbought. When the lines are below thirty, traders are looking to buy because this means the market is oversold. Relative Strength Index, or RSI, is like stochastics because it indicates conditions of overbuying and overselling on the market.

Each common chart indicator has strengths and weaknesses. Smart traders use at least three or four of these indicators to gauge which way the market is going. Common chart indicators can be a valuable tool for Forex traders if they are analyzed correctly.

Forex Trading Moving Averages

2012-07-08T18:19:00.002-07:00

Another very useful tool that is usually found in all the Forex platforms toolbox is the moving averages options. Needless to say a moving average is a trending line that helps you gauge the market direction and the market main movements as it is being developed. As always, these tools help you make sure you are on the right track but should not be used in isolation to determine an entry in a trade unless extensively studied and well educated about these tools potentials.

In Forex moving averages are also known as rolling averages, for the meaning of a running average. This is a sum that continues to develop as it progresses during the trading session and will change direction all the time during your trading session.

Moving averages in Forex are usually either ‘simple’ or ‘exponential’ as the most common although other variations namely weighted moving average and cumulative are also used but a little bit less, we shall get into an overall understanding in order to help you understand a little bit more their use and application in your trading plan. When applied a Forex moving average tries to clean as much market noise as possible to help the trader identify the main market movement rather than the occasional market spike. You can use moving averages in Forex to identify reversals, trend ending or trend starting patterns. As already told, usually you do not have to learn how to draw or create the lines yourself as most modern trading platforms would have these tools made available to you as a click, where all the lines are drawn for you to maximum accuracy and perfection.

Understand that Forex moving averages are used in conjunction to a timeframe and you need to usually use higher timeframes in order to understand strong patterns rather then just smaller market moves which might be insignificant to the trade. Smaller timeframe decisions sometimes can result into exiting early from a potential trade that would be going where your research had planned! Make good use of moving averages when trading Forex and apply them to your trading strategy, remember to always back-test in order to get familiar with the tools before entering any live trades.

Market Analysis and Fibonacci

2012-07-08T17:51:00.000-07:00

Technical and fundamental analysis are based on the assumption that things have happened in the past will often indicate what will happen in the future. Fundamental analysis depend on the past underlying financial performance of a company or industry to make forecasts while technical analysis will look at past stock price movements for the same purpose. From that perspective you can imagine fibonacci analysis as the technical equivalent to the fundamentals of discounting cash flows or projecting financial ratios. Fibonacci analysis is a way to forecast levels of support and resistance and project price targets. It can be used to set stops as well as timing entries, however, the most valuable information is what it can tell us about risk. In this lesson we will be introducing a few of the tactical concepts and tips you will need to understand these tools and begin using them as a technical analyst. Through the subsequent sections in this lesson we will examine several case studies to understand how these ratios work in the live market and why they are considered one of the most important tools available to technical analysts.

Fibonacci Concepts

What are the ratios and how are they used?

I will spare you the long, historical (and mostly erroneous) explanation of where the Fibonacci ratios come from and how it appears in the natural world except to say that fibonacci analysis is based on the fibonacci number series and the Fibonacci ratios, which are then applied to price charts. While there are many Fibonacci ratios, in my experience, it is sufficient to stick with the standard levels of 23.6%, 38.2%, 50%, 61.8%, 100% and 161.8%. Slicing these levels into thinner segments results in a crowded chart and probably won't improve your analysis.

How are fibonacci ratios calculated?

The ratios are based on the distance between fibonacci numbers. If we use three numbers from a simple fibonacci series (1,1,2,3,5,8,13,21,34,55...) you can see how this works in the examples below. 1. (34-21)/34 = 38.2% 2. (34-21)/55 = 23.6% 3. (34-21)/21 = 61.8%

Where do the lines go?

The sticky part of fundamental and technical analysis is that they are both very subjective, which means that they allow for a great deal of interpretation and individual preference. However, with Fibonacci analysis that subjectivity is easy to handle

Bodies or shadows?

There is always a minor debate about whether you should anchor your Fibonacci retracement to the body of a candle or the shadows. I prefer to use the shadows so that the study includes the extremes of market sentiment. Most of the time, the difference is insignificant but sometimes it can be critical. In the examples above you can see that I anchored the Fibonacci retracement to the shadows of the candles at the top and bottom of the trend.

Support and resistance lines or areas?

I feel that support and resistance is more often an area around the Fibonacci lines than a specific to-the-penny point in the charts. You will find that prices move around a support or resistance line, especially during a consolidation. Discounting that level because of a temporary break may lead you to ignore a valid signal in the future. In the examples I will use in this lesson I will show how to evaluate that support and resistance area and how to use it to be aware of risk as well as opportunities.

