Miyerkules, Nobyembre 30, 2011
Using a Valid Trendline
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When executing trades based on a trendline, it is important that the trendline is a valid one. This validation would occur when price has touched and respected the trendline a minimum of three times. Take a look at the current 4 hour chart of the AUDCAD below for an example… The first point on any chart is simply a random point on that chart. When a second point appears, no matter where it appears on the chart, it can be connected to the first by a straight line but that really tells us nothing. When the third point occurs and it can be connected by the same straight line that connects points 1 and 2, now we have something from which we can trade. Once the third touch occurs, provided that the candle does not close above the trendline in a downtrend or below the trendline in an uptrend (in other words price respects the trendline), we would take a position at the open of the next candle. Our stop would go below the trendline in an uptrend or above the trendline in a downtrend. Looking at the above chart, a trader could take a buy (long) position at the open of Entry Candle A with a stop (red line) just below the trendline. A trader could also take a buy position at the open of Entry Candle B with a stop just below the trendline. Going forward, if the current open candle, the last one on the right of the chart, closes above the trendline, a trader could take a long position at the open of the next candle (not yet on the chart) with a stop just below the trendline. Richard KrivoTrading Instructor DailyFX, The Research Arm of FXCM Inc.2701 Dallas Parkway, Suite 600Plano, TX 75093Tel (972) 535 9000Fax (212) 897-7669E-mail: rkrivo@fxcm.comTwitter: @RKrivoFX
Become a Master Forex Trader – 5 tips to get on track
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If you’ve been trying to make money in Forex for any amount of time you probably know it’s a lot more difficult than perhaps you first thought. Let me re-phrase that, Forex trading is made much more difficult than it actually IS because human beings have innate tendency to over-complicate and look past the simple in order to find “meaning” which generally leads to complications and confusion.
Let me elaborate a bit more on that somewhat cryptic opening paragraph. Have you ever realized that the more you dwell on something and try to “force” it, the harder it becomes to obtain? We see this all the time in human relationships; the more you try to control someone to “fit” to what you want, the further away you push them, generally speaking. Whereas, if you just let things “flow” naturally you would be much more likely to achieve your desire with a lot less stress and effort.
This is also true with Forex trading; traders tend to try and “control” the market by forcing trades when there isn’t anything there to trade or by over-leveraging their accounts, meddling with stops / targets after entering, or a whole host of other “unforced errors” if you will. Let’s look at 5 quick tips to get your trading on track and in the realm of relaxed and confident instead of stressed and worried…
1) Be realistic…stop hoping
The first thing you need to do if you want to become a master Forex trader, is become realistic about how much money you can make given the amount of money you have available to trade with and the fact that you must practice proper risk management if you want to succeed long-term. If you intend on managing your trading account money properly, and you have a relatively small account, you simply aren’t going to “get rich quick” or be able to quit your day job any time soon. The more you accept this, the easier trading will become because you won’t feel any “pressure” to make money fast.
2) Trade the daily charts
One of the most prevalent ways that struggling Forex traders try to force their will upon the market is by trading low time frames. I consider anything under the 1 hour time frame to be “too low” to be worth trading. Some people will disagree with me, and that’s fine, I can only say what has worked for me over the years, and that’s focusing on the daily charts. Trade setups are more accurate and more relevant the higher up in time frame you go. I found by focusing on the daily charts and trading less, my trading improved significantly, you just have to have more patience. Slow and steady wins the Forex race.
3) Understand less is more
This point goes along with trading higher time frames, but it’s worth discussing on its own because many traders over-trade and over-analyze market variables. There really is no need to read every economic report and figure out how it may or may not affect the market. All you really need is a simple yet effective Forex trading strategy along with proper trading psychology to make money in forex. There really is no need to over-trade, over-analyze, or generally over-complicate the market. You can trade effectively with simple Forex trading strategies that do not rely heavily on indicators or trading software.
4) Plan and track
Planning and tracking your trades with a Forex trading plan and a Forex trading journal is essential to maintain and sustain the proper forex trading psychology. Most traders simply do not have the proper trading mindset right out of the gate, so it’s necessary to pre-empt your trading approach by creating a trading plan in order to eliminate the possibility of emotional trading BEFORE you enter the market. Trading journals keep you on track and keep you accountable; they are essential for seeing how your discipline pays off over time and creating a track record for you to prove your ability as a trader if you want to get people to fund you.
5) Know what you’re looking for…without a doubt
The last tip to help you become a calm and confident “master” trader is to truly master a trading strategy so that you know without a doubt what you are looking for in the market every time you open up your charts. You should have your Forex trading strategy mastered to the point where you can open the daily charts and analyze the major Forex pairs for about 20 minutes a day and either place a trade or walk away with confidence. In essence, you should have your trading strategy mastered to the point of knowing very quickly whether or not your high-probability trading edge is present, if you have to sit and stare at the charts for hours each day, you either don’t know what you are looking for or have not yet mastered a truly effective forex trading strategy.
