3 WAYS TO UNDERSTANDING THE MARKET TREND

One of the major challenges retail traders face is establishing the direction to which the market/currency will tilt to. Is to to the support or resistance levels often times is a game of luck or guts.

However such shouldn't be the psychological attitude towards a trade. Even with all signals and well calculated analysis the trend could still go away, it's your ability to understand the market and interpret it within the short and long haul that separates the intuitive trader from the park.

Here are 3 WAYS TO UNDERSTAND THE TREND.

1. KNOW THE CURRENCY PAIRS.

It is important you know the economic activities surrounding the currency to which you have decided to place a trade on. Take for instance, EUR/USD. Have a clear understanding of the stands the European Central bank(ECB) is taking on interests and inflation rates and programs it has chosen to adopt to either beef up or cut rates(Quantitative Easing). Pay attention also to the stands the Federal Reserve Bank in America on it's interests and inflation rates. Same goes for Bank of Japan(BOJ), Bank of Canada(BOC), Reserve Bank of New Zealand(RBNZ), Reserve bank of Australia(RBA), Bank of Englan (BOE) and the likes. All these central banks have a direct effect on the way the currency pairs plays out in the forex market.

2. INTERPRET THE ACTIVITIES SURROUNDING THE CURRENCY PAIR.

Knowing exactly what and how to interpret the economic activities surround the currency pair you want to place a trade on gives you an edge, irrespective of the noise the market makes. For instance two days ago the mid-term elections created so much hullabaloo and traders were hoping that the outcomes could affect the US currency pairs at high levels. Just like it did a night before the US elections two years ago. Currencies and trades were very low and activities was down across the US currencies. When the results began to filter in and it wasn't much of a surprise, it became business as usual among the currency pairs.
Shortly after early this morning the US currency pairs began some sentimental moves across it's pairs all waiting for the outcome of the Federal Open Monetary Committee statement on rates. USD/JPY is going north, USD/CAD, headed north and later south. All these showing the anxiety in the market as to the prediction and outcome of the statement from FOMC.

Bear in mind its same news both the retail traders and institutional traders all look up to but yet take different position. Yes the Feds in the US is clear on increasing interest rates but such is not done at every meeting held. Your understanding of its decision per time matters on the position you want to take, either buy or sell.

3. LOOK BEYOND THE ECONOMIC ACTIVITIES.

This may sound contradictory to the second above, yes it is from the surface but has an in-depth revelation. Even when you see all the green lights, inflation needs to be kept at bay, Job rates is high, interest rates is spiking up and this is a go to the buy area. In some trades you just find out that the price rather than move to the resistance area heading north it goes the contrary down.
At such instance a well informed trader knows that it's the market sentiment at play and there is no economic justification for such a reversal. Yet same informed traders know it's an opportunity to buy low and wait for another spike to take profit.

There are other several economic events that affect currency pair movements and these are important as well to help retail/ day traders understand the short term positions they can take.
I have had people and some self acclaimed traders say they can can turn  $10 to $100 and I just smile and walk away at such ignorance and naivety. I am bold to say I have been scared and still bear scars from account i have blown $500 several times.

Yet I still dust myself up and make a come back. Forex trading a not a straight bull ride all the time. It comes with some painful losses and happy gains, this is when you here well informed and knowledgeable traders say your psychology to trading is key.
A british trader in commodities puts it better, he says 'know when to count your losses and move rather than praying and hoping for the market to move in your favour'

I hope this helps I look forward to your comments, questions and opinions on currency, I recommend a reading with www.jarrattdavis.com, I have never met him but he has truly beefed up my confidence in the Fx market ever knowing him online 4 years and counting.

Cheers!

UNDERSTANDING CANDLE STICK PATTERNS 2

It' been a long while since I talked about candle stick patterns and profitable trading. Quiet a lot of people and friends have always asked why I am not so keen about the candle stick and also how I get to interpret them.
Please see my earlier post on candle stick.

TIME FRAMES.

There are various time frames on the Meta4 trading platform, ranging from M5,M15,M30,H1,H4,
D1.
These symbols stands for 5 minutes,15 minutes, 1 hour, 1 day time frames respectively. They reveal the time to which each candle stick will reflect the number and range of traders within that time frame and price actions respectively.

The candle stick as explained by other 'professional traders' does not necessarily give you a signal to where prices will be heading to. Rather it just reveals the price action per time. Some technical analysis uses have drafted and ruled some lines and Fibonacci graphs, Moving average convergence divergence (MACD), hammer heads and crosses respectively to justify the next move of price but honestly that's not it.

The activity the candle stick displays however high it climbs or low it gets is a function of the back end economic activities going on. Most times too is about the sentiments in the market irrespective of fundamental analysis. At any given time frame you could have traders, either shorting a currency(taking quick profits) or going long(for bigger profits).

Retailers traders like me have always believed or being told that ones you understand candle stick patterns like the diagram above you can be a good trader(that's absolutely incorrect).
Again candle stick is just a picture of what the market is doing, revealing many buyers or sellers per time and vise versa.

