Free Forex Trading Information

Range Trading With The RSI Indicator

2009-05-08T05:54:00.000-07:00

For most of the time, currency pairs in the Forex market are trending by moving sideways, or trending up or down, within a certain price channel. For trading in such a market, use the scalping technique with the RSI indicator. These short trades, often only a few hours in duration, keep the pips coming while you wait for a bigger move.

The Relative Strength Index (RSI) is a popular oscillator. It’s a lagging indicator, measuring the past momentum of a currency pair’s price by comparing upward price pressure (green candles.

If you use candlestick charts against the downward price pressure (red candles) over a defined period of time. This is usually 14 days, the default setting in most software packages, but experiment to see what works best for you.

Like most oscillators, RSI is displayed as a squiggly line within a window beneath the chart itself. It varies up and down on a scale of 1 to 100, like a percentage, so it’s easy to understand.

The Technique

The RSI is excellent for range-bound markets. When the RSI climbs above the 70 line, that indicates the currency pair is overbought and that the people who purchased should be ready to sell it, thereby lowering the price; when it drops below 30, it’s been oversold. When the RSI crosses back over that point a second time, that’s the signal to enter the market.

For example, let’s say the GBP/USD is range-bound and dropping toward its support level. Below the chart, the RSI indicator follows it down and drops below 30. That warns you the currency pair has been oversold, and that people should be ready to purchase it, which means the increased buying pressure will cause the price to rise.

If you purchased the GBP/USD at that point, because other traders watching the RSI might not yet have caught on, the price might still be falling. You could be stopped out, losing pips.

But when the RSI changes direction and rises back above the 30, that’s the time to enter the market long. Place your stop below the price support level so that market jitters won’t trigger it accidentally, then sit back and count the pips as the price climbs back to its resistance point.

When the price reaches that point, close your trade. Then watch the RSI to see if it climbs above 70, when you can reverse the procedure.

This sort of range trading is a form of scalping. It doesn’t earn many pips at a time. But they add up, and if the signals are strong enough to justify the risk, you could always purchase more than one lot, compounding your pips as if they were interest.

Another way of reading the RSI is called divergence. That’s when the price on the chart reaches a new high or low, but the RSI doesn’t follow suit. It can be a powerful tool, too, because usually the price will change direction to follow the RSI rather than the other way around, and you can scalp more pips when the price moves to catch up.

How to Use Elliott Wave Analysis to Boost Your Forex Trading

2009-01-07T08:50:00.000-08:00

A Free Trading Video From the World's Largest Market Forecasting Firm

This video lesson features Elliott Wave International Senior Currency Analyst, Jim Martens, demonstrating how you can use Elliott wave analysis to identify opportunities in your Forex trading.

This is just a short excerpt. For a limited time, you can access the full $79 online trading course, FREE. Visit Elliott Wave International for your free access.

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Candlestick Reversal Patterns

2008-09-21T04:32:00.000-07:00

Anyone who studies the stock market has undoubtedly heard of candlestick charting. Their history goes back almost four centuries as a method of technical analysis used by Japanese rice traders. It wasn't until the early 1990's that candlestick charting made its way to the western world. As popular as the technique has become in the west, it's hard to imagine a time when there was little information able to be found on the subject.

All a person needs to do is type the term "candlestick charting" into their favorite search engine and they are presented with all types of information on the topic. There are numerous websites, articles, books, software, courses, and videos. There are even candlestick games and flashcards!

The subject has been highly commercialized due to the desire of new traders wanting as much information about the subject as possible.One of the drawbacks of the excess information available on the topic of candlestick charting is that there is as much bad or incomplete information as there is good. Unfortunately, the trader new to candlesticks takes this partial or downright bad information into the trading arena and experiences financial loss at the hands of the stock market. Why? Well, just like any other type of stock analysis, "it's never quite as simple as it sounds".

Candlestick charting is often touted as a "holy grail" in the world of trading stocks, but nothing could be further from the truth. While it's true that using candlesticks can give the trader a method determining whether or not a trend may be getting ready to reverse, it's also important to remember that stocks rarely just turn on a dime and reverse course. If you look at a healthy trend on a stock chart, you'll notice the price movement from one end of the trend to the other takes kind of a zigzag course while the overall price movement moves toward the direction of the trend. If you are looking at a candlestick chart, you'll also notice there will be a multitude of reversal signals that mean nothing more than a slight pullback in price as investors take profits, NOT a trend reversal.

So are candlestick reversal signals a viable method of technical analysis? You bet they are! In order to use candlestick reversal signals successfully you need to understand technical analysis in general.

There are points of price resistance and support that will show up on the chart and most technical analysts learn them early in their studies. Just like any other method of "predicting" a change in trend, candlestick reversal patterns need to be applied to these areas of support and resistance as well. Once the trader understands the proper application of candlestick reversal patterns they can also see the results in their portfolio.

Tips From a Pro: How To Trade Forex With Elliott Wave

2008-05-01T14:12:00.000-07:00

Free Video Lesson
Watch Jim Martens, Senior Currency Strategist at Elliott Wave International, the world's largest market forecasting firm, give tips on how to trade forex with Elliott wave analysis – free.