Martes, Nobyembre 29, 2011
USDollar Breakout ? Not Yet !
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By Walker England, Trading Instructor , DailyFX Education, 09 November 2011 18:53 GMT The Dow Jones FXCM Dollar Index Basket (US Dollar) was designed to reflect the strength and weakness of the US Dollar relative to a basket of currencies. Currently, the USDollar is trading off of its October 4th high at 10,134 while creating a higher low at 9,443 on October 27th. As price attempts to make higher highs, trend and breakout traders can begin to look for entrys on the currency basket.
Fundamentally, the dollar has rallied on its status as a safe haven currency. During a “Risk Off“ environment, the USD traditionally rallies on purchases of US paper which is deemed as a relatively safe investment. This has been occurring on a frequent basis as the European debt crisis continues to unfold. As recent headlines suggest the crisis to remain an issue, we will begin looking for opportunities to buy the USDollar. Taking Price in to a 4Hour chart we can better see the USDollar moving in a wedge pattern. Resistance is firmly formed at 9,810 by matching up the October 13th and 18th highs. Despite rallying strong for the month of November, the USDollar has yet to break resistance to form new highs. Breakout traders will see this to set entry orders above this resistance level anticipating price to break higher highs. My preference is to buy the USDollar on a break of resistance. Entry orders should be placed over 9,820. Stops should be placed below support at 9,720. Limits should look for a minimum of 100 pips at 9,920 for a clear 1:2 Risk/ Reward scenario. Alternative scenarios include price trading under resistance and breaking under the 9,665 low. Additional Resources Support and Resistance Video Trading Breakouts Identify the Trend ---Written by Walker England, Trading Instructor To contact Walker, emailwengland@fxcm.com. Follow me on Twitter at @WEnglandFX. To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to wengland@fxcm.com. DailyFX providesforex newson the economic reports and political events that influence the currency market. Learncurrency tradingwith a free practice account and charts from FXCM.DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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Lunes, Nobyembre 28, 2011
Clarifying the 5% Money Management Rule
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By Richard Krivo, Course Instructor 27 October 2011 22:32 GMT One of the key components of Money Management is the 5% rule. That is, never put more than 5% of the trading account at risk at any one time. The rationale behind this is that when we have losses (and we WILL have losses, make no mistake about that) they will be small and manageable as opposed to large and catastrophic.
Oftentimes however, this rule is erroneously interpreted as meaning 5% per trade. This is not accurate. The 5% rule pertains to the TOTAL amount of the account balance at risk at any one time...NOT on any individual trade. So, if you have one trade open, 5% is the maximum allowable risk. If you have two trades open or five trades open or ten trades open, the maximum that could be lost if the stops on all of the trades triggered at the same time is 5%. Think of it this way, if the rule were 5%pertrade, a trader could open five trades risking 5% on each trade and still be within the rules. What would prevent a trader from opening up ten trades and only risking 5% on each one? There has to be something that prevents the trader from over leveraging their account and that something is the “5% risk at any one time” part of the rule. Otherwise, as you can see from the previous 5% per trade example, the trader with five trades with 5% account risk on each one would have 25% of their account at risk and the trader with ten trades would have had 50% of their account at risk. Clearly, neither of those would be a situation in which a prudent trader would want to find themselves. Additional Resources: Archived Sessions on Money Management: On Demand Video Course Link: (When accessing the above links, provide your live account username and password and then scroll down to the topic of Money Management.) Richard Krivo Trading Instructor DailyFX, The Research Arm of FXCM Inc.2701 Dallas Parkway, Suite 600Plano, TX 75093Tel (972) 535 9000Fax (212) 897-7669E-mail: rkrivo@fxcm.comTwitter: @RKrivoFXDailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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Linggo, Nobyembre 27, 2011
Gold Declines and AUD/USD to Follow
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By Walker Enlgnand , Trading Instructor, 20 October 2011 17:29 GMT Gold has struggled to maintain its luster over the past three months. Despite a strong move for most of 2011, the metal is off over 20% from its September high at 1920.80. Price has since bounced off our 200 period SMA (simple moving average) at $1,527 and no finding resistance under the $1700. With the metal failing to make higher highs, this may signal the continuation of downward momentum on gold.