Ones you have a clear understanding of the fundamentals governing a particular currency. You will clearly interpret the picture the candle stick is given you. That's what makes and informed trader.

I would be putting out a video very soon on the realities to forex trading. I have blown my accounts several times and still do, as well as as make some reasonable pips. I still demo trade side with my live accounts.

The Forex market is an interesting one if you clearly understand the rudiments. Again I recommend you visit www.jarrattdavis.com. He was ranked as the 2nd best Forex trader in the world by Barclays. I have never met him he resides in England but has been the only Fx trader who has clearly explained the rudiments to forex trading and understand the fundamentals.

I look forward to your comments, questions till I we meet again. Hope you made some pips from the US mid-term election fiasco..

Best Regards

UNDERSTANDING CANDLE STICK PATTERNS 1

One of the most effective technical analyses in Forex trade is candle stick. These patterns are regular observation of the area to which prices are trending towards. A lot of traders have based their trades on the movement pattern and appearance of the candle stick. These patterns reveal the bullish and bearish trends of the market.

In using the Meta 4 trader platform, you need to set the candle stick to colours that are easily understood by you. The movement of the candle stick reveals a lot in price pattern.

Below is A step guide to adjusting the candle stick to reveal the bear and bull sticks.

•  Click on the candle stick after downloading, and then right click on the mouse. Move the cursor down to properties at the bottom of the table. Complete properties of the candle stick will be opened. 
• Scroll down to bear candle, click on the arrow and click on the orange colour, this changes the bear candle colour to orange. Scroll to bar down and repeat the process, change the colour to orange. This completely changes the entire bearish candle to orange.
• Scroll to the bull candle, click on the arrow and change the colour to lime, scroll up and do the same to the bar up icon. This completely changes the bull candle to lime. Click on OK and everything you have set changes on the trading platform.

At this point it doesn’t matter the time frame at which the platform is. The colours will remain that way for all time frames. The reason I prescribe these colour is to assist you understanding the signals of an Up market and a Down market. A closer look at the candle stick during market hours will see the stick rising or falling; depending on the prevailing market economic indices affect the currency of trade.

Some professionals have been able to successfully anticipate the move and appearance of the candle stick. However these observations have their own limit to a successful trade. When it comes to making the right decision to buy or sell currency based on the Resistance or Support level, then the candle stick is a good start otherwise, take a second thought.

As an advice, do not place your trades based on candle stick pattern alone, as this is very unprofessional, it could be tantamount to playing in the casino.

One of the best ways to use candle stick is to see it as a guide to the level of effect the currency is having in the market per time frame.

In the next edition I would be revealing how best to use candle stick in response to time frame.

 Remember, Forex is all about timely decision making.

Wishing you the best of trades!!!

TRADING PLAN

In carrying out a profitable trade, you need to ask yourself the following questions,

1.   Do you have a trading plan

2.   What strategy do you want to adopt

3.   What would be your initial cost implication (variable and fixed capital)

4.   Understanding Time zones

5.   What ideal and realistic profit are you envisaging( day, week, month, year)

Let’s have a clear look at these questions

1.   DO you have a trading plan?

As a guide I advice you have a trading plan, as a solid house is built on solid foundation. Your plan should be such that allows you to go online and place your trade without been worried over the profit margin. As a trader you need to be confident of your trades in either way. Do not gloat over the system and watch as the price fluctuates as this will cause unnecessary panic and may cause you to make wrong decisions. Just place your trade and get out of the market. If in doubt of your trades, ensure you use a stop loss. I rarely loss stop loss for my trades not because I am confident, rather I do not want the trade to close at my Stop loss knowing well that it will definitely hit the take profit even if it will take 4hours. However to do this you need to know your margin in the trade to know when to accept the loss and move forward. Only baby traders sit with the system observing the price as it fluctuates.

2.   What strategy do you want to adopt ?

It is very imperative that you have a trading strategy to place a trade and know when to walk away. The market is not a must win affair. Sometimes just allow your doubts to have its way, and make profit some other day. Personally , I do not place trades in the morning hours no matter the signals or news I have at my disposal. I just feel I do not want to get in the rush with the big dogs in the market. The London hours are the most active in the Fx market and a lot of trades go on during these hours. Getting into the market at such periods is too uncertain a risk for me. I just trail the market and allow the price to fluctuate as high or low as it can get. When its 4pm GMT I prefer going into the market. At this hour, the London session has winded up and the Newyork session is already on full swing. As the time begins to go, currency prices begin to react to the market naturally, as traders in most part of the world in the Eastern time (EST) zone are rounding up and closing for the day. These evening hours on the GMT are my trading hours. Prices usually drop, and I place my trade on the sell area. The fluctuation of price is usually between 10 to 25pips. At late hours of 8pm GMT, my trades are placed on the buy area, even though I am aware that the price will go against me at that time, it is certain that at Tokyo session(1am GMT+1), prices will take a new turn and will hit my take profit. However, I make sure that the margin for loss is very high so I don’t get knocked out the market untimely. Please practice as much as you can and adopt a strategy that you are comfortable with.

