Forex Signal Indicator | Forex Trading System

Forex Strategy - simple indicator

2009-11-07T20:08:00.006+07:00

Simple indicators forex strategy works well on the range of M15, the currency pair can be any; On the schedule for the chosen currency pair, you must install the indicators for forex trading terminal Metatrader 4:

1) Indicator - Heikin ashi
2) Exponential Moving Average - EMA (5), close - the color blue
2) Exponential Moving Average - EMA (8), open - the color green
3) Indicator - Dinapoli stoch (8,3,3)
4) Indicator - Momentum VT (10)
5) Indicator - QQE Alert v3.

All the necessary indicators, together with a template for MT4 can be downloaded at the end of this strategy forex.

Entering the market for BUY - if all the following conditions:

1) Exponential Moving Average EMA (5) and EMA (8) crossed up.
2) Indicator Dinapoli stochastic just crossed paths up (blue line crossed the red bottom-up)
3) Indicator MomentumVT (10) is above its zero level.
4) Indicator QQE arrow drawn up (possibly even a few bars earlier).
5) bar is painted in white.

Entering the market needs to produce the next candle after all conditions to the transaction.

Closure of a trading position - as the only indicator QQE alert and moving averages EMA (5) and EMA (8) are fed back trading signals. But since they rarely ring the trading bell at the same time, then close the deal, only in cases where 2, these signals were received.

---- by ; ForexStrategies ------

Forex ; Keltner Channel Indicator

2009-11-04T08:38:00.005+07:00

Keltner channel is a popular indicator for analyzing trends and for finding trend changes. The indicator was introduced by Chester W. Keltner in 1960

Definition:
The Keltner Channel has two bands drawn above and below an exponential moving average, and is based on Average True Range.

Average True Range is measured by taking a moving average of the greatest value of (a) the distance between this period's high & low, (b) the distance from last period's close to this period's high or (c) the distance from last period's close to this period's low.

Peaks in ATR indicate potential trend reversals after panic selloffs or frantic buying, valleys can indicate consolidations.

The Keltner Channel uses the ATR calculation as values for the bands.

Formula:
The formula for the upper band of the Keltner Channel is to take twice the value of a 10-period ATR and add it to a 20-period exponential moving average. The formula for the lower band subtracts the same value from the 20-period EMA.

Interpretation:
The Keltner Channel is typically used to ride upward and downward volatility. When the price spikes above the upper band it can be considered a buy signal until the close for the period evaluated falls below the upper band. Conversely, when the price dips below the lower band it can be considered a sell signal.

Because the Keltner Channel is meant to take advantage of volatility swings and is a trend following indicator, it typically does not work well in sideways markets but works better in taking advantage of breakouts within in an estabished trend.

As with all band indicators, most traders looks for confirmation from other technical inidcators.

Forex trading can extend debt help and make you debt free

2009-10-28T01:57:00.007+07:00

Your fight against debt is half won if you can identify the cause of your financial instability and if you know what debt help option will set it right. This is because if you are not aware of the reason that is making you fall behind on payments, you cannot strike in dark. It will be an aimless battle against debt. This is because you won’t know what to fight against.

So, as soon as you sense an approaching financial trouble, take it in your stride. Have you ever wondered how forex trading and debt are related? This is also true in case of stocks. Whether you have included stocks or forex trading in your investment portfolio, your investments can serve as an effective debt help option. Let’s see how.

When you are in debt, you tend to explore all possible ways to get out of debt. You will undoubtedly get to know the debt solution that will help you to get out of debt. This is because availing a debt relief option is now a financial option that every household is aware of. And it won’t be wrong to say that the debt help clinics are doing brisk business and helping many debtors get out of debt in the process. But beware of scam artists. They are operating in the debt help industry too.

When you enroll for one of the debt relief programs, you are required to make payments to the creditor. So, whether it is a debt consolidation program, debt settlement program, debt management or DMP, the amount you earn from forex trading can make your debt payments affordable.

Forex trading offers a good way of investing your hard earned cash. And if you have experience in trading currencies, it is still better. However, even if you don’t have sound knowledge in trading currencies, you can always seek professional assistance. There are many forex brokers that can help you in this regard.

Make sure if you have some extra cash, you can use the same for building an emergency fund. It is important to have an emergency fund that you can fall back upon when you are facing a financial crisis. At least you can avoid using your plastic money for making payments for your grocery and utility bills.

---- by: Robin Williams -------

Forex Technical Indicator - Momentum

2009-10-28T01:31:00.005+07:00

"Momentum" Technical Indicator
An Indicator which measures amount of the financial instrument price change for a certain period is called the Momentum Technical Indicator. There are two main methods of the Momentum indicator usage:

An Indicator which measures amount of the financial instrument price change for a certain period is called the Momentum Technical Indicator. There are two main methods of the Momentum indicator usage:

As a trend-following oscillator, similarly to Moving Average Convergence/Divergence MACD. A signal to buy occurs when the Momentum indicator forms a trough and starts its growth; a signal to buy occurs when the Momentum indicator reaches its peak and turns down. For more exact calculation of the indicator`s reverse its short moving average is used.

The Continuation of the current tendency is determined if the Momentum indicator has either very high or very lower values. If the indicator reaches high values and then turns down further prices growth is expected. But, in any case, do not hurry to open (close) position until the prices prove the indicator`s signal.

As a lending indicator. This method is based on the supposition that the final phase of the uptrend are usually accompanied by the high increase of prices (because everybody believes in it continuation) and completion of the bullish market by the rapid fall of the prices (because everybody tries to leave the market).

When the market is closed to the top it is accompanied by the rapid break of the Momentum indicator. Then the indicator starts to fall while the prices continues to rise and move horizontally. In the market bottom the Momentum falls suddenly and then turns up long before the prices start to rise. In both cases divergences occur between the indicator and price

Calculation

Momentum is calculated as a ratio of today`s price to the price several (N) periods ago.

MOMENTUM = CLOSE(i)/CLOSE(i-N)*100

Where:

CLOSE(i) - is the closing price of the current bar;

CLOSE(i-N) - is the closing bar price N periods ago.

