Technical Analysis Chart

The trend is your best guarding point in any financial trading market, as they say, and using a technical analysis chart for trend based trading is a simple method that at the same time can be very successful. Many traders over complicate the markets, especially at the beginning of their trading career. In fact simple systems can be the most effective.

Most traders use candlestick charts for this purpose, because they are so clear. Bar charts can also be used if preferred. Line charts would not be used.

The first thing to taking in to count is whether the market is rising or falling. This should be visible at a glance, especially if we check several time periods. Use an indicator like Bollinger Bands to make sure that a rising market is not overbought, or a falling market oversold. Once we have this information, which should just take a few seconds to verify, we can begin to draw trend lines on our technical analysis chart. Here’s how.

First, draw a straight line through the highest highs and another through the lowest lows.

1.   Bullish market

If the two lines are approximately parallel and heading upward, there is an indication of upward trend. The two trend lines can be used as support and resistance lines, which means that we assume the price will remain within the area between the two lines while the trend continues.

Forex Market

Forex or the foreign exchange trading market which deals with currency trading is primarily preferred compared to the stock market

stock market.

It is true that in the forex trading market, the various external factors like bank rates, trade deficits and inflation play a very important role, but it is also worth noting that at the same time the amount of risk that is involved in stock markets is almost nil when it comes to currency trading or forex trading.

 

Uniform price ranges

In the stock markets, all the participants in stock trading will have to place their quotes according to a uniform price range which is applicable to all. In the forex trading market the scenario is quite different.

Here it is composed of a series of levels where different financial institutions function differently and therefore varied exchange rates are available to the investors depending on their category.

Undercapitalization

„One of the biggest problems we see is trading undercapitalized. Too many traders are in a great hurry to get into the markets and to get rich quick. They have bought the lie that they can make a lot of money starting with a small account.

Although it is possible, it is not realistic. In a hurry to make money trading, most traders begin trading one contract. This is almost a sure way to losing what little capital they have. Everything is riding on a single contract, so the trader is forced to stay in too long or to scalp for only a few pips or ticks.”

Joe Ross in „Conversations with Forex Market Masters”


Most of traders who start their trading adventure hope for high profits, but do not have the equity to stick to a proper money management rules.

Overtrading

Many retail traders with little capital often exceed the risk limits and open too big orders hoping that they could live by trading. This is sometimes a part of their trading plan actually...

This is what we call overtrading - it is the simplest way to losses and/or burning down your account even amongst the most experienced traders.

Therefore if you eliminate the possibility of overtrading (i.e. by a proper construction of your trading plan) - you will minimize the possibility of experiencing losses. This is applicable throughout your entire career as a trader!

Overtrading has two aspects:

1. Unjustifiable large amount of opening orders.
2. Large number of hours in front of the screen.

Currency Pairs

What are currency pairs?

In the foreign exchange market, currency is traded in pairs. Pairs have meaning in relation to each other so must always stay together.

The two currencies in a pair are traded one against the other. The rate at which they are traded is called the exchange rate. The exchange rate is affected by currency supply and demand.

Most common currencies

The most common currencies traded in the market are called ‘majors’. Most currencies are traded against the United States dollar (USD). USD is traded more than any other currency. The five currencies most traded next are: the euro (EUR); the Japanese yen (JPY); the British pound sterling (GBP); the Swiss franc (CHF), and the Australian dollar (AUD). Trades of the six major currencies total 90% of the market.

The most common currency pair is EUR/USD.

The exchange rate

The exchange rate is always changing. The value of one currency is determined by market supply and demand forces, by comparing it to another currency. In a currency pair, the first currency is called the ‘base currency’; the second currency is called the ‘quote currency’ or ‘counter currency’.

