Forex Trading Indicators - The Keys to Finding Forex Success

By Steve Crown 

The Forex Market or Foreign Exchange market is where a professional trader purchases and sells currencies. The best way to initiate trades is to become fully familiar with the Forex trading indicators: In fact it is necessary that you do so. By understanding the Forex indicators you are in a position to properly evaluate information and affect successful trades. The various types of Forex indicators are discussed below.

1. Trend indicators will show three movements with respect to (the market) price including up, down and to the side. The trend indicators are helpful in implementing your Forex trading strategy. The trend indicators show you what to expect with regard to price consistency and inconsistencies over specific (time) periods.

2. Volume indicators are relative in that they are useful in supplying information as to the interest level of investors in the Forex market. If the investor volume is high then it is more than likely indicative of a new trend. A low level of interest may suggest investor uncertainty or also that investors are simply not interested in a particular currency market. Conceptually in order to fully appreciate volume indicators you will need to become knowledgeable in what the (supplied) data means. Additionally, you will need to know the best way to respond to the information provided. Quick increases or decreases in volume may suggest reversals. A decrease in volume that is continual yet consistent may be supported by movement that is fast-paced within the market.

3. The third type of indicator is the momentum indicator. The momentum indicator tracks the rates within the currency exchange during particular time periods. It also charts simultaneously the weakness or strength of a trend's movement. The greatest momentum is found at the start of a trend. The lowest level of momentum is naturally at the end of a trend.

In order to use the Forex indicators successfully you will need to establish incompatibility with the Forex rate(s) and the data provided by Forex indicators. Movements with respect to indicators and rates suggest the following information:

1. Changes in trend may be expected when the momentum indicator is strong and the rate of exchange is moving sideways.

2. A weak momentum indicator is a sign that the currency exchange rate is about to increase.

3. Diversity in direction between the momentum indicator and rate is illustrative of the fact the current trend is starting to weaken.

4. Another important Forex indicator is the volatility indicator. The volatility indicator provides the trader with information as to the relative proportion of a price or rate increase or decrease. As a trader you will find sometimes the Forex market is highly volatile and other times it is less risky.
The indicators make it possible for the Forex trader to achieve profits when conducting trading activity within the Forex market. If the Forex market is at a low level of volatility you may surmise that there is little investor interest. In this light you may anticipate an enormous movement within the market. This is your sign that it may be the time to reap substantial profits with respect to your trading activities.
You will need to select indicators that provide you with the necessary data essential to your success as a Forex trader. You do not want to use too many indicators that are similar. What you want is an indicator that provides information and an indicator that subsequently verifies the information (previously) supplied by the initial indicator.

Safeguarding Your Investments With Forex Risk Management

By Delores Lee 

Forex trading is one of engines that run the world economy. It is the place where people earn higher profits, create their names and gain stability in the trading business. It is a one big platform of opportunities and great benefits which would likely be an open door for success. The chance to get financial success significantly depends on how you execute Forex risk management. However, there are a lot of business owners who are afraid to try foreign exchange trading. This is due to the fact that they are blind by the thought that investing in a currency is a scam or by other fraudulent schemes made to rip them off. But this is just a false belief. They just don't know how helpful their investments would be in the world market.

What happens on a Financial Market?
People buy and sell different stocks and currencies taking the advantage of their daily fluctuations. Here competencies and different innovations never run out of style. The Forex market is a highly sophisticated type of financial market and therefore traders should be aware of modern Forex risk management systems. A lot of quick decisions are to be made, so traders should really be flexible and focus on every trading process in order to get full control of the whole transaction. By doing so losses and future financial troubles will be avoided.

Two Groups of Traders in the Fx Market

• Banks and Companies. This first type of traders are trading for the sake of business. Once they profited in the currency of one country, they will then convert it to the currency of another country in order to earn more. This method will help them to save a lot since converting through the Central Bank is too costly.


• Individual Traders. This refers to struggling traders that want to earn higher profits. They are self governing and are the ones designing their own trading systems and methods. Some big investors may consider them as nothing in the Forex world, but somehow their investments also contribute to the value of currency that affects the economic growth.