Forex Scalping Strategy

2009-10-25T11:33:00.005+07:00

Pattern Scalping Strategy..Part IV - Flags Pattern...
This article is part of our guide on how to use scalping technique’s to trade forex
Many scalpers prefer to exploit range patterns as they present quiet, tame conditions where various strategies can be utilizied without the danger of large losses which would arise in conditions of high volatility. Scalpers who thrive in these conditions have no great expectations from individual trades, and are perfectly content with unexciting, slow markets where “nothing is going on”, from the point of view of a trend follower. In spite of the brief lifetime, and small profit of individual trades, great gains are realized as profits of several hours are combined at the end of the trading day.

In this fifteen minute chart of the USDCHF pair we observe a strong hourly trend only briefly interrupted by the highlighted flags. Although the formations are not perfect, they are perfect as continuation patterns, and present quite, subdued periods where the scalper can test his skills. Of the three flags highlighted in this chart, the first and the third are the tamest, and the easiest to exploit. In both of these the price moves up and down in a simple range, and doesn’t possess directionality.

How does the trader exploit this situation? In essence we’ll regard the flags as small range patterns the upper and lower bound of which can be used as trigger points telling us to reverse the direction of our trade. When the price rises and approaches the upper edge of the flag, we won’t trade, but wait until it is reversed and a sell order is possible (we don’t want to enter a sell order immediately because of the possibility of a breakout). After that we’ll enter and exit small and quick sell orders trying to exploit the established range pattern. Conversely, when the price falls and touches the lower bound of the flag pattern, we’ll wait until it begins to rise again, and then we’ll scalp the market with buy orders.

It is quite simple and easy to scalp the market when there are flags appearing. But flags are very strong continuation patterns, and we must be careful not to get caught in the breakout when the flag pattern dissipates and gives way to the momentum of the main trend.

Triangles can be traded in the same manner as well, and any consolidation pattern can be used for scalping within the range established. As we mentioned before, the rules of range trading can be applied, along with the appropriate strategies, while using the necessary risk controls inside the preferred brief time frame of scalpers.

---- by; forextraders -----

Forex Scalping Strategy

2009-10-24T12:18:00.003+07:00

Pattern Scalping Strategy..Part III - Range Patterns...
This article is part of our guide on how to use scalping technique’s to trade forex
Most scalpers try to benefit from price patterns in trading the markets.
A scalper trading a range pattern will try to identify the time periods and price patterns where activity is most subdued, and will exploit them for profit. We have already discussed some of the general concepts in trading ranges, here we’ll try to apply them in greater detail.

Price charts are similar to fractals. They are self-similar at multiple time periods, with a price range at 30 minutes sometimes accompanied by a trend on a 30 second chart. While trading ranges scalpers must keep both the hourly, and the minutely price events in mind. We’ll use hourly charts to ensure that overall activity in the market is subdued, while using the short term price action to identify and trade profitable periods.

The hourly chart of the USDCHF pair presents an interesting scenario for scalpers. A large hourly range lasting for a number of days is coupled to fairly strong directional movements requiring some trend following skills for successful exploitation.

At this stage, observing the price action in the chart, we must ask ourselves the question: can we determine the severity of short-term volatility by examining charts which show long term activity? The answer is no. Although we can determine the ultimate direction of short term price movements by examining long term charts, volatility on an hourly chart, for example, does not need to be duplicated on a short term chart exactly. The price may move 100-pips in the course of an hour, and the chart would show a large green candlestick, but all that large movement could have happened in the last ten minutes of trading, with the previous fifty minutes presenting choppy, and boring conditions. In other words, the scalper must concentrate on the time period before him, especially if he is aiming to exploit random price movements that go nowhere (as in range trading), in contrast to scalping a strong directional trend. In the latter, the perspective provided by long term charts may be helpful, but in range scalping utmost attention must be devoted to the 1-minute, 5-minute graph which is being traded.

In the graph above the price is confined between 1.0654, and 1.0741. The three red arrows show us the opportunities where we can be confident that the range will hold: when the resistance line is tested for the third time, we will consider this an opportunity for sell-side scalping. When, at around 27th July 5 am the price rebounds from the support line for a second time, and later for a third, we’ll regard the market conditions as being ideal for establishing long positions repeatedly.

Forex Scalping Strategy

2009-10-22T11:10:00.008+07:00

Pattern Scalping Strategy..Part 2 - Technical Breakouts...
This article is part of our guide on how to use scalping technique’s to trade forex. What we term a technical breakout is the case where a range breaks down without any obvious news catalyst. News are released continuously all over the world during the trading day, and although it is often possible to tie a piece of the price action arbitrarily to a piece of news being released somewhere in the world, it is not always practical to identify what causes what in the chaotic trading environment with any certainty or exactitude. These seemingly inexplicable, sudden and difficult to predict breakouts will be termed technical breakouts in this text.

Scalping this kind of breakout requires a lot more conservatism in comparison to the scalping of the usual news breakout. There is very little clarity as to what is causing what, and a market that is up may soon reverse and go down with little or no warning. To avoid being caught up in the chaos of such conditions, it is a good idea to use even smaller trade sizes, sensible stop-loss orders,

In this chart we see the hourly movements of the USDJPY pair confined between 94.02 and 94.71. The highlighted area shows the region we would like to trade. Since the established range rests between support and resistance levels which are tested only twice, we would not have had the opportunity to trade the range itself developing on 28-29 July for profit, using scalping or any other method. On the other hand, we are ready to do some scalping in order to exploit the breakout which occurs at around 7 am on 29th July.

The volatile nature of breakout is demonstrated by the green candle next to the small red arrow on the chart where we see observe the closing price of the bar only slightly above the resistance line displayed. Scalping is suitable conditions such as these because scalpers do not need to think long and hard about the ultimate direction of the price. In the timeframe of a one or two hours, five, ten minutes, the price action is more or less random, and it is not very sensible to try to seek logical explanations for it. Scalpers can avoid doing so, and that is their advantage in breakout scenarios, and similar sudden and unpredictable markets.

While scalping this breakout, we’d use a chart with a shorter term, and not the hourly graph which we see above. Fortunately, the fractal nature of price charts allows us to trade a 5-minute chart in a way the same way that we trade a 5-month chart; the scalper only needs to apply the general rules of technical trading to the shorter time frame. The key issue is making sure that you’re on board the trend, or in harmony with the phase of the range pattern (up, or down) while scalping.