The U.S. dollar is the current center of the global financial community's attention, and it will likely stay in the spotlight for a while. That could be good for the forex market – and you, a forex trader.

Already the largest and most liquid market on the planet – with the daily volume ten times larger than the combined daily turnover on all of the world's stock exchanges – recent focus on the dollar is likely to attract even more currency speculators. And that means even more volume and liquidity – a nimble trader's paradise.

Winning in forex is not easy. You need skill, discipline – and sometimes, just pure luck. You also need a method. You may have heard that Elliott wave analysis is something many forex traders use. It's true; wave analysis is not a crystal ball, but it helps you accomplish three crucial goals: Identify the trend, stay with it, and get out when the trend is likely over.

Elliott Wave International's website gives you multiple resources that teach you Elliott. Of course, nothing helps you learn faster than watching a good teacher. That's why you don't want to miss this free opportunity to learn from one of the best forex Elliotticians out there.*

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How to Trade Forex with the Stochastic Indicator

2008-05-01T07:21:00.000-07:00

The Stochastic is an Oscillator that is typically used to identify overbought and oversold conditions in your day trading.. The indicator consists of two lines: % K and %D. These two lines fluctuate in a vertical range between 0 and 100. Readings above 80 are considered overbought and readings below 20 are considered oversold.

Many traders use Stochastics to generate buy and sell signals. When the faster %K line crosses above the slower %D line and the lines previously crossed below 20, a buy signal is generated. When the %K lines crosses below the %D line and the lines previously crossed above 80 a sell signal is generated.

After identifying a trend it possible to identify buy and sell opportunities. If the trend is up as on the eur/usd daily chart below then we take only buy signals as long as the trend remains in place. We ignore the sell signals and weaken the stochastic by changing the settings to 5,3,3 which will generate more signals and show the hand of the weaker players in the market.

On its own the stochastic generates too many false signals and plenty of whipsaw which can lead to losses.

As we can see from the above daily chart the eur/usd continued its uptrend from 21 August 2007 until 11 November 2007 a rally of 1400 pips before consolidating in a 500 pip range. The next breakout occurred as a continuation on 26 Feb 2008 rallying another 1400 pips before consolidating again.

As with all lagging indicators they are best used in conjunction with other indicators. The large highlighted trade shows a buy signal on the stochastic with the market dropping 300 pips. Stop losses should be placed below the last low or high. All the other signals produced good trades.

By using a 4 hr chart we can probably get better entries with tighter stops once we have a confirmed signal on the daily time frame.

The Independent Trader Crash Course

2008-04-09T13:26:00.000-07:00

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You've heard them say, "Buy low, sell high." You've also heard, "The trend is your friend." Then there's, "Don't fight the Fed" and many other age-old trading principles.

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he Independent Trader Crash Course is a complimentary resource provided by the world’s largest market forecasting firm, Elliott Wave International. The firm’s 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI’s educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet’s richest free content programs, Club EWI.

Utilizing Relative Strength Analysis in Forex Trading

2008-03-20T02:54:00.000-07:00

Relative strength analysis is a technical report that allows investors and brokers to make informed decisions about trading Forex.

When investors and brokers look at the relative strength analysis, they are presented with graph of how the trends in the Forex should go. This analysis allows brokers to see current trends in the foreign exchange market and allows them to know if they are interested in buying or selling currency at any given time. This can help an investor or financial institution make educated decisions on which markets are gaining and which ones are losing.

There are many factors that affect the exchange rate in the Forex. These factors can include political events, governmental policies, inflation, and current trends in the importing and exporting business, consumer opinions and even natural disasters all over the world. The relative strength analysis looks at all of these factors. The past trends in the Forex are also taken into consideration, but are not the only thing that is looked at when forecasting this type of market.

The relative strength analysis compares all foreign currency and the exchange rates every day. The report will then be sorted by their strength rating and ranked according the previous week’s rating. This report relies on at least 45 weeks of data so that sustained growth can be seen with ease. Using this analysis promises to be one of the most valuable tools of forecast the trends in the Forex. In addition, it can show the rating of stocks and rate them into which ones are the strongest. The stock market has a direct relation to the foreign exchange market because it reflects current trends in buying and selling, which will increase or decrease the value of currency.

The current trend in predicting the trends in the Forex is to use not only the relative strength analysis, but to also look at other factors such as the stock market barometers and economic factors. When investors and brokers look into all of these factors when forecasting the Forex, it makes for a highly reliable means of predicting trends. This can be the vital difference between making money and losing money on the foreign exchange market.

It is generally agreed that for a currency trader, it is important to understand how the methods and tools are used in both the Forex and the stock market. All currencies are different and the currency rate reflects the value of one currency in relation to another. When there is a noticeable change in the value of currency, one or both values will be affected. Using these methods of comparing the relative strength analysis to the Forex can offer currency traders with an opportunity to better forecast their trades.