What is Support

2012-07-07T14:31:00.000-07:00

Support level is defined as the price level at which point the demand level is strong enough to stop the trading price from declining further. When prices reach this support level it is more likely to bounce off this level, than to break through this level. The support level indicates the point at which the trading price becomes cheaper and traders become more interested in buying, giving way to a support level where sellers become less interested in selling. When prices reach the support level it is proved that the increase in demand will outweigh the supply and prices will be stopped from falling below the level of support. When prices decline below the level of support, there is an indication of new willingness to sell. This may also be the case if there is a new unwillingness to buy. Once the level of support breaks, the cycle will repeat from the start – A decrease in price will awake new interest in buying and a new level of unwillingness to sell -giving way to a new level of support This will form the new lower-level support level. Support trading can usually be found below the current price, but it is not impossible to trade at or very near support. Support levels are not always easy to identify due to various factors. Price movement is by nature volatile and prices may briefly dip through the support level, before returning upwards. Predicting the point, at which a price is considered to be breaking through the support line, comes with experience and research. Some will only consider this breakpoint if the price closes 1/8 below the current established support level.

What is “Resistance” and “Resistance Level”?

Resistance level is defined as the level at which selling is considered strong enough to hamper the price from increasing any further. The level of resistance theory defines that as a price moves towards resistance, sellers become more willing to sell, and buyers in turn become more unwilling to buy. When the price reaches the level of resistance, supply will outweigh demand and the price will be prevented rising through the resistance level. A break above the resistance level predicts a new willingness to buy and a new lack of interest in selling. Resistance will not always be strong enough to hold and a breakout might not always be able to break. The bulls must win the bears over before a breakout can be formed. Once the current resistance level has been broken through, the process will repeat and a new higher level of resistance is establishes. We hope you have found our article on support and resistance trading interesting and that you will now be more confident about support and resistance analysis. Feel free to browse our website for more informative articles on support and resistance trading.

Forex Support and Resistance in Technical Analysis

2012-07-07T14:20:00.001-07:00

Support and resistance analysis forms part of technical analysis and dictates that price movement will tend to stop and reverse at predefined price levels.Support and resistance analysis defines major junction points where variations in supply and demand meet. Let’s take a deeper look into elements of support and resistance trading.

Forex Trading Plan

2012-07-06T20:47:00.001-07:00

Having a forex trading plan and keeping a trading journal is essential to anyone serious about trading currencies. In order to learn from past mistakes and to ensure that you consistently execute your traders based on analysis rather than intuition and emotion you need to journal your trades and regularly study your own track record.

Tree Most Importance Types of Charts

2012-07-04T06:45:00.000-07:00

I know you no more about chat but Let's take about the three most importance popular types of charts:

Line Charts

Bar Charts

Candlesticks Chart

Line Charts

A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time.

Bar Charts

A bar chart is a little more complex. It shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price paid.

The vertical bar itself indicates the currency pair's trading range as a whole.

The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price.

Candlesticks Charts

Candlestick chart show the same information as a bar chart, but in a prettier, graphic format. Candlestick bars still indicate the high-to-low range with a vertical line.

However, in candlestick charting, the larger block (or body) in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or colored in, then the currency closed lower than it opened.

Types of Orders in Forex

2012-07-04T06:32:00.000-07:00

Market order

A market order is an order to buy or sell at the best available price. For example, the bid price for EUR/USD is currently at 1.2140 and the ask price is at 1.2142. If you wanted to buy EUR/USD at market, then it would be sold to you at the ask price of 1.2142. You would click buy and your trading platform would instantly execute a buy order at that exact price. If you ever shop on Amazon.com, it's kinda like using their 1-Click ordering. You like the current price, you click once and it's yours! The only difference is you are buying or selling one currency against another currency instead of buying a Justin Bieber CD.

Limit Entry Order

A limit entry is an order placed to either buy below the market or sell above the market at a certain price. For example, EUR/USD is currently trading at 1.2050. You want to go short if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a sell market order), or you can set a sell limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class). If the price goes up to 1.2070, your trading platform will automatically execute a sell order at the best available price. You use this type of entry order when you believe price will reverse upon hitting the price you specified!

Stop-Entry Order

A stop-entry order is an order placed to buy above the market or sell below the market at a certain price. For example, GBP/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060. You can do one of the following to play this belief: sit in front of your computer and buy at market when it hits 1.5060 OR set a stop-entry order at 1.5060. You use stop-entry orders when you feel that price will move in one direction! Stop-Loss Order A stop-loss order is a type of order linked to a trade for the purpose of preventing additional losses if price goes against you. REMEMBER THIS TYPE OF ORDER. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order. For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 the best available price and close out your position for a 30-pip loss (eww!). Stop-losses are extremely useful if you don't want to sit in front of your monitor all day worried that you will lose all your money. You can simply set a stop-loss order on any open positions so you won't miss your basket weaving class or elephant polo game.