--- by; forextraders -----

Forex Scalping Strategy

2009-10-21T11:00:00.005+07:00

Pattern Scalping Strategy.. Part 1 - News Breakouts...
This article is part of our guide on how to use scalping tequniques to trade forex
Most scalpers try to benefit from price patterns in trading the markets. Those who like calmer markets choose to exploit formations like triangles and flags, while those who prefer trading the news tend to be active during breakouts. There’s no single type of market where scalping can be applied to best benefit, because there are many different kinds of scalpers. But there are some technical patterns which offer their greatest benefits to a scalping strategy, and those are the patterns which we’ll examine here.

First we’ll take a look at scalping during breakouts, and then study ranges.

News Breakouts

The most typical and significant breakouts observed on any trading day are those associated with important news releases, regardless of their nature. Volatility maybe caused by an unexpected government announcement, at other times a surprising result from a statistical release, and sometimes a mundane piece of data which the markets choose to interpret in an agitated manner. The characteristic of these events is a rapid rise in volatility: a strong initial movement which then has aftershocks, so to speak, lasting over hours and generating swings and fluctuations which are then exploited by scalpers. Scalping in the aftermath of news releases is different from scalping in stale, range bound conditions with respect to its stop-loss requirement, the average life of a trade, and the necessary risk controls.

Although this kind of scalping has some resemblance to fundamental trading, in fact it is a purely technical approach, and has little to do with the real nature or significance of the news or data releases. It is not possible to fully evaluate the meaning of a piece of economic data in the ten minutes where market reaction is most intense, and as such, there is no point in giving fundamental meanings to the market’s behavior during the same time period. This is especially the case when we consider that news releases are revised frequently, and sometimes drastically following the initial release.

In the above graph we have the hourly EURUSD chart and the highlighted region shows the immediate price reaction to the news release at 8 am, followed by its subsequent legs. As soon as the important piece of news was released the market generated a rapidly increasing momentum which never gave traders a chance to look back. The maximum value around 1.4290 was also the opening price of the hourly bar, and it was never revisited. It is easy to conjecture that soon after the release, and in the period immediately preceding it, spreads had widened significantly, and opportunities for scalping were limited. Yet, right after the news release liquidity came gushing back to the market, as traders hastened to readjust their positions. Favorable conditions for scalping would exist within about ten minutes after the news release.

The most important rule while exploiting a news breakout is to stay away from the market during the short period around the news release itself. Unless one is using automated tools for scalping, this brief period is too agitated, and chaotic to allow informed decisions. Worse yet, in the short term the brief but powerful widening of spreads makes technical planning an insurmountable task at times. Instead, a successful scalper will use this brief period to identify the possible direction of the market before entering positions in accordance.

In the example above, we’d be able to scalp the market for a four-hour long period, during the four red candles in the highlighted area. The best way to ensure against suffering losses in the volatility of this period is using a reasonably tight stop with a somewhat looser take-profit order. In example, if we open a short position at around 1.4250 during the third hour, with a 3-pip spread cost to be paid to the broker, we’ll place our stop loss at 1.4255, while our take profit order will be at around 1.4240. This would ensure a 2:1 risk-reward ratio for the position being maintained.

It is a good idea to add a time-stop to a scalping position as well. What is a time stop? This is a kind of stop order which will close a position once a certain period of time is reached, regardless of the amount of profit or loss involved (although of course, both the potential loss or profit are less than what would be indicated by the stop-loss or take profit orders). For example, in our previous example, we had placed our stop loss at 1.4255, while our take profit order was at 1.4240. When we add the time-stop to our initial order at, say, 2 minutes, we’ll close and exit our position two minutes after its opening regardless of the profit or loss involved in the trade.

Why do we use the time stop? We had defined previously that as scalpers we don’t want to be exposed to the markets for a long time. But the market does not need to listen to our expectations, and might as well refuse to hit both the stop-loss and take-profit points for a long of period (at least in the terms of the scalper). The longer we expose ourselves to market moves, the greater the risk of a sudden, sharp movement against our expectations. In order to prevent being caught in such an indecisive, but also dangerous market, we use to time stop as a safety valve allowing us to bail out of our positions if things don’t turn out as we had initially expected.

Scalping of news breakouts can be very profitable, because all the ideal conditions required by scalpers are present. The swift, large, moves which occur in the brief timeframe during which scalpers are willing to expose themselves to the market allow the formulation of profitable forex scalping strategies.

--- by; ForexTraders ----

Forex Indicator ; Fractal and Alligator

2009-10-14T21:45:00.008+07:00

Fractals
All markets are characterized by the fact that on the most part the prices do not change too much, and only short periods of time (15–30 percent) account for trend changes. Most lucrative periods are usually the case when market prices change according to a certain trend.

A Fractal is one of five indicators of Bill Williams’ trading system, which allows to detect the bottom or the top.

Fractal Technical Indicator it is a series of at least five successive bars, with the highest HIGH in the middle, and two lower HIGHs on both sides. The reversing set is a series of at least five successive bars, with the lowest LOW in the middle, and two higher LOWs on both sides, which correlates to the sell fractal. The fractals are have High and Low values and are indicated with the up and down arrows.

The fractal needs to be filtrated with the use of Alligator. In other words, you should not close a buy transaction, if the fractal is lower than the Alligator’s Teeth, and you should not close a sell transaction, if the fractal is higher than the Alligator’s Teeth. After the fractal signal has been created and is in force, which is determined by its position beyond the Alligator’s Mouth, it remains a signal until it gets attacked, or until a more recent fractal signal emerges.

ALLIGATOR
"Most of the time the market remains stationary. Only for some 15–30% of time the market generates trends, and traders who are not located in the exchange itself derive most of their profits from the trends. My Grandfather used to repeat: "Even a blind chicken will find its corns, if it is always fed at the same time". We call the trade on the trend "a blind chicken market". It took us years, but we have produced an indicator, that lets us always keep our powder dry until we reach the blind chicken market" ( "Bill Williams" )

In principle, Alligator Technical Indicator is a combination of Balance Lines (Moving Averages) that use fractal geometry and nonlinear dynamics.