There are several benefits to using the relative strength analysis when attempting to forecast the Forex. When an investor looks at the relative strength of a certain stock, it affects the foreign exchange rate. One with a strong relative strength is ideal, but the value on these will not be low. Investors can look at a stock that is increasing in values and used the relative strength to measure whether or not this particular stock is moving up because it has a history of increasing or if it has a sustained high value. Stocks with a good relative strength over a constant, steady time period are good performers in the Forex market.

When using the relative strength analysis in relation to the foreign currency exchange, it is possible to tell which markets are performing well and which ones are not. The key is finding the markets and currency that are moving up on the ranking scale. It is important to remember that like stocks, the Forex is affected by a variety of factors. The relative strength analysis can help investors find which ones are good investments. This report is based mostly on a stock’s closing price and the relative strength analysis is based on gains and losses. The report can calculate the markets report for any period in time.

- Alpha Trader

5 investment mistakes you will probably make in 2008 ...

2008-01-19T04:07:00.000-08:00

Unless YOU attend this FREE, LIVE webinar!

Have you ever looked back on an investment and asked yourself, "What in the world was I thinking?!" The obvious reply is "Yes!", and that is because...

...Every investor makes mistakes. It always has and always will be true. But even so, some mistakes hurt you more than others. When it comes to successful investing, what matters is to keep your mistakes small and make few of them.

That is simple, but it's not easy. The most critical step you can take is to identify your mistakes and, more important, understand why you make those mistakes.

You can learn how to do just that by participating in a unique webinar with EWI's Senior Tutorial Instructor, Wayne Gorman. He knows a thing or two about avoiding investment mistakes; he's been doing it (trying to, anyway) for 30+ years!

Join Wayne LIVE on the web, Jan. 23 at 4:30PM Eastern, for his rapid-fire explanation of why these five factors lead to costly investment mistakes, and how you can avoid falling victim:

The News
Macroeconomics
Microeconomics
The Fed
The "Easy Way"

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New Forex Trading Software Reviews

2008-01-02T07:23:00.000-08:00

Success in trading Forex online is all about timing, knowing when to enter the trade and when to get out, can make the difference between excellent profits or serious losses. There are many Forex companies offering their services as trading signal providers, and for a modest monthly fee they’ll send you real-time signals (even via your cell phone) letting you know when to buy or sell a currency pair.

Ideally you’d like to be able to identify trends by yourself without having to rely on a signal provider, but this will take time to master. By all means begin your education in recognizing trends and in-depth technical analysis, but in the meantime you can make use of some personal Forex trading software to aid you in your Forex trades.

Finding a reputable trading signal provider can be a tricky task and can cost several hundred dollars per month. Fortunately there’s an alternative – Forex trading software that you can download and run on your home computer.

There are two new software programs available right now, that are quite popular and offer excellent Forex signal notification, so no matter if you’re a short term trader, swing trader, or long term trader, one of these Forex software programs should be part of your daily trading arsenal.

Forex Killer is trading software program designed to run on Windows and can take data from any Forex broker that can export historical data in a .csv format. Once imported into the program, Forex Killer allows the user to select a time frame and currency pair. Enter your desired stop loss and take-profit level and start the calculation. Forex Killer generates two sets of signals, short term and long term, and let you know whether you should buy or sell based on current market prices. This particular Forex software program supports most of the common currency pairs, as well as gold, stocks, and futures.

The next Forex software program to consider is called Prophet1 Expert Advisor for the Metatrader 4.0 trading platform. This program bases its signals on two popular indicators, moving averages and MACD’s. This allows the user to make use of this software for day trading purposes, but it’s certainly not limited to that time frame. Based on back-testing this Forex software program boasts an admirable 90% success rate, and this is using its default settings. As with Forex Killer, alerts can be sent via email or to your cell phone.

No matter what software you end up using, don’t rely on it solely to make you money. It can be a powerful tool to help you succeed in Forex trading, but it’s very important that you take the time to educate yourself on all aspects of trading with of Forex technical analysis. It can seem daunting at first, but once you understand how signals are generated you’ll be in a much better position to adapt to the ever-changing world that is the Forex marketplace.

"Pips" in Forex Trading

2007-12-12T11:30:00.000-08:00

I stumbled on this excellent summary of what a "Pip" in Forex trading is..This is for Hein from Germany...after last nights discussion in our Forex Chat room...hope it's clear to you mate and take it easy !

The unit that is described with each tick within the forex markets and currency pairs is called “Pips” or percentage in points. If you are a trader in the Forex markets, than you will come to know and hear the term PIPs in everything that you do.

All a PIP is, is the value of what to call a single tick ( one tick ) move either up or down. You might here people use the term points in the stock market, but in the forex markets, they are called PIPs

Put simply, a pip is the smallest unit of price for a currency. It's the last decimal point in every exchange rate or currency pair. For every one PIP, you make or lose $10 U.S. dollars. So if the market moved favorably to you 120 PIPs, then you would multiply 120x$10 which is $1200 dollars.

Even if you didn’t know how much money you are making or losing, the interface you use on your computer automatically calculates every PIP based on lot size (typically $100,000 U.S. dollars for regular sized lots in the forex markets and $10,000 dollars for mini lots).