Trailing Stop

A trailing stop is a type of stop-loss order attached to a trade that moves as price fluctuates. Let's say that you've decided to short USD/JPY at 90.80, with a trailing stop of 20 pips. This means that originally, your stop loss is at 91.00. If price goes down and hits 90.50, your trailing stop would move down to 90.70. Just remember though, that your stop will STAY at this price. It will not widen if price goes against you. Going back to the example, with a trailing stop of 20 pips, if USD/JPY hits 90.50, then your stop would move to 90.70. However, if price were to suddenly move up to 90.60, your stop would remain at 90.70. Your trade will remain open as long as price does not move against you by 20 pips. Once price hits your trailing stop, a stop-loss order will be triggered and your position will be closed.

Advantages of Forex

2012-07-02T04:06:00.000-07:00

When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. 1.The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. 2.To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.3

Intrudation to Forex

2012-06-30T04:19:00.000-07:00

Financial market is a mechanism that allows people to easily buy and sell (trade) market instruments at low transaction costs and at prices that reflect efficient markets. Financial markets have evolved significantly over several hundred years and are undergoing constant innovation to improve liquidity. If you believe value of a market instrument is going to increase, then you would buy the instrument and at one point in the future you would sell it for a higher price. This is the basic motivation for trading on financial markets.

Forex Trading History

2012-06-29T07:42:00.001-07:00

The forex is unique among financial markets in a number of ways. One of these is that it was not traditionally used as an investment vehicle. It had, and still maintains to some extent, a somewhat more utilitarian purpose. In today’s globalized economy, most businesses have some international exposure, creating the need to exchange one currency for another in order to complete transactions. For example, Honda builds its cars in Japan and exports them to the United States, where an eager American buyer exchanges his dollars for a brand new Honda. Some of this money has to make its way back to Japan to pay the factory workers that built the car, but first those dollars have to be exchanged for Japanese yen, since that is the currency the Japanese factory workers are paid in. Transactions such as this are facilitated by international banks and are done through a mechanism known as the foreign exchange market, or forex. Since banks are used to facilitate these cross-border transactions, they naturally want to be paid for their services. This payment comes in the form of a bid/ask spread – offering to buy the desired currency at a slightly lower price than they are willing to sell it at, and pocketing the difference. Considering the fact that more than $3bn moves through the forex market daily, these seemingly small fees can add up to a significant sum.

What is Traded

2012-06-29T07:27:00.000-07:00

A cash commodity must meet three basic conditions to be successfully traded in the futures market: It has to be standardized and, for agricultural and industrial commodities, must be in a basic, raw, unprocessed state. There are futures contracts on wheat, but not on flour. Wheat is wheat (although different types of wheat have different futures contracts). The miller who needs a wheat futures to help him avoid losing money on his flour transactions with customers wouldn't need a flour futures. A given amount of wheat yields a given amount of flour and the cost of converting wheat to flour is fairly fixed. hence predictable. Perishable commodities must have an adequate shelf life, because delivery on a futures contract is deferred. The cash commodity's price must fluctuate enough to create uncertainty, which means both risk and potential profit. THESE SIMPLE MEANS CASH. Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country, kinda like buying stocks of a company. The price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy. When you buy, say, the Japanese yen, you are basically buying a "share" in the Japanese economy. You are betting that the Japanese economy is doing well, and will even get better as time goes. Once you sell those "shares" back to the market, hopefully, you will end up with a profit. In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to other countries' economies. By the time you graduate from this School of Pipsology, you'll be eager to start working with currencies.

Definition Of Trader Meaning What Is Forex?

2012-06-28T11:19:00.001-07:00

A basic economic concept that involves multiple parties participating in the voluntary negotiation and then the exchange of one's goods and services for desired goods and services that someone else possesses. The advent of money as a medium of exchange has allowed trade to be conducted in a manner that is much simpler and effective compared to earlier forms of trade, such as bartering . In financial markets, trading also can mean performing a transaction that involves the selling and purchasing of a security. If you've ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet (if you're a dude) or purse (if you're a lady) or man purse (if you're a metrosexual) into the currency of the country you are visiting. You go up to the counter and notice a screen displaying different exchange rates for different currencies. You find "Japanese yen" and think to yourself, "WOW! My one dollar is worth 100 yen?! And I have ten dollars! I'm going to be rich!!!" (This excitement is quickly killed when you stop by a shop in the airport afterwards to buy a can of soda and, all of a sudden, half your money is gone.) When you do this, you've essentially participated in the forex market! You've exchanged one currency for another. Or in forex trading terms, assuming you're an American visiting Japan, you've sold dollars and bought yen. Before you fly back home, you stop by the currency exchange booth to exchange the yen that you miraculously have left over (Tokyo is expensive!) and notice the exchange rates have changed. It's these changes in the exchanges rates that allow you to make money in the foreign exchange market. The foreign exchange market, which is usually known as "forex" or "FX," is the largest financial market in the world. Compared to the measly $74 billion a day volume of the New York Stock Exchange, the foreign exchange market looks absolutely ginormous with its $4 TRILLION a day trade volume. Forex rocks our socks! Let's take a moment to put this into perspective using monsters... The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of about $74 billion each day. If we used a monster to represent NYSE, it would look like this...