*

The blue line (Alligator’s Jaw) is the Balance Line for the timeframe that was used to build the chart (13-period Smoothed Moving Average, moved into the future by 8 bars);
*

The red line (Alligator’s Teeth) is the Balance Line for the value timeframe of one level lower (8-period Smoothed Moving Average, moved by 5 bars into the future);
*

The green line (Alligator’s Lips) is the Balance Line for the value timeframe, one more level lower (5-period Smoothed Moving Average, moved by 3 bars into the future).

Lips, Teeth and Jaw of the Alligator show the interaction of different time periods. As clear trends can be seen only 15 to 30 per cent of the time, it is essential to follow them and refrain from working on markets that fluctuate only within certain price periods.

When the Jaw, the Teeth and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. As it sleeps, it gets hungrier and hungrier — the longer it will sleep, the hungrier it will wake up. The first thing it does after it wakes up is to open its mouth and yawn. Then the smell of food comes to its nostrils: flesh of a bull or flesh of a bear, and the Alligator starts to hunt it. Having eaten enough to feel quite full, the Alligator starts to lose the interest to the food/price (Balance Lines join together) — this is the time to fix the profit.

Gator Oscillator — Gator
Gator Oscillator is based on the Alligator and shows the degree of convergence/divergence of the Balance Lines (Smoothed Moving Averages). The top bar chart is the absolute difference between the values of the blue and the red lines. The bottom bar chart is the absolute difference between the values of the red line and the green line, but with the minus sign, as the bar chart is drawn top-down.

--- by ; metaquotes ------

Forex Trading Strategy

2009-10-12T08:32:00.004+07:00

Forex ; Tight stop timing with CCI
Today's challenge: how to exit a trade in time without leaving much on the table.
Today's system: reveals how to use CCI indicator to know where to pull the trigger and launch aggressive price chasing.

The idea is actually pretty simple, like all good ideas: we need to figure out when price gets "carried away" in a rapidly developing momentum and from that point we'll be looking to aggressively protect our gains while giving the market a chance to progress till it runs out of steam and inevitably reverses.

To illustrate the strategy I've chosen 15 min EURUSD and 30 CCI.
Please don't ask me, what would be the best settings for other pairs and other time frames, because like you, I don't know :). It can be figured out, however, quite easily with a few minutes work on any selected frame and pair. I encourage you to experiment! If you find a good combination, share it with other trader here..

Back to the point now:
On the screenshot below let's first take a look at Parabolic SAR (0.1, 0.1). In this example it represents a regular trailing stop trading: a trader simply places a trailing stop behind each new SAR dot, until finally the stop is hit.

(Click for a larger image)

Now we move to CCI.
We are interested in CCI when it goes above 100 (overbought) and below -100 (oversold). Before that we happily trail our stop with whatever indicator we have, in our example it is a Parabolic SAR.
So, after opening a trading position we are trailing our stop with SAR indicator, but then later there is a signal from CCI -> CCI hits 100/-100 mark. We react to it by abandoning our old trailing stop method/indicator and instead introducing a candle by candle trailing as illustrated on the screenshot above. Circled in purple are the moments when we switch from trailing stops by SAR to trailing stops by candlesticks (e.g. behind each newlyclosed candlestick). We do so candle by candle till we get stopped out.

That's it. We get stopped. There will be a new trade, another stop trailing until CCI signals that its time to limit risks and protect profits if any.
This exit strategy prevents emotional trading, stop guessing and other fears related to protecting profits while letting a trade run. It shows how to control the situation when market accelerates and/or prepares to reverse.

--- by; Edward Revy - FxStrtgRvl -----

Forex Trading System

2009-10-04T22:54:00.003+07:00

Forex ; Tiatomi System

SETUP
1 - 4 Hour chart (This system works best with GBP/USD, GBP/JPY)
2 - NonLagMa_v4, ? Filter=20, ? Color=1, ? ColorBarBack=0
SHI_SilverTrendSig
? Allbars=0, ? Otstup=30, ? Per=9.0, ? Don’t forget to change the colors also (0=blue-1=red)
FX Sniper’s Ergodic_CCI_Trigger
? pq=4, ? pr=8, ? ps=5, ? trigger=4

Entry
Enter long when :
1 – a blue dot appears
2 – the ergodic CCI crosses up the trigger line ( blue line crosses up the red one )
3 – NonLagMa color changes to yellow

Enter short when :
1 – a red dot appears
2 – the ergodic CCI crosses down the trigger line ( red line crosses down the blue one )
3 – NonLagMa color changes to yellow

Exit
When a new dot appears (red if you are long and blue if you are short). This method gives you mecanicals trades. Don’t hesitate to transform them into a discretionnay trade after because you can see
things that the system can’t. Sometimes, it will be the difference between a 30 pips trade and a 300 pips
trade. Once you move your stop to breakeven and add a trailing stop – you can’t wait alittle more time
to see what the market wants to give you.

Stop
In general, I look for previous daily Resistance-Support but I don’t have only one method for my stops.
You can also looks for the high or low of the previous bar.

Remarks
Price enter :
The price enter is the open price of the candle or bars where the NonLagMa is yellow.
Ergodic_CCI :
The signal is stronger when the FX Sniper’s Ergodic_CCI_Trigge is above 300 or under -300.
NonLagMa :
”The non-lag MA does turn yellow/non yellow while the current candle/bar is still forming … so i
wouldn’t enter a trade until the end of the current candle confirms that the yellow section doesn’t switch
back to a non signal. So remember wait till the candle is fully formed until entering a potential trade!!!!”Matrung (FF member).
What’s matrung says is right but it’s depend if you are agressive or conservative ! If you are agressive,
you can go when the non lag show for the first time a yellow line but if you are more conservative, like
matrung said, wait for the candle to be fully formed.
To be more conservative means less profit but also more safety.

The order :
I don’t take a trade when the cross happens before the dot or when the cross happens after the nonlag.
So, i wait for a dot then for the cross and then for the nonlag.
It doesn’t matter if the cross and the nonlag happen at the same time but like i said earlier, the cross
should never happen after the nonlag.