This interface updates in real time and connects to the forex markets to give you up-to-date price spreads as they fluctuate.

Fibonacci Trading Videos for Beginner Traders

2007-10-15T10:38:00.000-07:00

I regularly get ask who or what trader are good in explaining Trading with Fibonacci. It is very rare to find a great Fibonacci expert, and then to find someone who can teach well, is a real bonus! Neil Hughes from FibMaster presents his courses in video with no hype and exaggeration. He dispenses with all the complicated technical stuff and gets right down to what actually works. When you're finished with his courses, you'll be able to apply Fibonacci to your own trading, it's that simple.

If you are not familiar with Fibonacci, these video trading courses are a great place to start with and they come with an 8 week money back guarantee.

Here is an outline of the course:

The Beginners Fib Trading Course contains the following:

Video 1 - Introduction what is Fibonacci?
Video 2 - Introduction, background info.
Video 3 - Basic concepts & terminology.
Video 4 - Extensions and Retracements.
Video 5 - Projections and Expansions
Video 6 - Fib Retracements in action.
Video 7 - Exercise - Retracements.
Video 8 - Fib Expansions in action.
Video 9 - Exercise - Expansions.
Video 10 - Conclusion.

The Advanced Fib Trading Course contains the following:

Video 1 - Introduction buy pullbacks sell rallies. 7 mins
Video 2 - Advanced Fibonacci retracements. 4 mins
Video 3 - Exercise - retracements. 7 mins
Video 4 - Mistakes to avoid. 9 mins
Video 5 - Fib retracements in action. 6 mins
Video 6 - Advanced Fibonacci expansions. 4 mins
Video 7 - Exercise - Expansions. 6 mins
Video 8 - Fib expansions in action. 8 mins
Video 9 - Terminology & the power of SK! 17 mins
Video 10 - Exercises - SK. 10 mins
Video 11 - Advanced application of Fibs. 17 mins

*This video courses comes with a 100% money back guarantee for 8 weeks, so if you don't like it just send it back for a complete refund.

Visit Neil at FibMaster and read more about these Fibonacci Video Trading Courses.

Euro performance up against the US dollar

2007-10-15T10:26:00.000-07:00

14 Rules of Successful Forex Trading

2007-01-03T04:14:00.000-08:00

Forex Trading Machine

Being a successful Forex trader takes more then just having money, time and desire. The more you realize it, the better are your chances of making it big in this wonderful business. Throughout the years I learned many valuable lessons that today I apply to my Forex trading. Here are some of these lessons. I hope you don’t take them lightly, I guarantee you that these are true gems product of trial and error (something I hope to shorten for you!).

1.Your psychological state of mind is more important than your dollars. Yes, that is correct. For example, entering a trade when you know you should not enter it and ultimately losing money on it will cause you a financial loss which hurts but can be recovered in the next trade or two. However, it will also cause you a psychological loss in the form of future fear and insecurity. This, will take more than one or two trades to recover!

2.This one is simple but you would not believe how many traders do not follow it. In bear markets sell the markets that show most weakness. Don’t try to outsmart the market. If the market is telling you "I am weak" don’t argue and just follow! If the market tells you "I am strong", BUY and continue BUYING!

3.Don't ever try to pick absolute tops and bottoms. I know of traders that have an addiction with this. They always look to pick the absolute bottom or top and ride the market on the reversal. They succeed one or twice but eventually suffer a big hit. If you can't help it and you want to try and look for those huge turning points in the market at least use some sort of confirmation. Don't just guess "this is the top" or "this is the bottom".

4.Trading runs in cycles. There are good day and bad days, there are good weeks and bad weeks, there are good months and bad months. Don’t let a bad day, week, or month put you down. Learn not to measure results in the very short term. Many traders give up after having three or four bad days. Don’t! Know that its part of the business. Hang in there, manage your money well, be persistent and I promise you it will pay off!

5.Remember what type of trader you are and follow the rules of that specific method of trading. For example, if you are a day trader it would be wise to ignore the fundamental picture. It would also be wise to analyze and trade with the appropriate time frames. Also, select a broker that offers tight spreads, provides good order fills and guaranteed stop losses (all important for effective day trading). If you are a swing trader it is important you look at the much bigger picture. Sometimes fundamental market data can come in handy (although I personally prefer to look at the technical picture alone). Learn to be patient, both in terms of your profit target being reached and entering trades (for swing traders it can be weeks with no trade signals).

6.KEEP IT SIMPLE! Don't think that the more indicators and patterns you use the more profitable you will be. My trading strategies are simple BUT original. I learned through time that the true gems in the market originate from simplicity. This is an important concept, don’t dismiss it.

7.Never ever add to a losing position. I think this is one of the biggest "diseases" traders have. A stop loss is like a red light, it's not a suggestion. It tells you to get out of the market not to add more money to the trade. It simply makes me angry to see people adding money to a losing position. It has no justification except one. HOPE! They don’t say "gee, I was wrong and should have exited in my stop loss level", they say "I am correct about the direction of the market, it's just that my stop loss was placed to close to my entry. If I hang in there and add more money the trade will surely go my way and I will not only make for the loss but I will make much more since now I am adding to my position at a much better price!".