When you buy a currency pair, you buy the base currency and sell the quote currency. The exchange rate tells buyers how much of the quote currency they need to buy one of the base currency. The order in a pair always stays the same, being a common approach by the industry. USD/JPY, for example, is a pair (USD = base, JPY = the quote). The order within the pair, in the way you use the term, does not change. So you either BUY it or SELL it, depending on the direction of the trade. For example: USD/JPY – you either BUY JPY using USD or you Sell JPY to get USD. On the currency rate table on the Easy-Forex® website you can view the way in which each pair available for trade is ordered.

Here is an example: EUR/USD 1.2500 means you need 1.25USD to buy one euro. It also means if you sell one euro you get 1.25USD. All trades involve buying one currency and selling another currency at the same time. If in the next day the Euro is rising against the USD and the exchange rate is now 1.26, for every 1 Euro that you bought, you have earned 1USD cent. Or, if you traded the opposite direction, for every EUR that you sold (at 1.25) you lost 1USD cent (since you “buy” back the EUR for 1.26).

Buy and sell currency

Traders in the foreign exchange market buy and sell currency to try to make profit. There are two prices for currency: the buy price, called the ‘BID’; and the sell price, called the ‘ASK’.

The difference between the ‘bid’ and the ‘ask’ is called the ‘spread’. The spread represents the difference between what the market maker gives to buy from a trader, and what the market maker takes to sell to a trader.

For example: the EUR/USD bid/ask rate is 1.2100/1.2200. The market maker gives $1.21 when buying from the trader, but takes $1.22 when selling to the trader. If traders buy and sell immediately without any change in the exchange rate, they lose money. This happens because of the spread – traders pay more to buy the currency than they receive when they sell in that one moment.

In fact, the spread is the leading source of income for the market maker. Like any other market, the merchant will buy at one price and sell at a higher price.

Quotes

The price of a currency is called the ‘quote’. There are two forms of quotes in the Forex market: direct quotes, and indirect quotes.

A direct quote is the price for one US dollar in terms of another currency.

An indirect quote is the price for one UNIT of another currency in terms of the US dollar.

Please note: in general, most currencies are quoted against the USD (e.g. – “direct quote”).

But, the EUR, GBP, AUD, NZD (as well as Gold XAU and silver XAG) are indirect quoted, for example: GBP/USD.

The quote is the price to a currency pair that the deal will be made with. This is unlike an ‘indication’, where the price given by a market maker is only informational (for trader’s knowledge, rather than for execution). Real time quotes are provided to Easy-Forex® logged in users. Delayed quotes ('indication') are provided to the rest of the site users.

Trading Commodities

Trading commodities on the Visual Trading™ platform is as simple and straight forward as it is to trade currencies. Easy-Forex® offers a number of commodities which are traded differently to currencies.

Energy Commodities

Energy Commodities traded with Easy-Forex® include, WTI Crude Oil, Brent Crude, Gas Oil and Heating Oil. These commodities are traded by investors for a number of reasons, including hedging, investing and speculating.   On a large scale, energy commodities are traded by energy companies and consumers to hedge themselves against rising or falling prices.

Commodities are usually traded using futures contracts. A futures contract is a contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. At Easy-Forex® you can trade commodities using our Day Trading product, keep in mind that the deals are cash settled (you don't take delivery of the actual goods) and that they must expire on a set day in the future. The pricing of all commodities day trading deals is based on the next futures delivery month.

How to Manage Forex Trading Transactions

The FOREX trading is one of the best rewards that the internet has given to the business and ordinary community. FOREX trading is simple and even an ordinary person without having any prior knowledge of the online trading or FOREX trading can make lots of money. But that is not it about FOREX trading and the transactions. You will need to manage your transactions and money in order to make the most from the FOREX trading.

Here are few tips which can help you to manage your FOREX trading transactions easily and simply.

How to Use Forex Robot Reviews For the Best Forex Systems

With the appearance of the powerful forex robot, the traders began to be very frenzy about it. All the traders that consider employing a forex robot will have great benefits for their business. This happens because they promise that you will make money by doing virtually nothing. The forex robot reviews that you can read online will demonstrate you this. The forex robot reviews are written by people who know a lot about Forex and they will show you that you can make good money with Forex.