Forex Trading Strategies

2009-09-27T10:25:00.002+07:00

Forex Strategies - Ways to Enter a Breakout Trade
The forex breakout strategy is one of the most reliable and most common strategies that successful forex traders use. Especially in the current 2008-09 market with high volatility, breakout strategies have prevailed as being some of the most reliable.

However, there is more than one way to trade a breakout, of course. Some traders will enter a trade on a breakout and then hold the trade for more than a few days as a swing trade, if they believe a trend is forming in the direction of the breakout. Intraday traders will often take a breakout trade and actually use the breakout as an opportunity to scalp anywhere from 10 to 60 pips or so. Traders will enter the breakout trade at different times and will follow different rules of entry, exit and stop setting. However, nearly all successful traders will incorporate breakout strategies into their trading plans one way or another.

There is no “one correct way” to trade breakouts, of course, so you will need to discover which method is the best for your, personality, and the level of risk and patience you are able to provide while waiting for a breakout to occur!

First, let’s review what a breakout is. In general, a breakout is when a currency pair makes a move across a support or resistance point. It “breaks through” the support or resistance level.

In price action based trading (trading that does not rely on the over-use of technical indicators); there are 3 different ways that are recommended to identify and take a breakout trade:

1. Look for a period of consolidation in the currency pair, then enter during the consolidation phase. In my opinion, this is the most risky approach. When you enter a breakout during consolidation, you really do not know which way the currency pair will move. In my opinion, by entering during the consolidation phase, you are starting with just a 50% probability of getting the direction of the trade right. Then you have to add in the other factors such as setting a large enough stop loss which is another factor that can decrease the probablity of the trade going as expected. So all in all, in my subjective opinion, I would claim that this is one of the least preffered ways to take a breakout trade.

2. The second way is to determine the upper and lower points of the consolidation range. Then wait for the currency pair to actually break through one of the points. Then immediately, or after a very short time, get into the trade in the direction of the breakout. This strategy is less risky, in my opinion, because you have waited for some confirmation of the pairs’ direction. False breakouts can always occur; however, when you use this basic strategy along with setting appropriate stop loss, limit taking, and reversal rules, you can expect to increase your “win” ratio to 70% or even higher.

3. The third way I will mention is similar to method 2 above. Again, you start by observing the pair in a period of consolidation. Next you wait for it to break through one of its support/resistance points. However instead of taking the trade immediately upon the breakout, the trader will wait for a “pullback” and then take the trade in the direction of the breakout. The main concern I have with this method is the potential for “lost opportunity.” In other words, if momentum is really strong, the pair may not perform a “pullback,” and you would then miss a big move waiting for a better entry point.

I have a preference for which of the 3 methods I like to trade. This does not mean that my strategy is the best one for others. Take some time to implement the different ways of entering a breakout trade on a demo account and see which one fits your “trading personality” the best!

See Forex Indicator III - Our Blog Partner

Forex Trading Method - 9 EMA Entries

2009-09-20T00:57:00.006+07:00

Think about entries.
When your trading strategy says: enter on the cross of Stochastic lines, on the cross of MACD lines, when RSI comes from oversold/bought zone, when two moving averages cross, when divergence occur etc etc. When exactly do you enter?

Usually you would just visually double check that there is a signal from your indicator and then enter on the close of a signal bar.

Sometimes it will work, sometimes you would wish you have waited a bit more before entering.
Sometimes moving averages that produced a cross would straighten back or as I like to say "uncross", and you'll be left with a false signal and a losing trade. Same for Stochastic lines, which can cross multiple times before price actually decides to move in either direction. Things like divergence are even more difficult: at which point after you've spotted a divergence you are going to enter?

Here is my favorite and simple method. I use 9 EMA. After I get an entry signal from other indicators, I wait till a price bar Closes above 9 EMA to enter Long, or Closes below 9 EMA to enter Short. This method helps me to know when exactly I will enter, and so I have no second doubts about "acting now or waiting a bit longer".

Examples:

9 EMA Entry works on any time frame. I used to scalp on 5 min charts entering with 9 EMA, now I use it successfully for daily charts with the same good result.

Traders can use whatever Moving average they like: 5 EMA, 10 SMA etc. I like 9 EMA.
Besides entries, 9 EMA can also be used for exits, where the same principle works: once price Closes on the opposite side of 9 EMA, you exit. Note, that poking trough the Moving average without closing on the opposite side of it doesn't count, also doesn't count when price Closes right on the moving average.
Additional note: I use 9 EMA to time my entries. I do not trade 9 EMA alone, because it is vulnerable to
sideways choppy prices (just have a look at the last several candles on the first screenshot with RSI - candles dance back and forth around 9 EMA as the price moves sideways).
Hope you find this method useful for your Forex trading.

--- by; Edward Revy & Team -----

tags ; forex trading strategy, forex strategy, forex indicator, forex trading system, forex chart, forex signal indicator, forex momentum, forex e-book

Forex - Flag Patterns

2009-09-15T00:41:00.003+07:00

Flag Patterns in the Forex Market
When talking about flag patterns, it probably will remind many traders of wedges and triangles, actually there's no difference among them - they are short-term continuation patterns. For convenience, we'll call all these patterns as flag in the rest of the article. Flag is a sharp, strong rise/fall trend with several bars of sideways price action on much weaker trade followed by a second, sharp move to new highs/lows.

Flags, wedges and triangles can be categorized as continuation patterns. They usually represent only brief pauses in a currency pair. They are typically seen right after a big, quick move. The price then usually takes off again in the same direction. Research has shown that these patterns are some of the most reliable continuation patterns

Flags are short-term patterns that can last from 1 to 12 bars. There is some debate on the timeframe and some consider 8 bars to be pushing the limits for a reliable pattern. Ideally, these patterns will form between 1 and 4 bars. Once a flag becomes more than 12 bars or more, it would be classified as a rectangle.

A flag is a small rectangle pattern that slopes against the previous trend. For a bullish flag pattern, the flag would slope down; a break above resistance indicates that the previous advance is resumed. For a bearish flag pattern, the flag would slope up, a break below support indicates that the previous decline is resumed.

The biggest difference between flags and other patterns is that, flags (wedge or triangle) are usually too short in duration to have any real impact on highs and lows of the price. The price actions are confined within two parallel trend lines, while other patterns are not.