8.Be patient with your profit targets. I know it is very tempting to grab the profits in a winning position before the profit objective is reached. There is a fear the market will turn around and the trade will become a loser. Be disciplined. There is a reason your profit objective is where it is. You did your homework before entering the trade and the profit objective you decided on justifies the trade in terms of risk/reward. Frequently take profits before the profit objectives are reached will destroy your whole risk/reward ratio and will finally be the difference between success and failure.

9.95% of traders are not disciplined and that is why they do not succeed. They always know better than their system, they always know better then what the market is telling them. Be amongst the 5% disciplined traders and I guarantee you will be light years ahead of the crowd.

10.Think, analyze, and create BEFORE the trade. During the trade only follow what you though, analyzed and created before the trade. Before you enter the trade you are cool and balanced, you are thinking logically. During the trade you are under fire since money is involved. You are under pressure. What makes you think that you can make better decisions under intense fire then when you are calm and balanced? You can't. That is why you planned the trade before hand. Follow your plan!

11.Don’t favor sides. Trading is about recognizing long and short opportunities. Many people have the problem of shorting. They have the problem of profiting when the market is going down. They are taught through life that you make money when markets go up. As a currency trader you don't care if the currency market is going up or down, if there is an opportunity to make money you take it, that’s your job.

12.Trade a method that fits your personality. If you are like me and like hearing the cash register ring often then use day trading strategies. If you don’t mind waiting for profits to accumulate over time then consider using swing trading strategies. This is very important. Trade with what best suits your character. Be true with yourself and recognize what are your needs. My need is the gratification that frequent profits provide, no matter how small. It keeps me going.

13.As forex traders we can never know what price is to "low" and what price is to "high". Don’t be afraid to join a trend. I know that psychologically this can be difficult sometimes. You are always afraid that you will be entering the trend at it's end. This rule is important but must not be followed blindly but rather smartly. Suppose you are day trading the EUR/USD. You know that the average daily range of the pair is 90 or 100 pips. If your system is telling you to go long at a point where the market has already moved 80 pips and place a profit objective of 50 pips, would that be a smart move? Obviously not.

14.Know the personality of the currency you are trading. Each currency pair has its own individual "personality". This can be in terms of volatility, spread, average daily range, liquidity, specific patterns etc. Use trading strategies that go hand in hand with the characteristics of the currency pair.

That's it. Remember, 95% of traders don’t follow these rules. Be amongst the unique that do and use a good trading method/system. Your success will come faster than you think.

I wish you all the best.
- Avi Frister

Pivot Points in Forex

2006-09-02T04:32:00.000-07:00

Pivot Points in Forex – What They Are and How to Use Them

Pivot points are one of the commonly used triggers for trading systems. If you’re new to the forex market, though, you may be foggy on exactly what pivot points are and what they can mean to your trading.

In a nutshell, pivot points are exactly what they sound like – the point at which the market is expected to turn – if it’s been going down, a pivot point is the value at which it will reverse the trend and begin to climb. If it’s been rising, then the pivot point is where the sentiment of the traders will turn and begin a downward trend. Obviously, being able to predict major movements in the money market is a valuable skill, since it hints at the where the market is moving and whether or not this is the time to trade or stick.

Pivot point trading is an especially popular method of mapping out a trading strategy. It was originally used by floor traders in the stock market who liked it because it allowed them to gauge where the market was heading with just a few simple bits of information and calculations. By knowing the high, low, opening and closing points from the previous day, they could calculate a point at which the market had ‘turned’ to head upward or downward. Pivot points can help predict where the market is going – and coupled with the resistance and support points, give you an idea how far in that direction it will go.

There are a number of ways to calculate the pivot points for the day, but the most common – and easiest – is to average the opening, closing and high points for the last day’s trading. There are other pivot points that can be calculated from those numbers as well. Before we talk about how to calculate them and what they mean, let’s define a few terms:

Pivot point – the point where the market reverses a current trend.
Resistance – A high point in a market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin a downturn.
Support – A low point in the market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin to climb back up.

Traditionally, support and resistance points are difficult to break through. Most of the time as the numbers approach that level; there will be a slight rebound in the other direction. An interesting phenomenon is that once a resistance or support point is broken, it tends to switch sides – a broken resistance will often become a support for prices on the other side of the line.

The most common calculation for arriving at a pivot point is:

Pivot: (High + Close + Low)/3
Resistance: 2 * Pivot – Low
Support : 2 * Pivot – High

USD/EUR Date:02/03/06 14:40 O=0.83174 H=0.83188 L=0.83167 C=0.83188

Given this data for Feb 3, 2006, the pivot points for Feb 4, 2006 would look like this:
Pivot: 0.83180
Resistance: 0.83193
Support: 0.83172

Those numbers give me some points on which to base my strategy for the day. If the market opens above the pivot point, it’s a bull market, and most advisors would go for long trades, since the direction of the market is up. If it opens below pivot, it’s time to favor short trades and quick sales.