Fundamentally, the Aussie Dollar currency is correlated to gold as Australia is the world’s second largest producer of the metal in the world. This correlation means our directional bias on gold will allow us to make a trading decision on Aussie Pairs. Since resistance is found on gold at $1700 on our daily chart, we have discussed resistance also on the AUD/JPY with our article on October 13thand reasonably presume it is in place on the AUD/USD pair as well. Taking Price in to a 4Hour chart we can see the AUD/USD moving in line with gold, holding a downward trajectory. We find resistance currently above 1.0352 the October 19th high. Support appears to be holding up price over 1.0140, causing it to consolidating price in a small triangle pattern. Breakout traders may utilize the triangle pattern to enter on the establishment of new lows. My preference is to enter the AUD/USD on new lows under 1.0100. Stops should be placed 200 points away with the middle of our triangle. Limits should look to first target .9700 for a clear 1:2 Risk/Reward profile. Secondary will look for targets on new lows under .9500. Alternative scenarios include price breaking through resistance and moving on to new highs. Additional Resources Price Action Swing Trading Breakouts ---Written by Walker England, Trading Instructor To contact Walker, email wengland@fxcm.com. Follow me on Twitter at @WEnglandFX. To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to wengland@fxcm.com.DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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Restoring Lost Equity By The Percentages
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In our LIVE FX webinar trading sessions each day we strongly emphasize the principles of Money Management. What many traders do not realize, however, is the very real challenge that is presented when one attempts to regain what they have lost. The table below will provide some insight regarding that challenge… For example, let's say that you have a $1000 account and 25% of it, $250, is lost and you now have $750 in the account. $250 is 33% of $750. So the percent that you have to recoup, 33%, is actually greater than the percent that was lost, 25%. Looking at the numbers on the grid, it becomes quite apparent why one should not risk large percentages of their account at one time. The recommended "ceiling" amount to risk at one time (not per trade but at one time) is no more than 5% of the account balance. By the way, this table is excellent to keep at the forefront of one’s mind (or even posted nearby) when trading so that we are aware of the perils of overleveraging our account and posting significant losses relative to our account size. Seeing the hurdle that we face after such a loss, may keep us from taking inordinate risks and overleveraging our account in the first place. Additional Resources: Four Lessons on Money Management Money Management Webinars (To gain access to either of the above, use your live account number and password when prompted.) --- Written by Richard Krivo, Trade Instructor To contact Richard, e-mail rkrivo@fxcm.com. To be added to Richard's e-mail distribution list, send an e-mail with subject line "Distribution List" to rkrivo@fxcm.com.
Sabado, Nobyembre 26, 2011
USD/CAD Tests Multi-Month Daily Trend
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By Walker England, Trading Instructor, 25 October 2011 14:16 GMT The USD/CAD has been giving us mixed signals throughout 2011. Currently, the Pair is trading near the parity figure, which has been traded through previously in January, and September. Currently daily support is found by connecting the July 26th low at .9405 with the September 16th low at 97.84. Currently price is testing a third touch of support and is awaiting the pair to either bounce or break.
Fundamentally, the USD/CAD trades in an inverse correlation with USOIL. As concerns about the global turndown have subsided we have seen the CAD and Oil prices rally. If recovery remains a theme we would look for our daily trend line to break. Conversely, if another bout of economic crisis emerges, this is a potential catalyst for both pairs to bounce off of their established trend lines. Taking Price in to a 4Hour chart we can see our downtrend established from our October 4th high of 1.0656. Price has been moving steadily downward to today’s low of just under parity, at .9989. If price is to make new lows it must stay under resistance found at 1.0190, denoted by our 78.6%Fib line. A break above this level and a new high on the chart would indicate a validation of our daily support line seen above. My preference is to sell the USD/CAD against its 78.6% retracement at the 1.0190 level. Stops should be placed outside of the previous high at 1.0250. Limits should look for 1.0070 or better for a clear 1:2 Risk reward ratio. Secondary targets may search for lower lows under parity. Alternative scenarios include price breaking through resistance and moving on to new highs indicating a bounce off our daily trend line. Additional Resources Support and Resistance Video Trading Breakouts ---Written by Walker England, Trading Instructor To contact Walker, email wengland@fxcm.com.Follow me on Twitter at @WEnglandFX. To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to wengland@fxcm.com.DailyFX provides forex news on the economic reports and political events that influence the currency market.
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Biyernes, Nobyembre 25, 2011
EUR/USD si sposta dalla resistenza Trendline
Da Inghilterra Walker, istruttore di Trading, 7 ottobre 2011 16:21 GMT The EUR/USD ha continuato ad essere nell'occhio del mondo come simbolo della ripresa economica intorno al globo. È stato il USD prevalente nella forza, aggrappata alla sua moneta di riserva e lo status di rifugio sicuro. Dal 29 agosto alta di 1.4548 che l'Euro è sceso oltre 1400 pips per il 4 ottobre bassa di 1.3144. Come la tendenza continua a svilupparsi, commercianti possono cercare segni di debolezza vendere la coppia.