The following indications are important when identifying flags.

* Flag patterns occur when a market makes a very strong up /down trend in prices, followed by a pause or sideways trading for a few price bars; if the distance of the flagpole is limited, flag will be less typical.
* Do pay special attention to the slope of flags: if the slop is consistent with the trend, it's highly possible that it is not a continuation patterns, but an exhaustion of current trend, full of risk of reversion.
* The duration of flag. If the duration is longer than others in current trend, the trend is very near to the end; discretion is advised.

Forex ekpereHama

2009-09-07T14:25:00.004+07:00

after trying out hundreds of systems on both demo and real accounts for more than a year i found out that the secret of forex is KISS. since then i have been very succesful.
i will call this system ekpereHAMA because its a pimped version of HAMAPAD trading system, its quite simple looking but very accurate.

entry LONG

when MACD crosses the zero mark and at least one line has appeared up. The barchart should be above the tunnel and green.

exit when MACD goes below the zero mark or HAMA turns redand below tunnel.

TF is 1hr chart.

trade with small lot and stay in the market as long as possible.
short entries are the other way round.

---- SBJ ---- FxStrategyRvl ------

Forex Momentum Strategy ( momentum 1 )

2009-09-03T09:56:00.008+07:00

Momentum 1 is a short-term trend momentum strategy. Short-term means that this strategy can enter and exit several trades a day. It is a trend momentum strategy because it buys only when the Schaff Trend Cycle (‘STC’) is rising and sells only when the STC is falling. The strategy exits a trade when trend or price momentum slows down.
For example, MOM 1 will buy into an uptrending market as it accelerates. And it will exit that trade when the speed of the uptrend slows down. The reverse holds true for a sell trade. MOM 1 will sell into a downtrend as it accelerates. It will exit a sell trade when the speed at which prices are falling slows down.
Indicators used in this strategy & their inputs:
Schaff Trend Cycle - STC(5,7,13)
Simple Moving Averages – Two Lines, SMA(3) and SMA(5)
FXS Trend Oscillator - TrendOscl(2)
Trend
This strategy uses a fast moving Schaff Trend Cycle (‘STC’) on a 1-Hour Chart to indicate Trend. The STC moves between 0 and 100. Trend is the direction of the “fast” STC.
UP: Trend is considered to be UP when the STC is rising or at 100.

Chart 1. Momentum 1 uses three strategy indicators.
DOWN: Trend is DOWN if the STC is falling or is equal to zero.
Trade Entry
The strategy uses two fast moving Trade Entry indicators to fine-tune when to buy or sell: Simple Moving Averages – Two Lines and the FXS Trend Oscillator (‘TrendOscl’).
The moving averages are considered bullish when the faster black SMA(3) is rising and above the green SMA(5), and bearish when the SMA(3) is falling and below the green SMA(5).
FXS Trend Oscillator crosses above and below zero. The green ‘TrendOscl(2)’ line is bullish when it is above zero and rising. It is considered bearish when it is below zero and falling.

Chart 2. A Buy Entry occurs at 1.4186, at 8:00, when all three strategy indicators became bullish.
Here are the Buy Entry and Sell Entry rules:
BUY when Trend is UP and:
1. The black SMA(3) above the green SMA(5) and
2. The green Trend Oscillator line is above zero and rising
SELL when Trend is DOWN and
1. The black SMA(3) is below the green SMA(5) and
2. The green Trend Oscillator line is below zero and falling
Trade Exit
Various exit tactics are used, depending on how price could develop.
Profit Target:
1. Exit Buy Position if price trades at Key Resistance target and TrendOscl crosses below zero.
2. Exit Sell Position if price trades at Key Support target and TrendOscl crosses above zero.
Strategy Indicators Changes Direction:
If the Trend Indicator changes direction then exit the trade. If both of the Trade Entry indicators change direction then exit the trade.

Chart 3. Buy Trade exits after Trend changes to DOWN.
Exit a BUY Position if
1. Trend changes to DOWN

OR
2. Both Trade Entry indicators change to Bearish
Exit a SELL Position if
1. Trend changes to UP

OR
2. Both Trade Entry indicators change to Bullish.
Initial Stop Loss Order: Controls trade risk. Establish before the trade.

--- SBJ – by: Fx Strategy --------

Forex ; Acceleration Bands

2009-08-30T23:26:00.004+07:00

Acceleration Bands
Breakout outside Acceleration bands suggest a beginning of a strong rally or a sell-off.
Closing inside the bands afterward signals about the end of a rally or a sell-off.
Details
The idea behind Acceleration Bands indicator
Acceleration Bands principal use is in finding the acceleration in currency pair price and benefit as long as this acceleration preserves.
How to interpret Acceleration bands indicator
Acceleration bands are set as an envelope around a 20 period simple moving average on equal distance from it. Headley, the inventor of Acceleration Bands indicator suggests using them on weekly and monthly time frames to determine price acceleration breakouts (breakouts outside the bands).
When Acceleration Bands are used for smaller time frames, upper and lower bands are treated as levels of possible support and resistance.
How to trade with AB indicator
2 consecutive closes outside Acceleration Bands suggest an entry point in the direction of the breakout. Then position is kept till the first close back inside the Bands.
Acceleration Bands indicator on the chart

The formula for Acceleration Bands
Upperband = ( High * ( 1 + 2 * (((( High - Low )/(( High + Low ) / 2 )) * 1000 ) * Factor )));
Lowerband = ( Low * ( 1 - 2 * (((( High - Low )/(( High + Low ) / 2 )) * 1000 ) * Factor )));
Factor=0.001

----- SBJ ---- Fx indicators ----

Forex Tips and Strategy

2009-08-23T00:44:00.004+07:00

Forex Bullish & Bearish Divergence Pattern
Divergence is a term which often comes back in forex technical analysis, it occurs when the price of the underlying currency pair and the indicator move in opposite directions. A bullish divergence can predict future upturns, while a bearish divergence can predict future downturns. Currency traders make trading decisions by identifying situations of divergence, where the price of a currency pair and indicators, such as the MACD, are moving in opposite directions.