What is Forex risk management?
It is one of the most popular strategies of this new era. One of the features of this method allows traders to trade online without using real money. One of the advantages is that you have small risk due to not exposing your investment. This is very helpful especially for small traders or even for neophytes of trading.
Whatever the Forex market may bring you, just remember that confidence is not effective if not anchored with great competency and responsibility. Success in trading is easy to reach only if you have a proper Forex risk management.

Let's all admit the fact that Forex market is the place not only for success and profits but also for losses and high risks. Perhaps, the reward and financial gains you acquire here is just similar or with very little difference to the risks you take. Because of the market's volatility, there is no stability on its direction, not to mention that the price of currencies and stocks often fluctuates. As a result, traders are prone to drawbacks and losses if they won't implement proper Forex risk management.

This kind of business requires hard work and higher competency in order not to encounter troubles in the future. Traders really need to commit an enough time to study and master the major processes in trading. They also need to be familiar with all the factors that significantly affect the market's flow that may influence trading transactions. Part of their responsibility is also to be aware of the risk they are taking, they're future outcome if not taken into account, and on how to manage or lessen its intensity. That's why a Forex risk management was developed in order to:

• Avoid surplus stocks. One of the ways to avoid financial troubles is to limit your stock orders. Purchase only an average quantity needed for trading. This way, you could avoid extra expenditure and debt.

• Conquer your emotions. In the trading business, it is ideal to not let your emotions overrule in the process. It would only add up to your worries and burden.

• Do not invest your money in just one trading transaction. Higher risks are taken if you will just concentrate and put all your investments in one trade. Chances are, if unfortunate events will happen, you'll just going to lose all your money leaving you with no resources to pull you up.

Forex risk management is essential in every trading. It does not only lessen the risks you are taking, but also gives you the confidence to overcome hardships and difficulties the Forex market may give you. Remember, the key to success is hard work and competence. This two work hand in hand for the achievement of goals.

Difference Between Demo and Live account in Online Forex Trading.

A consistent live account trader of one month is better than the consistent of five years of demo trading. The fact is that you cannot grow or be successful if your money is not involved in forex trading. As a demo account trader you can try all experiments but with live or real account it is a different psychological frame of mind. You learn faster from your mistakes and get refined, matured and disciplined in the market.

As a beginner trading live account, you will see money on the table (i.e. sure trading position that will yield profit) yet fear of loss grips you and you just sit down there and watch the market move in the trend you have envisaged or analyzed. But if it were demo account you will go for it. On demo account you take risks which ordinarily you would not dare on a live account, you end making money there. But it turns out to be another story when it’s a live account.

Even though demo account is a near perfect simulation of live trading, the trader’s emotions and fears are completely wide apart. It is traditional or conventional for most trainers to ask you to begin demo trading after your training, but with my training, I am changing that course. My experience, boldness and success stem from the fact that I got burnt in the market, but I decided to face the question of why I encountered losses and since I found that answer I have nearly been on over 95 per cent success story.

Most people who have lost money in forex trading and hence loathe forex are those who (by my guess) spent much time demo trading without a good psychological preparation for the real or live trading. Also, those who lose money initially to inadequate education (on technicals and fundamentals) of the market think forex trading is a herculean task. The initial losses discourage them and they never go far beyond overcoming that trauma to look for the right answer rather the blames are heaped on the market. Forensic analysis on their account history will definitely show their wrongdoings.

In summary, good education and fearless early live market entry is a sure way to finding the door to successful career and profitable trading.  No pain, no gain!

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* QUIZ 1
 Forex beginner strategy: getting started (10 questions)
1. A and D
2. B
3. B and D
4. D
5. A
6. A and C
7. B and E
8. C
9. E
10. B

* QUIZ 2
1/5 Determine the market direction (7 questions)

1. C
2. A
3. B
4. A
5. C
6. B
7. A

* QUIZ 3
2/5: Identify the trading opportunity (9 questions)

1. A
2. C
3. A
4. A
5. D
6. C
7. D
8. C
9. B

* QUIZ 4
3/5: Enter the pending order (10 questions)

1. B
2. A
3. A
4. B
5. C
6. C
7. C
8. A
9. B
10. D

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4/5: Manage the pending order while you wait for your trade (10 questions)

1. A, B and C
2. D
3. E
4. E
5. D
6. B
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8. A
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The Value of Education in Online Forex Trading.