Fondamentalmente, il mercato ha goduto di un rischio sull'ambiente negli ultimi quattro giorni. Questo è culminata nell'annuncio NFP (Non Farm Payroll) notizie questa mattina. Più posti di lavoro sono stati creati nel settembre del previsto, con conseguente commercianti lo spostamento di fuori delle valute tradizionale rifugio sicuro. La prossima settimana il calendario economico porta tedesco CPI e USD disoccupati crediti per darci un'immagine migliore di qualsiasi potenziale ripresa economica. Prezzo prendendo in a un grafico a 4 ore possiamo vedere chiaramente resistenza in formazione sul nostro canale di prezzo. Resistenza attualmente risiedono presso 1,3525. Si trova a questo punto di connessione alla linea di tendenza da settembre 25 alte (1.3824) per il 29 settembre alta (1.3678). Sapendo resistenza canale ci offre l'opportunità di utilizzare indicatori di entrare in con la nostra tendenza, pur mantenendo la gestione del rischio buona. La mia preferenza è quello di vendere l'EUR/USD su un crossover di ITC da livelli di ipercomprato, conforme all'inizio del prezzo. Gli ordini devono essere collocati come vicino come possibile, di vendere a resistenza 1.3525 o meglio. Fermate devono essere posizionate sulla resistenza alla 1.3690. Limiti dovrebbero essere disposti a 1,3125 per un chiaro rischio ricompensa rapporto 1:2. Gli scenari alternativi comprendono sfondare resumes resistenza e prezzo, rendendo più elevati livelli di prezzo. Ulteriori risorse come al commercio ITC Trading settembre US Jobs Report impostazione Trading aspettative dal grafico giornaliero - scritto da Walker England, Trading istruttore a contatto Walker, emailwengland@fxcm.com. Seguimi su Twitter a @ WEnglandFX. Per essere aggiunto alla lista di distribuzione di posta elettronica di Walker, inviare un'e-mail con oggetto "Lista di distribuzione" a wengland@fxcm.com.DailyFX fornisce notizie forex sulle relazioni economiche e avvenimenti politici che influenzano il mercato valutario.
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Forme d'oro a triangolo dopo un calo del 20 %
Da Inghilterra Walker, istruttore di Trading, 11 ottobre 2011 17:18 GMT Gold (XAU/USD) continua ad essere fuori di favore a causa di suo declino del 20% dal suo $1920 alta 10 settembre a settembre la bassa, 1532 $ 28. Attualmente è residente a resistenza per la nostra corrente giù la tendenza a prezzo $1680. A questo punto critico, oro si ritroverà rottura ai livelli più elevati, oppure continuare la sua discesa presente per abbassare i livelli bassi.
Fondamentalmente, oro rimane ancora bene rifugio sicuro della scelta. Come il clima economico nel mondo rallenta molti commercianti, gli investitori e gli altri sono ancora parcheggio loro denaro in metallo. Se i governi del mondo non riescono a decidere su un piano d'azione di stimolo e mercati continuano a diminuire oro sarà probabilmente un benefattore diretto. Allo stesso modo se non c'è luce alla fine del tunnel e una ripresa economica sulla strada, può segnalare prossima tappa verso il basso per l'oro. Prezzo prendendo in a un grafico a 4 ore possiamo vedere le nostre linee di supporto e resistenza ben definite del nostro triangolo. Resistenza è attualmente trovato sopra il 10 ottobre alta di $1682.61. Supporto è trovato sotto $1653.00 collegando il nostro crescente Bassi ascendente fino al presente ricorso al prezzo. Un metodo di negoziazione triangoli include immissione ordini di voce in attesa di un breakout. In questo modo gli operatori a coprire entrambe le estremità del mercato indipendentemente dalla direzione. La mia preferenza è su bracket oro (XAU/USD) che utilizzano gli ordini di voce. Acquistare della voce deve essere posto oltre 1.700 con l'opzione a vendere sotto 1, 6400. Limiti dovrebbero guardare per un minimo di $125.00. Fermate devono essere impostate limitando $62,50 nel rischio per un rischio/rendimento rapporto 1:2. Gli scenari alternativi comprendono prezzo continuando a consolidare la prima di una pausa. Risorse aggiuntive come al commercio triangoli, individuando i punti di articolazione Trend - scritto da Walker England, Trading istruttore a contatto Walker England si prega di e-mail Instructor@DailyFX.Com. James potete seguire su Twitter @ WEnglandFX. Per essere aggiunto alla lista di distribuzione di escursionisti, inviare un'e-mail con oggetto "Notifica", a WEngalnd@FXCM.com.DailyFX fornisce notizie forex sulle relazioni economiche e avvenimenti politici che influenzano il mercato valutario.