THE TREND

In having a successful forex trade you need to understand the three important D's of forex Trade.

1.    Determine the Trend: you need to know the direction in which prices are moving. Either up or down. The prices have a pattern in which they move. Often times these pattern is a function of the time zone you are operating from. I would discuss extensively on time frames and zones in subsequent post. Prices are either moving in the Support direction or the Resistance direction. However please note it is also a function of the existing fundamental analysis.

2.    Determine your take Profit: it will  be absurd for you to just enter a trade without first determining what you want your take profit to be. Really you need to know your end point in terms of what you want as a profit, say $10, $20 etc. Some traders make a certain profit per trades others per day. Ensure you observe all indicators before you place a trade.

3.    Determine your Trading Pattern:this has to do with the style in which you make your trades. No doubt that the London session is the most active hours, yet it is not a guarantee that profit is sure. As much as I appreciate the London hours, I prefer trades at the close of the US sessions.

FOREX trading is not a get rich quick market, but a systematic approach to building wealth. It is a High Risk High Reward market.

However with proper knowledge you definitely will always smile to the bank.

Watch out for my online tutorials soon.

THE RUDIMENTS OF FOREX TRADING

There are a lot people who have got their hands burnt in forex trading, for various reasons, such as greed, inexperience, naivety and much more. Fx is not a get rich quick investment and investors who approach trading with this mind set will hit the rocks. One of the peculiar reasons why the big dogs invest in Fx trading is because it is High risk investment market, and this is one of the attributes of Well informed investors.
Let me point out here that to go into Forex trading, you need to have a strategic plan on how you need to minimize your losses and maximize your profits.   
Study the following steps below.

1.    Understand the fundamental analysis involved; With respect to your opinion on technical analysis, there is no indicator any where that will give you a 90% signal direction. This is a market controlled by fundamental analysis, most especially News releases. Take for instance the current crises in Libya. There was no indicator any where that says the oil rich nation will be invaded. Such speculation could only come from economists who have an understanding on the effect of commodities demand in the world market. The effect in the currency market definitely favoured investors who are well inclined in understanding that the tripling effect of the crises may affect oil supply, and as a result push the dollar currency upwards. This is an indication that upward trend is the way to go.

2.   Respect Pivot Point; The resistance and support levels are very powerful indicators, that reveals currency trending patterns based on fundamental analysis. Of course other indicators are good views but the signals may not be certain. Lets face it, no indicator any where predicted the fall of oil prices during the economic recession. Every speculation that was given got a spark from various economic events in oil exporting countries. If you really want to profit in Fx trading forget about does complex confusing technical analysis, and start paying attention to economic indices, most especially oil price fluctuations.

3.    Throw that Robot in the Bin; I get amazed when i hear some traders say they use robot to trade. How can you trust your investment to a robot program written by a human. Real and knowledgeable investors do not even pay attention to such. The robot software, will definitely not stand the test of time. It is so dumb not to know that a thought of war in an oil producing state, could cause oil prices to take a flight, which will have a spill over effect on currency trends.
To be knowledgeable in Fx trading, you need to understand the economics involved. I would be doing some explanations on this in subsequent posts.
If you really want to make a wise decision in Forex Trading, follow oil prices closely.

UNDERSTANDING FOREX TRADING

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Forex trading is a currency market that has a daily turn over of over $2billion dollars. It is an over the counter market that is done electronically, at various time zones and regions around the world. The volatility of this market makes it an interesting investment for big time investors.

It involves the trading of one currency over another, such as US dollar (USD), Pound (GBP), New Zealand dollar (NZD), Yen (JPY), Euro (EUR), etc. These currencies are traded over the other with one of the currency as the base.

Forex is not a get rich quick market as some quarters have had you believe. The profit markup is high no doubt, as well as the losses. No one could claim to be a guru without having his fingers burnt in the trade, what separates the expert from the mediocre is the style of trading and the information at their disposal. Here I would be giving you a down to earth approach to FX trading and the challenges I have had to face, how to minimize your loss, this is inevitable and make profit sure.

I would be exposing to you the realities of FX trading, and why you should not follow the crowd. Sometimes the best way forward is to take a reverse direction.

There are a lot of sites that you may have come across that explains the FX market to you, but right here I would give you the opportunity to have a first hand information on the intricacies and rudiments to a successful trading.

I do not claim to be the best, but with my strategies you are guaranteed over 70% profit of your investment.

I would like you to keep a date with this blog, and bookmark it so as to get informed each time a post is made. If you had had your fingers burnt in Forex trading, this is the best place to be, as you would be tutored on the realities in currency trading.

My next post we would be looking at the terminologies in FX trading and other requirements. Remember Information is what gives you an edge in business.

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