There are two common sales strategies using pivot, resistance and support points.

Breakout Trade: When a currency pair breaks through a resistance or support point, there’s usually a surge of activity around it. Buy if the charts show a break through a resistance, sell if the rate drops below a support point.

Pullback Trade: When the exchange rate drops back from a high, most traders will buy, based on other information that’s available. It’s a tricky move, though, since the pullback could just be a temporary pause in the upward momentum, or the beginning of a downward rebound.
Using pivot points to inform your strategy in day trading is a complex subject. You’ll find a great deal written about it by various gurus and experts. These basics can help you understand what you’re reading from them.

For more in-dept information visit Professional trader and author Peter Bain's Video Forex Course that demonstrates simple yet powerful Pivot Currency trading systems used by professional traders.

[forex pivot point trading]

Forex Training

2006-05-04T11:39:00.000-07:00

Knowledge is the key to successful Forex trading. The knowledgeable trader has greater awareness of how the market moves and more chances of making profitable transactions. Without knowledge you are shooting in the dark. You may succeed on a few deals but the odds are that you are going to lose in the long run.

Thankfully there's lots of information available about the FOREX and how to trade. You can find hundreds of web sites with useful advice and there are just as many books about all aspects of FOREX trading. If self-learning is not your style, there are training courses available that guide you step-by-step through the intricacies of Foreign Exchange.

If you have the time and the inclination, you can find all the facts you need on the Internet or in your public library. The problem with Internet sources, however, is that the information is generally unstructured. You may find bits and pieces of useful data, but finding a source that presents it in a step-by-step fashion is more difficult.

Forex study courses, on the other hand, present their material in a logical and structured manner that aids in understanding Forex trading. The investment involved in a Forex course may well worth the time saved in seeking out similar information on your own. There are courses available for both beginners and intermediate traders.

The cost of a Forex course varies from free to $1000 or more. As with most things, you get what you pay for. Free Internet courses may give you the basics needed to begin trading, but usually omit the in-depth training needed to analyze charts and plot trading strategies.

There are two basic types of study courses. You can attend a class with a group of people, or you can sign up for an online course that is taken over the Internet. Classes are available in most major cities. You can attend a class to learn the basics or sign up for more advanced courses if you are an experienced trader. The advantage of these courses is that you get personalized attention – any questions you have can be answered directly by the instructor. The disadvantage is that you must follow the class schedule – if you miss one class it can't be made up at a later time.

Seminars are also a possibility for learning about Forex. Seminars are usually aimed at experienced traders, but if you know the basics you could benefit from a 1 or 2 day seminar. These are available in most major cities, and you could expect to see seminars offered every couple of months. They are usually conducted by well-known Forex professionals who can offer new insights and strategies in Forex trading.

If you prefer to study at your own pace you should investigate online Forex courses. You can log on to a website any time of the day or night and go through the course material as you see fit. If you have any questions, you can usually communicate with an instructor by email. Responses could take anywhere from minutes to days.

A variation of online courses is CDROM courses. These are done on your computer, but you order the study materials from a company and they arrive by mail. There may be little after market service offered with CDROM learning materials. If you have questions you may not be able to contact an instructor for answers. However, each company has their own policy about this, so find out what their service provides before putting down your money.
Other types of home training include video lessons. These can be watched in the comfort of your living room and are similar to attending a Forex training seminar.

The best kind of Forex training can be with an individual trainer or mentor. This would be someone with many years of Forex experience who can offer insights and strategies learned through the course of conducting thousands of transactions. Forex mentors usually charge a lot of money – thousands of dollars is not unheard of. Whether the cost is worth it is up to the individual to decide. Working with a master trader can provide valuable insight into the psychology of Forex trading.

Forex Trader Mistakes

2006-04-20T13:08:00.000-07:00

How to Learn Your Lesson and Move On

When learning to trade Forex Online, mistakes can lead to loss of profits and can become very expensive. A good Trader will understand the currency markets they are trading. Whether you are new or experienced, you can still make mistakes. There are common errors that many Forex traders make when trading on the Forex. With a little research, you can learn how to avoid common Forex trader mistakes and how to learn to move on.

Using too much margin when trading Forex can lead to costly mistakes. Margin is the use of borrowed money to purchase securities. While it is true that using margins can help you make more money, it can also make your losses bigger. When new investors look at margins as “free” money, they have the potential to lose much more money in the Forex. Margin is not free money and using is too much can end up making more debt than profits. You would not buy stocks using a credit card, so you would not use margins to trade currency. When investors use margins when trading on the Forex, it requires the investor to have to watch their investments much more closely than when margins are not used. Margins should never be used if the investor does not have the experience or time to closely monitor their trades.

Another common, but costly mistake is when investors buy and trade on unfounded tips. This is one of the most common mistakes, even with more experienced traders. It is easy to be tempted to buy or trade currency or even stocks when you overhear someone talking about the next big “thing”. Sometimes this can be helpful, but more often than not, it will only lead to losses, not profits. Do not fall victim of investing and trading based on tips you hear or read about on television or on the Internet. If you hear about a trade that interests you, then best tip is to do some research and talk to your broker before trading or investing. You can also benefit from getting a second opinion about a Forex tip before buying, selling or trading any form of currency.

