Nov
22
Trading that mirrors news reports is one of the most powerful and effective ways to make money within the Forex market. In the most elementary sense, news is what makes the Forex market move, even more so than trader sentiment. After all, where does trader sentiment come from? Markets do not move in a vacuum, they need real life occurrences to move. So when major news breaks, you can expect that other serious traders are watching and that they will react.
Because news is such a popular trading motivator, dealers will treat this accordingly. In an order for the dealers to make and protect their profits, they will oftentimes widen the bid / ask spread. What was once a reasonable spread will become inflated so that instances of arbitrage or other quick turnaround profits at their expense can be avoided. Another thing to be aware of is the fact that you might get locked out. In other words, because dealers are so overloaded with work during moments of important news releases, they might execute your trade at the moment you specify, but because they are so busy, it might not show up at your computer immediately. This might not seem like a big deal, they made the trade for you, didn’t they? But its effects can be devastating if the market moves against you. A good trade can be lost this way and a bad trade can become even worse. If you can’t see or access your trade, there is no way to protect yourself when it turns sour. Make sure you take a look at all the Forex reviews online to avoid brokers that may not fill your orders. A lot of times this is the reason why you end up switching.
Nov
17
 In Forex trading it is critical to understand the support and resistance levels properly so that you can successfully make money. These levels can beat the other indicators hands down when they are used with other price action interpretations. A beginner should know how to apply these levels properly so that he can maximize his profits.
A common mistake that most of the beginners make is they will open the Forex charts and then try to match their trade conventions. In fact, the support and the resistance levels are nothing but joining the two points together. Hence it is better to draw these levels on the chart and then you confirm your trade through it.
As far as possible, you should try not to cheat on your support and resistance levels. Many people draw both the levels at the end of the wick of the candle or mixing them up. They do this as they are afraid of facing failure in their trade. However the best way to trade is to let the price hit both the levels before trading.
Hence you will be only cheating yourself when you cheat while drawing the levels because of the fear of missing on your trade. The best way to draw the support and the resistance levels is to put them at the end of the candle wicks. This step is very important as it will help you maximize your profits and lessen your loses.
Nov
13
Japanese Candlesticks is a type of method used to show Forex trading trends. The method was developed somewhere in the 1700s by a man called Homma. The method was used to analyze the changes in the prices of rice.
The candlestick charting system was later used widely as it shows the highs, lows and close of commodities over a particular period of time. The Japanese Candlesticks is very much similar to the bar chart, however it shows the maximum relation between the closing and the opening currency exchange prices.
There is a narrow line that shows the price ranges of the day. The wide body shows the difference between the opening and the closing prices. If the closing line is above the open line then the body is white or green. If the close is below the open line then the body is black or red. The traders are able to better comprehend the market when they refer to the Japanese Candlesticks. These charts offer better and wide range of information than the bar chart.
The traders can quickly understand the different price actions that show the continuation and reversal in trends. If the chart is combined with other technical analysis tools then it can be very helpful to choose the exit and the entry points. These charts are the most appealing to the traders as they are better than a two dimensional line or bar chart. A Japanese candlestick chart contains 4 elements which are closing, low, high and open.
Nov
9
Currencies move in units called pips. Let’s assume that you are using the U.S. dollar as your base currency and are purchasing the Japanese yen. The bid ask spread will look something like this: 80.7400 / 80.7405. This means that if you are buying the yen, you will be paying more for it than you would get if you were selling it. The bid / ask spread, as you can see, is a built in defense that dealers have against immediate arbitrage within their market. In the above example, the spread is 5 pips.
If you are purchasing a currency, you will need to know how much you can buy. Generally, currencies are sold in lots. A lot consists of 100,000 units of a currency. This does not mean however, that you need to front a large amount of money. Thanks to leverage, you usually can front as little as 1 percent of the amount you are planning on purchasing. Many dealers also will now allow you to buy in smaller increments than a standard lot of 100,000. A nano-lot can consist of as little as 100 units of the currency you are buying.
Let’s go back to the dollar to yen example. If the yen rises in value up to 80.7500 / 80.7505 and you want to sell, you would be selling at the lower price within the given spread. So if you bought at 80.7405 and sold at 80.7500, you would net a profit of 95 pips. Pips, as mentioned before, are a universal measurement that does not take the actual dollar profit or loss into account, but levels the field so that all traders can know the degree of success that your trade garnered. A profit of 95 pips will look different to various traders depending on how many lots they were dealing in.
Nov
4
As you know, traders who have a non-directional bias when it comes to currency trading are better prepared and will have more opportunities to make money than a trader with a directional bias. This does not mean that every trade will be a winning one, though. Many times, a trade will start going in one direction, only to suddenly reverse directions. You can be prepared, however, and capitalize off of a trade even when this happens.
By establishing entry and exit prices, you can trigger a trade to be executed and then have it be immediately ended when it starts to move against you. Additionally, you can have your plan for a trade going in the opposite direction enacted when the trade stabilizes and begins to go in a second direction. If you have entry and exit prices for both directions entered into your trading platform, you stand the chance of automatically being entered into a position that will have the potential of erasing losses created by the first trade.
This is how it works: by entering orders that establish entry and exit points in both directions, you will have all of your bases covered. So if a trade moves against you, your exit price will be hit, but the moment that the price starts moving again, a second trade will be entered, this one hopefully making a profit for you. Be sure to use the Oracle Trader to help you find the direction of the market you are in.
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