Education is a rope that can carry us to greatness. It is one of the most important things in life, because without it, you can't contribute to the world or earn money, and do not have knowledge. Knowledge is power, so when you know what you can do, you can go that mile further. This article addresses that issue and tells how to find the importance of education and what is the worth of quality education in forex trading?

Let me spell out three scenarios:

Driving from Ojodu/Berger, Lagos, the first turning on the right has a ‘NO ENTRY’ sign for motorists. A good one by the transport management authority to educate the motorists and ensure an effective traffic control, I suppose, but in the middle of that sign is  the non-conspicuous time of ‘from 4pm.’ I wonder why that important time limit will be written in such a small size font. Then, what is the essence of that road education? Punitive?

I tuned my car radio and a programme in which an official of a forex brokerage company was reeling out the importance of education in forex trading was been aired. The PR man made notable points as he stressed the importance of education in forex as the very basic step. A good one! But in my mind, I disagree with their training structure. I do not see it taking traders to their desired goal. My doubt also stems from the fact that brokers and traders might somehow be strange bed fellows. I can authoritatively confirm that an account under that broker’s PAMM scheme for two years, which yielded nothing other than a 20 per cent shortfall in investment, was doubled in six weeks under my management. The client found it incomprehensible.

Thirdly, the craze for foreign education outside Nigeria calls for serious concern economically, especially when one thinks of its effect on capital flight. From the three examples above, the first shows an attempt to educate but still something is hidden. The second points to getting your education at the right place and probably not with a ‘rival’ and the last speaks of how people seek better knowledge if affordable to them.

In relation to this article, readers have to be informed that getting a proper education now in forex trading, which removes all fear of losses, teaches proper risk and profit management, technical and fundamental trading, good trading strategies, is all they should seek. The time frame to cover all of this cannot be in short seminars of a day or few days.

Forex trading involves investment, hence the need to guide your capital. Traders go into the market as speculators to make profit. This is the ultimate aim and if that fails, discouragement sets in. From my experience on feedback since writing here, I do not encourage those who seek materials on their own to trade in forex.

Irrespective of the cost, I recommend mentoring from an experienced trader. Some that called to find the cost of training, which at present is less than $500, complained that it was expensive and I advised them to try the Online Trading Academy in St. Albans, UK or the branch in the US.

Not taking them far again, I do even ask for their permit to recommend cheaper ones around. Some take it in a bad stride as if I am haughty. But the answer is that going into forex trading in which you expect to make money, if not a living, dictates that you should shun quack training for a quality one; but the choice is yours. I would not compromise standard. I wonder why someone investing close to a million naira if not more would shun good training because of a fee that is less than 10 per cent of his or her investment.

How To Use Candlestick To Identified Short/Sell Signal Forex Market.

This article is a continuation of last week’s article. Last week, if you can grab a copy of that article, we discussed long or buy formations. This week, the focus is the opposite of that. We shall also summarise five candlestick bearish patterns and their characteristics for a sell decision or to go short.

Hanging man

The hanging man has or is characterised by a small real body, long lower shadow and short or non-existent upper shadow. The length of the lower shadow must be at least twice that of the real body.

The hanging man is a bearish reversal pattern that can also mark a top or resistance level. Forming after an advance, a hanging man signals that selling pressure is starting to increase. The low of the long lower shadow confirms that sellers pushed prices lower during the session. Even though the bulls regained their footing and drove prices higher by the finish, the appearance of selling pressure raises the yellow flag.

As with the hammer, a hanging man requires bearish confirmation before an action. Such confirmation can come as a gap down or long black candlestick on heavy volume.

Shooting star

The shooting star is a bearish reversal pattern that forms after an advance and in the star position, hence its name. A shooting star can mark a potential trend reversal or resistance level. The candlestick forms when prices gap higher on the open, advance during the session and close well off their highs. The resulting candlestick has a long upper shadow and small black or white body. After a large advance (the upper shadow), the ability of the bears to force prices down raises the yellow flag. To indicate a substantial reversal, the upper shadow should relatively be long and at least two times the length of the body. Bearish confirmation is required after the shooting star and can take the form of a gap down or long black candlestick on heavy volume.