Not understanding how the foreign exchange market works is yet another costly mistake that new traders and investors make. Understanding the terminology and terms used in the Forex is very important to new traders. There are tutorials and free demos widely available on the Internet that allows traders and investors to learn how to use the Forex to their advantage.

In addition, it is wise to choose an experienced Forex mentor that can help you trade and invest in the Forex. These brokers should know everything about the Forex and can help traders and investor make wise choices. Find a broker that is tied with a good financial institution and that has experience in the Forex.

Also, another common mistake is when traders and investors buy or sell when the rate on currency is cheap. Sometimes this is a good move, but just because the rate is low, does not mean that it will profit the investor. Instead of choosing a currency to buy or trade, it is best to look at all of the factors that affect the exchange rate and look at the trends and history. Avoid buying or selling any currency just because the rate is low. Most of the time, there is a distinct reason why these rates are low. Research the trends of the currency and find out, which ones are the best profit makers when trading on the foreign exchange market.

Last of all, another common mistake that costs money for both new and experienced Forex traders is that they underestimate their trading abilities. Some traders feel that they do not understand the Forex well enough to trade to their fullest ability. Anyone with willingness and commitment to learn the Forex can profit with some Forex Education and research. It can take some time to learn the aspects of the foreign exchange market, but even new traders can learn how to trade with success.

In order to speed up your learning curve and preventing costly mistakes read more here

Fast Forex Trading Tips

2006-04-15T11:08:00.000-07:00

For those of you who are new to the Forex market, or even for those of you who are considering becoming a Forex trader, this article with Forex tips is for you. This article will learn you exactly what Forex is and how it works. - For the Forex Trading beginner, you will find a quick list of trading tips that will help you in your transactions.

For those of you who are new to the forex trading market, first you will need to know the meaning of the term “Forex” which stands for Foreign Exchange market. This pertains to the international foreign currency exchange market where the currencies of all countriess are bought and sold. The forex market got started back in the early 70's when floating currencies and free exchange rates were first introduced. At this time, the Forex market traders were the only players on the market to decide upon the value of one type of currency against another, all solely based upon a particular currency’s supply and demand.

The Forex market is very unique for a number of reasons. First of all, this is one of the few markets that require very little trading qualifications and is free from any external control and can not be manipulated in any way. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency. In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

Open a Forex trading account, all you have to do is simply fill out an application and provide all the necessary identification. The application will include a margin agreement will state if the broker will be allowed to intervene with any trade when it appears too risky. This agreement is made to protect the interests of the broker because most trades are done by using the broker’s money. However, once you have established an account, you can fund it and begin trading in the forex market.

Adapt your own Forex trading strategy. There is no one strategy that will work for all the traders, each individual trader will need to develop their own trading strategy to the market. While some traders may relay solely on technical analysis, others may prefer a more fundamental approach, while the more successful traders use a combination of both. Each individual trader will need to learn the best approach for them selves in order to gain a more comprehensive overview of the forex market in order to prepare for any entry and exit points.

Understand that prices move by trends. Forex trading has a popular saying, “The trend is your friend.” there are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.

Prior to taking any position, look over the top five Currencies to make sure you’re not missing something. The top five foreign in forex are: USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

For Forex Trader beginners, it would be safest to have two trading accounts because you learn as you trade. Keep one real account, the one that you will actually use to trade money in realtime; and the second account should be a demo account, one that you can use to test alternative moves in your daily trading. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.

Always examine the daily, four hour and one hour Forex charts that concern your specific trades. Although you can trade at 30 and 15 minute time intervals should you have the experience, but short term trading are reserved for the Forex traders that has been tradong for quite a while.

Introduction to Technical Analysis

2006-04-10T11:47:00.000-07:00

Forex Technical Analysis is divided into two types: Fundamental and Technical. Fundamental analysis attempts to predict movements in currencies by examining current political and economic events. Technical analysis uses historical economic data to predict movements in the Forex. These two articles will examine the principles of technical analysis and the tools involved.

Basic Principles
Technical analysis is based on three assumptions:
1 – Price movements are a result of all market forces combined. Things that can affect currency prices include political events, economic conditions, supply and demand, seasonal variations and weather conditions. The technical analyst, however, is not concerned with the reasons for market movement, but rather, the movements themselves.
2 – Currency prices follow trends. Many market patterns have been recognized as having predictable consequences.
3 – Price movements follow historical trends. Forex data has been collected for over 100 years and patterns have emerged over time. These patterns are based on human psychology and the way people react to certain sets of circumstances.

Is Technical Analysis Necessary?
Most Forex day traders rely heavily on technical analysis and may use fundamental analysis to support their trading strategy. A major advantage of technical over fundamental analysis is that it can be applied to many different markets and currencies at the same time. Fundamental analysis requires in-depth knowledge of the political and economic conditions of a certain country; therefore it is less likely that any one trader can do proper fundamental analyses on more than a few countries.