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Stocastico lento: Come per il commercio con stocastico lento
Huwebes, Nobyembre 24, 2011
How to Read Risk ’OFF’ or Risk ’ON’ Sentiment
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By Jeremy Wagner, Lead Trading Instructor, DailyFX Education, 04 November 2011 20:20 GMT By: Jeremy Wagner, Lead Trading Instructor, DailyFX Education
The market sentiment seems to flip flop back and forth on a daily basis between a “Risk On” and a “Risk Off”. Reading Risk Sentiment is as simple as following the direction of the US Stock Market. Each day, it seems a new rumor is produced and the stock markets shifts accordingly. The seesaw action can take a toll on a trader’s emotions. One way to gauge an underlying trend in the market is through the risk appetite of investors. The benefit of understanding the mood of the market is it allows you to align your trades in the direction of the market sentiment. When you see the stock market increase significantly, that is an indication that risk is “on”. A risk “on” environment is a mood of the market where investors feel good about the future prospects of the economy. Therefore, they take their capital and speculate in the stock market and high yielding instruments. This generally increases the value of the stock market and high yielding currencies which lately are the Australian Dollars (AUD) and New Zealand Dollars (NZD). At the same time, low yielding instruments tend to gain less on a relative basis or possibly even lose value. Low yielding currencies tend to be sold to fund the purchase of a higher yielding currency. This selling of a low yielding currency while simultaneously buying a high yielding currency is called the Carry Trade. So an effect of a risk “on” sentiment is an increase in the stock market and demand for high yielding currencies. As a result the Carry Trade strategy tends to perform well. (See additional resources below for more information on the Carry Trade Strategy.) (Created using FXCM’s Marketscope 2.0 charts) In the chart above, since the AUD has historically been a high yielding currency, when the risk sentiment was ‘ON’ (Green shaded areas) the AUD/USD exchange rate was likely to rise and the carry trade strategy worked well. When the risk sentiment turned ‘OFF’ (pink shaded areas) the AUD/USD exchange rate tended to fall and the carry trade strategy would not have performed inconsistently. When you see the stock market fall like we did earlier this week that is labeled as risk “off” in the media. That means investors and traders are averse to risk…they want to avoid risk and risky instruments. Therefore, the investors pull their money out of stocks by selling their shares and sell their risky instruments like high yielding currencies. In a risk “off” market mood, the carry trade does not work. Although a trader is gaining a daily dividend, the movement of the exchange rates is so adverse that is wipes out any interest gains. In a risk “off” environment, traders are better served buying safe haven currencies like the US Dollar (USD) or Japanese Yen (JPY). (Until August 2011, the Swiss Franc was also considered a safe haven currency, but the recent intervention by the Swiss National Bank is trying to curtail the buying of the Franc.) The risk assets like the US Stock market and high yielding currencies like the AUD are near resistance levels. This may mean a return to risk aversion and a selloff in the stock market and AUD/USD. To learn more about how the US Stock market movements can translate into currency moves, join me for a live webinar each weekday at 9am ET for the US Market Opening Bell webinar. The webinar is held inside Daily Plus and requires your live FXCM account username and password to attend. Daily plus Live Classroom Additional Resources How a Stock Move Translates to Currency Trades (Text) The Carry Trade Strategy (Video) A Trending Pip Count (Text) Identifying the Trend (Video) ---Written by Jeremy Wagner, Lead Trading Instructor, DailyFX Education To contact Jeremy, email jwagner@dailyfx.com. Follow me on Twitter at @JWagnerFXTrader. To be added to Jeremy’s e-mail distribution list, send an email with the subject line “Distribution List” to jwagner@dailyfx.com.DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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Miyerkules, Nobyembre 23, 2011
Price Action Swings
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Price Action Swings Any chartist that has spent considerable time analyzing candlesticks would agree: Market movements rarely take place in a linear fashion. Down-trends are often accented with ‘up-swings,’ as the chart below points out: (Created with Trading Station 2.0/Marketscope) The exact opposite can be said for up-trends, being accentuated with ‘down-swings.’ (Created with Trading Station 2.0/Marketscope) And of course, if we have a range, we can notice both up-swings and down-swings. (Created with Trading Station 2.0/Marketscope) Swings-Lows, or Down Swings, can be classified as a low point of price that is accompanied by a ‘higher-low,’ value in price on each side of the candle. (Created with Trading Station 2.0/Marketscope) The multiple swings exhibited by price behavior throughout the day can be used for a multitude of functions. For instance, for traders wishing to grade trend, they can often do so by observing ‘higher-highs, and higher-lows,’ or ‘lower-lows, and lower-highs.’ (Created with Trading Station 2.0/Marketscope) Taken a step further, traders wishing to manage risk can potentially look to these swings for stop placement. For example, in the chart below, the trader looking to take on a long postion can adopt the stance: “If price breaks this swing low, then I no longer want to be in my trade as the trend may no longer be to the upside.” (Created with Trading Station 2.0/Marketscope) And of course, once a trader is in a position – this same mindset can be used in position management. The chart below illustrates: (Created with Trading Station 2.0/Marketscope) We’ve covered 3 of the more popular mechanisms of ‘Swings,’ in the market, but we are just scratching the surface. There are numerous additional mannerisms in which these swings can be used by the price action trader. In our next piece, we will look at using ‘Swings,’ to enter into positions that may be amenable for ‘big,’ moves exhibited by the market; a market condition that many traders flock to when conditions are right: The Breakout. Links for Additional Information: Price Action, an Introduction Support and Resistance Lesson 1 (DailyFX+ On-Demand Video Course) --- Written by James B. Stanley To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX. To be added to James’ distribution list, please send an email with the subject line “Notification,” to Instructor@DailyFX.com.