 Bearish engulfing

  

This requires an existing or previous uptrend or ascension. The last candle before the engulfing candle must be bullish. The engulfing candle must be bearish and must ‘swallow’ the previous bullish candle in a manner that the previous candle can completely fit into it. A bearish confirmation may be required. The formation of the pattern on a higher time frame will give more potent result.

Bearish piercing

This requires an existing or previous uptrend or ascension. The last candle before the piercing candle must be bullish. The piercing candle must shoot/pierce/cover the over or at least 50 per cent of the previous candle. The piercing candle must be bearish. The piercing candle must open higher than the close of the previous candle, then close below the midpoint of the body of it. A bearish confirmation may be required. The formation of this pattern on a higher time frame will give more potent result.

 Dark cloud cover

This requires an existing or previous uptrend or ascension. The last candle before the dark cloud candle must be bullish. The next candle opens at a new high then closes below the midpoint of the body of the previous bullish candle. The formation of this pattern on a higher time frame will give more potent result.

A combination of last week and this week summary on candlestick formation could narrow your search on winning or profitable candlestick formation strategy as you now have nine strategic formations to look out for on your trading style, time frame or periodicity.

Candlestick Long/Buy Formations

Online forex trading is simply about buying and selling. All technicalities and fundamentals about forex boil down to buying and selling of currency pairs to make gain. This article and subsequent ones shall focus on these two. The articles shall summarise trading in its simplest form. The way I have taken trading despite all its intricacies is that am either buying or selling to make gain and leave the rest. Going long means to buy in forex trading.

With these articles you can get the essence of forex trading and remove fear of what you see on your computer screen that looks complicated. This week’s article is on buy or going long signals with candlestick charting/formation as the basis of decision. In as much as new comers in forex will want to have an in-depth (which is good), on the long run it will be surprising that forex trading is simply about what am about to discuss. Success in forex trading is not measured by how many books you have read, nor how many courses you have attended, or by how many market tools in your arsenal but by that apt decision to buy and sell and ultimately make profit.

I will onwards from here give four candlestick patterns and their characteristics for a buy decision or to go long.

Hammer

As in the picture above hammer has or it’s characterised by a small real body (black or white), long lower shadow and short or non-existent upper shadow. The length of the lower shadow must be at least twice that of the real body. The hammer is a bullish reversal pattern that forms after a decline (meaning there must be an existing or previous downtrend). In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers signal a bullish revival. The use of hammer also goes with periodicity. The formation of a hammer on a higher time frame will give more potent result.

Inverted hammer

The inverted hammer is the opposite of hammer as in the picture above. It has all the characteristics of a hammer but it is like a hammer turned upside down (inverted), hence instead of a long lower shadow, it has a long upper shadow. The Inverted Hammer forms after a decline or downtrend. Inverted hammers represent a potential trend reversal or support levels. After a decline, the long upper shadow indicates buying pressure during the session.

However, the bulls were not able to sustain this buying pressure and prices closed well off of their highs to create the long upper shadow.

Because of this failure, bullish confirmation is required before action. An inverted hammer followed by a gap up or long white candlestick with heavy volume could act as bullish confirmation. The application of an inverted hammer also goes with periodicity. The formation of an inverted hammer on a higher time frame will give more potent result.

Engulfing

Like the picture above engulfing requires an existing or previous downtrend or decline. The last candle before the engulfing candle must be bearish. The engulfing candle must be bullish and must ‘swallow’ the previous bearish candle in a manner that the previous candle can completely fit into it. A bullish confirmation may be required. The formation of the pattern on a higher time frame will give more potent result.

Bullish Piercing

This requires an existing or previous downtrend or decline as in the picture above. The last candle before the piercing candle must be bearish. The piercing candle must shoot/pierce/cover the over or at least fifty percent of the previous candle. The piercing candle must be bullish.  The piercing candle must open lower than the close of the previous candle, then closes above the midpoint of the body of it. A bullish confirmation may be required. The formation of this pattern on a higher time frame will give more potent result.

Given an array of candlestick formations, the four above could simply be looked for on your Meta trader platform and any which supports candlestick charting taking into cognisance the periodicity. I am of the positive opinion that you could be trading profitably based on the fact that you can actually recognise these patterns.