Category: Forex Education - Page 14

Trading Psychology and Trading Patterns – when the usdjpy broke the 100 level

Trading with price charts in the currency markets implies looking for repetitive shapes that happened in the past and by the time current price is making a shape like that traders have an educated guess about the possible outcome. This is what is known as a price pattern.

So looking for patterns when trading is one of the things that traders have in common as this helps forecasting price for the next period, depending very much on the time frame the pattern is being identified. If, for example, a head and shoulders pattern is identified on the weekly or monthly chart, then the measured move for it implies quite a strong move price will make.

When patterns are being used in combination with market psychology, the analysis becomes even more complex. It gives the trader a competitive advantage as, on one side, the pattern represents something from the past that can be projected into the future and on the other side market psychology comes to confirm/infirm that specific move.

How to trade false breakouts in the markets?

by rcanessa

Trade false breakouts in a simple way

The trading techniques based on breakouts are very popular because they are quite profitable and can be used to trade in any market. Many traders know the fact that after the price get caught into an area of consolidation a breakout usually occurs by which the price make a violent and extensive movement outside the area where it was consolidated.

These movements could be so strong that a trader can obtain high profits if enters the market in the right direction. However, the problem is that in many cases the traders who jump when there is what appears is a breakout realize the fact that the price returns to the area of consolidation and ends losing money. This is known as a fakeout or false breakout.

In fact, the fakeouts are so common that many investors trade and make money with strategies based on false breakouts. Therefore, in this article we will show the basic way to trade false breakouts.

Piercing Line Candlestick Pattern

by rcanessa

The Piercing Line candlestick pattern is a reversal formation that occurs in downward trends and usually indicates a possible change from bullish to bearich trends. This pattern has a high reliability and can be identified as follows:

This formation is only formed during downtrends.
The first candle is always a big black candle (bearish).
The next candle should open below the low of the black candle.
The white candle of the next period should close at least above the midpoint of the real body of the black candlestick.

The Forex Market Requotes

by rcanessa

When we trade in the currency markets at some point we will cross with requotes. While this does not happen all the time, it can happen and the trader should know what they are, what they mean and how to avoid them.

What is a re-quoting?

A re-quoting in the Forex market means that the broker with which we are trading is not able to provide us with an entry into the market based on the price we asked at the beginning when we send the order. Usually, this occurs in highly volatile markets in which prices move up or down very quickly, usually in the periods in which important economic or political news are announced but also can be caused by some event that had a strong impact on the market.

In essence, a trader decides to buy or sell a currency pair at a particular price and click the appropriate button on the platform to do this. By the time the broker receives the order, the market price has moved too fast for the broker to execute the order at the price. When this happens the broker shows the announcement of a re-quote in the trading platform in order to tell the trader that the price has moved and to give its client the opportunity to decide whether or not to accept the new price. Almost always the new price is worse than the price requested by the trader. That is why serious brokers ask their clients before executing the trade with the new price.

United States Retail Sales

by rcanessa

General definition

The Retail Sales Index is a report that considers the sales of goods in the retail sector during the previous month. This is a monthly figure, which always refers to the previous month in which the Census Bureau and the Department of Commerce of United States issued the report. This report is compiled and issued approximately two weeks after the end of the month.

This index is based on data obtained from samples that are extrapolated to the entirety of the whole country.

How to Avoid a Fake Forex Blog

by rcanessa

No matter how absurd it may sound, a fake Forex blog does exist. Online foreign exchange traders go to Forex blogs to fill up the void in terms of trading information, news and insight. And when there is a need, there are also those that take advantage by filling that need with scam and useless information. It is risky enough to be in Forex trading, how much more so with the possibility to be drawn towards a fake Forex blog?

Look out for those outrageous headlines. For online users that have one time or the other been drawn to scams, the headlines might have done the trick. It is silly to put the finger on it but it is true: Be a millionaire trading foreign exchange! Gain $2000 a day trading Forex! These headlines provide easy solutions to everyday problems in a few words. In equipping oneself with trading knowledge, one finds out early on that these offers are impossible. Yet, trading can be complex that one just wishes for an easier path to the fulfillment of its goals. At the end of the trail, one is bound to be buying the blogs’ offerings and losing more money with nary the offered millions in sight.

What is carry trading?

by rcanessa

The carry trading is a strategy in which an investor sells a certain currency with a relatively low interest rate and buy another currency with a higher interest rate. The aim of this strategy is to get as profit the difference between the two interest rates, a benefit that may become attractive depending on the amount of leverage used. As the profit comes from the interest rate differential, you can make a profit even if the price of the currency does not change a single pip.

Although the Forex market operates 24 hours, is taken by consensus UTC 0 hours as the end and beginning of a new trading day. In Forex trading, at the end of each day is credited or charged to the account of the trader the spread between the interest rates of the two currencies of the currency pair in which the trader have open positions at this time (this is known as Rollover).

Little known utilities of Metatrader 4

by rcanessa

MetaTrader 4, the most known and used platform for Forex trading has a lot of tools and options which are little known and used primarily by ignorance. This is due largely to the fact that very few users read the manual built into the platform. In this article we will see some of these options and utilities unfamiliar. (Much of what … Read more

Forex Market vs Stock Market

by rcanessa

Investing in the Forex market offers huge advantages over buying and selling shares in the stock market especially if you’re a small investor who does not have a large capital to invest. Here are the main advantages of the Forex market with respect to stock trading:

The Forex market operates 24 hours a day

The Forex markets operates continuously 24 hours a day, Monday through Friday. This market opens on Sunday at 14:00 hours (New York time) and closes on Friday at 16:00 hours (New York time). In this way, traders from around the world have the advantage of being able to react quickly to the main news of the market and can set their own schedules to trade as they have the possibility to trade during the trading sessions in the financial markets in United States, Europe and Asia.

Pennant Chart Pattern

by rcanessa

What are pennants patterns? The Pennant is one of the most popular patterns used by technical analysts and it is basically a short-medium term continuation chart pattern used by many traders in many financial markets. This chart pattern will exist and last long from one to three weeks of time. The pennants are formed in both bullish and bearish trends … Read more

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