Bullish Divergence
Bullish divergence occurs when the price of the underlying currency pair makes a new low while the indicator fails to make a new low or heading higher suggesting the downtrend may be nearly over. When identifying bullish divergences, a currency trader will look for BUYING opportunities.

Bearish Divergence
Bearish divergence occurs when the price of the underlying currency pair makes a new high while the indicator fails to make a new high or heading lower suggesting the up trend may be nearly over. When identifying bearish divergences, a currency trader will look for SELLING opportunities.

Forex ; Continuation Patterns

2009-08-14T15:32:00.005+07:00

Forex Chart - Continuation Patterns
In the candlestick theory, there are two main patterns that are continuous, the Falling Three Methods and the Rising Three Methods.

Falling Three Methods
A long black black day will occur in a downward trend and be followed by three days of small real bodies that create a short upward trend. However, by the fifth day, the bears will step in rather strongly and cause the market to close at a new low rate. This small upward trend that occurs between two long black days reflects the consistent behavior of the investors taking a small break. This downward trend will usually continue for a time. It denotes a bearish trend and has a high rate of reliability.

1) The first day will be a long black day.
2) The second, third, and fourth days that follow will have small real bodies. The rates will remain within the range of the beginning day and will follow a brief period of an upward trend.
3) The fifth day is a long black day. When the market closes on this day, it will close at rates that are below the rates the market closed with on the first day.
Rising Three Methods
During an upward trend, a long white day will occur that is followed with three days in which small real bodies have fallen into a short downward trend. Again, this trend is indicative of the investors taking a small break. At the close of the fifth day, the market will close at a new high rate, this results when because the bulls have came in strong. This method also indicates a bullish trend and has a high reliability rate.

1) The first day will be a long white day.
2) The second, third, and fourth days that follow small real bodies. The rates reflect a brief downward trend, but still remain within the range that the market had on the first day.
3) The fifth day is a long white day. At closing time on this day, the market will have rates that are above those on the first day of closing.

Forex Trading Indicator

2009-08-11T08:30:00.004+07:00

Forex – Aroon Indicator
Trading with Aroon indicator involves the following signals:
AroonUp crosses AroonDown upwards — bullish signal.
AroonDown crosses AroonUp downwards — bearish signal.
AroonUp and AroonDown move in parallel lines — consolidation period.
Details
The idea behind Aroon indicator
Aroon indicator is a young one, developed by Tushar Chande in 1995.
Aroon was created to measure strength of a trend and potentials for its continuation as well as the quality and type of the trend: up-trend, down-trend or sideways moving market.
How to interpret Aroon indicator
There are two parts to the Aroon Indicator – two coloured lines: Aroon up (red line) and Aroon down (blue line).
The Aroon indicator scale ranges from 0 to 100.
There are 4 important levels to monitor when trading with Aroon indicator: 0, 30, 70 and 100.
The default time period for Aroon indicator is 25, on some panels - 14. But, it can be changed to, for example, 10-periods for shorter term trades or to 50-periods for longer ones.
How to trade using Aroon indicator?
1. When AroonUp crosses AroonDown upwards it is a bullish signal.
2. When AroonDown crosses AroonUp downwards it is a bearish signal.
3. When AroonUp and AroonDown move in parallel lines it suggest a consolidation period
AroonUp rules:
1. When AroonUp reaches the 100 level the uptrend is clearly strong; the closer it remains to the top the stronger the uptrend.
2. When AroonUp line fluctuates between 70 and 100 levels it suggests a Potential uptrend. The signal becomes stronger if at the same time AroonDown remains between 0 and 30 levels.
3. When AroonUp line fluctuates between 0 and 30 levels it suggests trend weakness and a possibility of a trend reversal.
Opposite true for AroonDown:
1. When AroonDown reaches the 100 level it suggests downtrend being strong; the closer it remains to the top the stronger the downtrend.
2. When AroonDown line fluctuates between 70 and 100 levels it advices on a Potential downtrend. The signal becomes stronger if at the same time AroonUp fluctuates between 0 and 30 levels.
3. When AroonDown fluctuates between 0 and 30 levels it suggests trend weakness and possible future trend reversal.
Aroon Indicator Formula
Aroon(up) = ((total number of periods — number of periods since highest close) / total number of periods) x 100
Aroon(down) = ((total number of periods — number of periods since lowest close) / total number of periods)) x 100
Aroon indicator shows how much time passed between the highest (up) or lowest (down) close since the beginning of a period (in percents).

Aroon Forex chart example

Conclusion
As market changes, traders adjust their trading approaches and methods from trend following to tools used during market consolidations. Aroon indicator helps traders to determine when to use a trend following indicators and tools and where to switch to oscillator like tools that work best in consolidating markets.

>>>>> See Aroon Oscillator CLick here >>>>

---- SBJ ---- by; FxIndicator -----

Forex Dynamic Momentum Index - DMI

2009-08-08T21:55:00.004+07:00

The Dynamic Momentum Index, or DMI, very much resembles the Relative Strength Index. The distinction is that the DMI uses inconstant time periods - from 3 to 30 - while RSI uses only the constant ones.
The inconstancy of the DMI time periods is restricted by the recent inconstancy of currency trading prices. The DMI is more sensitive to price changes when Forex prices are inconstant. When there are no fluctuations on Forex market, the DMI uses a greater number of time periods. During more active Forex trading markets while a smaller number of time periods are being used. Thus, the DMI depends on fluctuations more in the Forex market and demonstrates changes more quickly than the RSI.

---- SBJ --- by;ForexRealm -----

Forex Stochastic Momentum Index

2009-08-08T21:50:00.002+07:00

SMI was created by William Blau in January 1993 issue of Technical Analysis of Stocks & Commodities. The SMI demonstrates where the close is relative to the middle of the last high/low range, in comparison to the close relative to the recent low/high with the Stochastic Oscillator, which resembles the Stochastic Momentum Index.
It's an oscillator that shifts between -100 and +100 and can be a bit less inconstant than an equal period Stochastic Oscillator. The oscillator consists of 2 lines - the moving average of the SMI (red) and the SMI (blue). The SMI will be negative if the close is less than the middle point of the range. The SMI will be positive if the close is greater than the middle point of the range.
The SMI interpretation is in fact the same as that of the Stochastic Oscillator. The most ordinary way of using it is to trade from is to sell when the SMI rises above +40 and then returns to the point under that level and to purchase at the moment when the SMI decreases under -40 and then shifts back above it. Another trading sign is to purchase when the SMI shifts above the moving average, and sell when the SMI decreases below the moving average.
Usually before basing any trades on strict oversold or overbought levels it is better to qualify the trendiness of the market using an indicator, for example, R-Squared. Levels should provide the most effective results if indicators provide a non-trending market trades based on strict oversold or overbought.