The beginner trader may be put off by the seeming complexity of technical analysis and wonder if it is necessary for Forex trading. As with any investment, Forex trading requires a strategy. Although any strategy is possible, technical analysis is a proven method for predicting movements in the Forex. Does that mean it's a sure thing? Nothing is 100% certain, and currency prices are affected by a variety of forces. This is why many traders use a combination of technical and fundamental analysis to plot their trading strategies.

Availability of Resources

Every Forex online broker should provide access to a wide variety of charts for technical analysis. Some charting software is available free of charge while in-depth professional charts may carry a monthly fee. Charts can be viewed by various time scales and provide detailed information about price movements as well analytical overlays. Charts can be zoomed in to the tick level or zoomed out to see the broad picture over a period of months or years. Charts are updated in real time.
Forex charts may be available on your broker's web site or may be included as part of their trading software.

Before beginning in Forex trading it is a good idea to become accustomed to market behaviour by following charts for a period of time and studying their movements and learning about trends. Many brokers provide practice accounts that can be used by beginners to place 'paper' bids – no real money is exchanged. These practice accounts familiarize the beginning trader with Forex charts and market movement while at the same time allowing him to become acquainted with the trading software a particular broker uses.

Trading Forex with Pivot Points

2006-04-09T03:03:00.000-07:00

Pivot Points are used in Forex Trading by Forex Traders and are calculated on the previous days move and trades are entered when the market hits a support or resistance line of the pivot point providing your OB/OS indicator is in agreement. All the support and resist lines are put in place 1st thing in the morning. then you wait for the market to hit those entry Points.

Contrary to what some might believe, Trading Forex online with Pivot Points are probably the most popular method used in trading the financial markets today. Long before the invention of computers this was the method used by the traders in the pits to determine hidden support and resistance levels.

The Pivot Point is still used by experienced floor traders and technical analysts alike. The major advantage now is that we now have computers and can calculate our points well in advance. Many charting packages can calculate them for you automatically, thus enhancing the use of Pivot Points.
Whilst there is a lot more to Pivot Point Trading in Forex Trading than we will be mentioned in this article, the purpose of this exercise is to introduce you to the concept of trading Forex with Pivot Points.

Remember the market can only go up, down, or sideways. It is like an elastic band that has been stretched, sooner or later it will rebound to an equilibrium point where the market is in balance, and then stretch the opposite way only to rebound and reach another balance point. Then some fundamental announcement or happening will drive the market in a new direction and so on day after day. Pivot Points can aid us in determining how far that elastic can stretch before it rebounds.

Whilst there are many time frames that can be used for calculating Pivots, for the purpose of this exercise lets concentrate on the daily time frame (i.e.: 24hr) Pivot Points are calculated using the previous days, Open, High, Low, and Close figures. There are many Pivot Point calculators available on the web so you don’t have to waste your time doing the calculations manually. Also bear in mind the longer the time frame you are using the longer you must be prepared to stay in the market or wait for the next entry point.

Pivot points unlike many other indicators are an objective tool. Because they are mathematically calculated, there can only be one answer for a specific time period.
Many subjective indicators like Fibonacci retracements, (and I am a great fib fan) Elliott waves etc. can have different people trading in different directions at the same time due to individual interpretation..

Pivot Points can help you to predict the next day’s highs and lows in advance. PP’s can give you anything from 4 to 8 support and resistance levels. However you still have to be able to identify the trend to be a successful PP trader. Pivot Points also work best in a trending market.
Entry and exit points Pivot Points can give you exact entry and exit points, rather than enter markets that are in the middle of a run, or about to turn the other way. Here is where we use other indicators to assist on the entry or exit.

Read more about Trading Forex with Pivot Points.

If the market stalls at a Pivot Point level, and you have an overbought or oversold indicator that will be a good time to get in or out. Or if a Fibonacci level coincides with a Pivot Point level it can make a strong case to enter or exit a trade. If the market is bullish and your favourite indicator is not near overbought, when it hits the first resistance level then you probably have a good case to stay in the market and make your profit target the next Pivot Point resistance line. The breakout above the 1st resistance level can then become your new stop or stop reverse.
Obviously the reverse is true of the support level as well. By combining the Pivot Points with your favourite indicator you can develop your own trading system that no one else uses.
Trading for the day will probably remain between the 1st support (S1) and resistance (R1) levels as the floor traders make their markets. Once one of these levels is penetrated other traders will be attracted to the market, and should the second level be breached, the longer term traders are attracted to the market.

Knowledge of where the floor traders are expecting support or resistance can be a distinct advantage especially when there is no outside influence in the market. Provided no significant market news has occurred between yesterdays close and today’s opening, the local floor traders and market makers tend to move the market between the Pivot Point (P) and the first support line (S1) and resistance (R1) If one of these levels is breached then expect the market to test the next levels (S2) and ( S3) or (R2) and (R3)

Whilst there are many other aspects to Forex Pivot Point trading why not try this simple method first and see if you can develop your own strategy by using your existing trading technique’s in conjunction with the Pivot Points.