Gamma-Trading confluenza
Martes, Nobyembre 22, 2011
Punti di articolazione (Floor Trader perni)
Canali di prezzo: Come per il commercio con canali di prezzo
3 Easy Steps to Trade Forex (Part 3)
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3 Easy Steps to Trade Forex (Part 3) By James Stanley It will often take traders awhile to learn a concept that may sound very simplistic, but is absolutely a point of emphasis for all traders. That concept is: Nobody knows what will happen next with price. Regardless of how strong a strategy may seem, or how sure the trader is that price will go up, or price will go down, a simple fact remains: Nobody knows exactly what will happen next on the chart. That is why the management of risk is so important to traders. If risk isn’t managed, results can be catastrophic. Created with Marketscope/Trading Station 2.0 Let’s think of the trader that looks for ‘100 pip wins,’ on each trade that is taken without observance of potential losses. Let’s imagine that this trader has a string of successes, winning 9 trades in a row, adding 900 pips to their trading account. At this point, our trader is feeling good with 9 straight wins. And then our trader takes a trade that doesn’t do what they thought it would. And as opposed to immediately realizing the loss, our trader decides to wait and hope that the trade comes back in their favor. The next morning our trader opens their trading platform and sees that the position is now losing 1000 pips. This one trade, this single idea has just wiped away the gains of 9 winning trades, AND THEN SOME. Our trader would be looking at a net 100 pip loss, when they have won on 90% of their trades. 100 Pip Loss with 90% win ratio! While this may sound like a problem that can be easily fixed, we have to imagine the decision making process that goes through our heads when we are in a trade. We are human; we want to be right. By default, our brains associate losses with failure and many traders, new and old alike, are reticent to realize losses for fear of failure. The thing that most professional traders will realize is that losses are inevitable; because nobody knows exactly what will happen next on the chart. So the goal then becomes – not necessarily to avoid losses; but to mitigate the damage on those ‘ideas,’ that are losers, and maximize the profit potential on the ones that are winners. One of the most important steps that traders can take to address risk, trade, or money management concerns is the creation and observance of a prudent trading plan; a plan in which the trader specifies the maximum amount of risk that will be taken on, the maximum potential loss that could be seen, and perhaps most important – the amount of return a trader wants to look for given a pre-determined amount of risk (The Risk, Reward Ratio). The importance of risk management CANNOT be understated. The one thing that I, as a trader, know is that I will take losses. My goal is to make those losses hurt as little as possible while making my winners as profitable as I can. This is what we teach in the DailyFX PLUS Education Curriculum; between the On-Demand Video Course (available 24 hours a day, 7 days a week: On-Demand Video Course), and the 3-4 Live webinars that we host in the DailyFX PLUS Live Classroom (DailyFX PLUS Live Classroom). If you would like more information on Risk/Money Management: DailyFX PLUS Online Video Course Lesson 1 – Money Management Clarifying the 5% rule --- Written by James Stanley To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX. To be added to James’ distribution list, please send an email with the subject line “Notification,” to Instructor@DailyFX.com.