Forex Trading System

2009-08-01T21:09:00.006+07:00

FOREX ; Ascending and Descending Trend

FOREX Ascending Anytime that the demand for currency exceeds the currency offered, the exchange rate on Forex grows. On the other hand, if the volume of currency for sell is less than the volume that participants are seeking to buy, the market rate falls. When the demand lasts for a long time, it causes a rate in growth and will lead to the market being saturated. From the time that offers exceed demand; the sales are decreased in rate.
Trend corrections are the movements that are directed against the direction in which the previous trend was headed. This movement doesn't surpass the previous trend. A trend is considered a phenomenon that will return prices to a correct channel and does not allow the movements in the market to deviate from the fundamental factors.
If participants will open long positions and when satisfied by the increase of an exchange rate sell with a purpose of profiting quickly, it is called an ascending trend. But, if the principal factors that have resulted in an increase in the demand for currency have not changed, it renews the buying of currency and increases the rate. Then that particular movement takes a direction.
There are two kinds of trend: ascending and descending trend.
Ascending trend - An ascending trend is any period in which exchange rates reach a higher value when compared to the previous rate. It's an upward gain in rates from the rate before it.
The bottom points of waves (local minima) join a direct line - trend line:

Example of an ascending trend

Forex Descending trend - Whenever the current rate of exchange depreciates, it is a descending trend. It is simply, when the rates value becomes lower.
Trend lines are drawn by connecting the highest peaks of local maximums for ascending rates and the local minimums for descending rates.

Example of a descending trend

When the trend lines form a straight, or more even line, it confirms that particular trend. One of the criteria for determining trend force is examination of breaks in the support or resistance levels. Any trend that receives a lot of resistance will be weaker. And, without support, the trend will eventually change in the future.
There are several general rules that are followed in defining trend force:
1) The longer a trend lasts, the stronger it becomes however there is still a limit.
2) When a trend begins abruptly and ascends or descends quickly, it's a strong trend.
3) If a trend line reflects a long, level line, it's very likely the trend will continue.
4) While an abrupt trend usually indicates a strong trend, they can also change abruptly.
5) No matter what the trend is, it will eventually slacken. High trends will eventually become lower and low trends will eventually rise.

---- SBJ --- FXRealm ----

Forex Trading Strategy

2009-07-31T18:07:00.002+07:00

FOREX Trend Following – 3 simple steps to catching big profits

If you want to catch the big profits in forex trading you need to trend follow forex trends which are longer term. Here we are going to give you a 3 step simple method which if you use it correctly, will help you catch every major forex trend and lead you to long term currency trading success.

Most novice traders don't bother trying to trend following forex longer term - instead they try forex scalping or day trading. These methods focus the trader on small moves and they hope to catch small profits however as most short term moves are random, this leads to equity wipe out.

The other choices are swing trading and long term forex trend following and this article is all about the latter method. If you look at any forex chart, you will see long term trends that last for months or years. These moves can and do yield big profits - here we will outline a simple method to catch them.

Breakouts

By far the best way of catching the big moves is to use a forex trading strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is broken.

It's a fact that most major moves start from new highs or lows.

While it might appear that you are not buying or selling at the best level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The reason for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don't buy or sell breakouts and that's exactly why it's such a powerful method.

The only point to keep in mind is a support or resistance which is broken, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the wider the spacing between the tests the more valid the level is.

Confirmation

Of course not every breakout continues and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your trading signal.

These indicators give you an idea of the strength and velocity of price and there are many to choose from. We don't have time to discuss them here (simply look up our other articles) but two of the best are - the stochastic and Relative Strength Index RSI

Stops and Targets

Stop levels are easy with breakouts - Simply behind the breakout point.

If you have a big trend then you need to be careful you can milk it, so don't move your stop to soon and keep it outside of normal volatility. If it is a big move, trailing stops should be held a long way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don't know when the trend is going to end, so don't predict.

It's ok to give a big back, as that's the nature of trading forex. Keep in mind if you got 50% of every major trend you would be very rich. When you are long term trend following you have accept giving a bit back and taking dips in open equity as the trend develops - this is noise and does not affect the long term trend.

The above is a simple way to trend follow forex and catch the high odds moves that yield the big profits. If you are learning forex trading and want a simple method that is robust and will help you catch every major move, then you should base your Trading on the above method.

FOREX ; Head & Shoulders Top Chart pattern

2009-07-26T13:35:00.004+07:00

The Head and Shoulders Top marks a "reversal" pattern in an uptrend market and is extremely popular among currency traders.

The pattern consists of 2 Shoulders, 1 Head and the Neckline (support):

1) The first point - the left shoulder - occurs as the price of the currency pair in a rising market hits a high and then fall back to the neckline.

2) The second point - the head - happens when prices rise to an even higher high and then fall back again to the neckline.

3) The third point - the right shoulder - occurs when prices rise again but don't hit the high of the head.

4) A key element of the pattern is the neckline and can be horizontal, slope up or slope down and is formed by drawing a line connecting two low price points of the formation.

What does a Head & Shoulders Top reversal pattern look like?

The pattern is complete when support provided by the neckline is "broken." This occurs when the price of the currency pair, falling from the high point of the right
shoulder, moves BELOW the neckline.

Currency analysts will often say that the Head & Shoulders top pattern is not confirmed until the currency price closes below the support neckline - it is not enough for it to trade below the support neckline.

How to trade this pattern?
Go short when the currency price CLOSES below the neckline and put a stop-loss few pips above the last peak (right shoulder).

Use a risk reward ratio 1.5 or better to calculate your profit target.(if you risk 50 pips, your target should be at least 75 pips).

Chart example

Please note that the Head and Shoulders Top formation does not need to be perfectly symmetrical.