Lunes, Nobyembre 21, 2011
The Case Against Hedging
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Every few weeks a question comes up about hedging…buying and selling the same currency pair at the same time. It usually starts something like this… The trader opened a trade and after a time the trade had moved against them. Rather than take the loss, (one individual said the loss was simply “too big to accept”) the trader decided to open a trade in the same pair going the opposite direction. That way the losses that they would incur should their original position continue to move against them would be mitigated as the trade in the opposite direction moved in their favor. At the outset, it almost sounds like a good plan. What happens however when the market starts to move against the second position? Since the trader was carrying a loss that was “too big to accept” on the first position when the second was opened, as the market moves against the second position, the trader will now have two losing positions on their hands. It is usually at this point that we receive an email from the trader or a question in our live webinars on how to “unwind” this hedge profitably. (They are still not willing to accept the loss.) Not to be glib, but my response is always not to allow yourself to get into this position in the first place. The easiest way out of any problem is not to get into it in the first place. Consider this trader’s reason for hedging: they were in a loss that had become too large and they were reluctant to close out the position and take the loss. This is a good example of letting emotions win out over good judgment. The best time to make trading decisions is before the trade is ever entered since at that time there are no emotions involved…you have no “skin in the game”, so to speak. So, lay out your trading plan ahead of time and then stick with it. Trading with the trend is one of the best strategies to employ. Rather than hedging, we would either be buying or selling a currency pair based on our interpretation of the direction of the trend on the daily chart. Look only for the pairs that are in the strongest trends to trade and then trade them only in that direction. Any solid trading plan will always include the principles of Money Management. Entering the trade in the direction of the trend with a stop in place that does not over leverage the account and having a limit (profit target) in place that at least will gain the trader twice the amount they have at risk, is a solid plan. By doing this, emotional decisions are removed from the situation. Your trade will either be stopped out with a manageable (acceptable) loss or it will limit out with a profit. The question of hedging will never cross your mind. We do not recommend buying and selling the same currency at the same time…period. --- Written by Richard Krivo, Trading Instructor To contact Richard, e-mail rkrivo@fxcm.com. Follow me on Twitter at @RKrivoFX. To be added to Richard's e-mail distribution list, send an e-mail with subject line "Distribution List" to rkrivo@fxcm.com
Linggo, Nobyembre 20, 2011
Determining Your Trading Style
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Oftentimes one of the first concerns with which a trader is confronted is deciding on their trading style. While one certainly does not have to trade in only one style (in fact, we encourage traders to try several styles at the outset), there is merit in zeroing in on a specific trading style and learning its “ins and outs” under various market conditions in close detail. Below are some considerations… What type of personality/emotional make up do you have? If you are a person who prefers a very rapid pace and who generally expects quick results and seeks fairly immediate gratification in general, you may be best suited for shorter term trading…scalping. If you are a person who is not a fan of a fast paced environment and is no stranger to practicing patience and discipline and is quite comfortable with results that may not manifest themselves until a bit of time has passed, you may be more inclined toward medium term/swing trading/longer term or position trading. Since the size of one’s trading account will impact their trading style, what size trading account were you planning on having? Trader’s having larger accounts are better positioned to trade shorter or longer term. Very short term trading (scalping) benefits from the ability to open a greater number of positions at a time to maximize moves that are comprised of a small number of pips. Naturally, a larger account size facilitates the opening of a greater number of positions. Longer term traders will also benefit from having accounts of larger size since their stops generally will need to be quite deep to absorb the strong bullish and bearish moves that their trade will need to endure over time. Traders having smaller to more modest size accounts may find that medium term/swing trading is more suited to the size of their account. The grid below will provide some additional insight relative to determining one’s trading style… Additional Resources: Longer Term/Medium Term Traders – Price Channels Trend Shorter Term Traders – Archived Sessions – Lon-NY Day Trading Use Live Account Username and Password to gain access. Richard KrivoTrading Instructor
Where Are the Trades?
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By Richard Krivo, Course Instructor 08 November 2011 22:21 GMT An issue that I personally had when I began trading was what to do when a trade did not present itself on the charts. After all, I wanted to be a trader and here I was…at my computer and ready to trade!
So…where are the trades!! Last week during our LIVE webinar this same issue came up. Essentially the trader had done the Strong/Weak Analysis and then mentioned, “but when I pair up the currencies and look at the charts I don’t find a trade according to my strategy…frustrating…what should I do?” No doubt about it, when you are ready to trade but find no trades it can be very frustrating. But we simply cannot take a trade because we want to trade. That is one of the most illogical reasons to enter a trade that there is. Think about it this way… Let’s say we are driving a long distance and getting extremely bored and frustrated because we are not there yet. And we know that up ahead someplace we have to make a left turn to get to our destination. Would it make any sense at all just to make that left turn right now out of boredom and frustration? Of course not. The same is true in trading. It makes no sense to enter a trade until the set up is there. We must guard against boredom and frustration as it can lead to taking trades that made no sense earlier in the trading session when we were not bored. But, human nature being what it is, the more bored and frustrated we become, the better that low probability trade begins to look. So we take the trade out of boredom and when it moves against us, we become even more frustrated. It is important to develop patience and discipline as a trader so we can wait for our set up to take place. (We must also be ready to accept the fact that our set up may NOT take place.) We must have a firm understanding of our trading strategy and not get into a trade until our “set up” takes place. As an old trading axiom says, let the trade come to you. For example, let’s say I want to buy a currency pair if it closes above 1.5153. If it is now trading at 1.5100 I will not enter the trade now because it looks like it will trade up to that level. Nobody knows what may or may not happen going forward on the chart. So, based on my trading plan, I would not consider an entry until it closed above 1.5153. That is letting the trade come to us. We will not enter a trade until it meets our criteria. Bottom Line: No matter how bored or frustrated we become, that is never an excuse for entering a trade. Based on our trading style we may have to wait hours or days or longer for our trade set up to present itself. Until that time, we resist the temptation to enter a trade and always remember that cash is a position. --- Written by Richard Krivo, Trading Instructor To contact Richard Krivo, e-mail rkrivo@fxcm.com. Follow him on Twitter at @RKrivoFXDailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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Sabado, Nobyembre 19, 2011
La relazione di settembre i lavori degli Stati Uniti di negoziazione
Di Jeremy Wagner, condurre Trading istruttore, 6 ottobre 2011 19:26 GMT il molto lol rilascio noi Non-Farm Payroll è domani mattina a 8:30a ET. Questo è probabilmente il più grande mercato di evento in movimento per il dollaro USA.
Se si desidera il rapporto, seguire questa strategia di inversione di notizie. (Come il commercio la relazione di posti di lavoro usa il venerdì) Di seguito è riportato un grafico di set up come avrebbe guardato nel settembre 2011. (Creato utilizzando il classico 2.0 charts di FXCM) di commerciante avrebbe Garfunkel prezzi vicino al top della gamma e posto di vendere l'ordine a 1.4250. Lo stop loss sarebbe stato nella parte superiore della gamma nei pressi di 1.4290. Cattura Trading istruttore Walker Inghilterra a 9:15a ET domani mattina appena dopo l'uscita sul mercato apertura Bell. Walker sarà digerire la relazione e condividere qualsiasi mestieri che sembrano essere impostare di conseguenza il comunicato stampa. Il webinar sarà condotta all'interno di DailyFX Plus Live Aula. Si identifichi con la password temporanea indicata di seguito: Username: dfxedu Password: dfxedu24 - scritto da Jeremy Wagner, condurre Trading istruttore a contatto Jeremy, e-mail jwagner@dailyfx.com. Seguimi su Twitter a @ JWagnerFXTrader. Per essere aggiunto alla lista di distribuzione di posta elettronica di Jeremy, inviare un'e-mail con oggetto "Lista di distribuzione" a jwagner@dailyfx.com.DailyFX fornisce notizie forex sulle relazioni economiche e avvenimenti politici che influenzano il mercato valutario.
Imparare la moneta di scambio con un account di prove libere e le tabelle da FXCM.
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Stock Market and Forex Relationships: How a Stock Move Translates to Currency Trades
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By Jeremy Wagner, Lead Trading Instructor, 17 October 2011 11:38 GMT By: Jeremy Wagner, Lead Trading Instructor, DailyFX Education
Stock market movements are watched by casual investors to active traders. Many times, the movements of the stock markets can give clues about potential movements in currency trading. Below is a table of general tendencies that a trader familiar with stock trading can use to guide them in forex trades. If the stock market is said to be in a “risk on” mode with prices on the rise, then you tend to see these currencies below trade in noted general directions. For example, if the stock market moves higher, you tend to see the AUDUSD move higher as investors seek risky assets. Risky assets include the stock market and higher yielding currencies which currently are the AUD and NZD. At the same time, as investors seek out ‘risky’ assets, currency pairs like the EURAUD and GBPAUD tend to fall as traders look to earn the large daily dividend those pairs offer. This is known as a Carry Trade Strategy. [Watch this short video on the carry trade strategy.] On the other hand, if traders are in a ‘risk off’ mode and are averse to risk, the opposite of these relationships tend to occur. For example, if the stock market is in a downtrend, then a currency pair such as the USDCAD tends to move higher as traders buy the USD for its safe haven status. Regardless of the movement of the stock market, there generally exists a currency which you can buy. Now, the key is identifying a high probability area to time an entry in the trade. Use levels of support and resistance to identify these key areas with the help of oscillators to indicate momentum. *Keep in mind correlations move into and out of favor with one another. Therefore, a price of one instrument is not always going to move tick for tick with the other related instrument. Additional Resources Weekly Article on Market Correlations Support and Resistance Part 1 Trend line Trading Support and Resistance Part 2 The Carry Trade Strategy (9 minute video) Trading share indices with FXCM ---Written by Jeremy Wagner, Lead Trading Instructor To contact Jeremy, email jwagner@dailyfx.com. Follow me on Twitter at @JWagnerFXTrader. To be added to Jeremy’s e-mail distribution list, send an email with the subject line “Distribution List” to jwagner@dailyfx.com.DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
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