Many traders are aware of the general concepts of Bollinger bands, such as the price action tending to follow a band until a reversal, which then targets the other band. Bollinger bands can reveal much more information than this, however, and here are some concepts which you can use to explore your own interpretations of the chart.
You should never ignore the center line of the bands. Although some people will tell you to expect when the price reverses from the upper band it will continue down until it touches the lower band, fairly often there is some variation in the decline at the centerline, and this may even provide support for another uptrend.
In an uptrend, you should expect the price to remain between the centerline and upper band. If the price drops below the center line, this shows increasing weakness, and you should look for the trend to falter. Conversely, if in a downtrend the price rises above the center line this shows some strength returning to the stock, and interesting action ahead.
By observing the reaction of the band to an approaching price, it is often possible to deduce future price action. While it is helpful to have other indicators as confirmation, you'll find that the majority of the time the chart will continue as follows -
If the price rises toward the upper band, and in response the band heads further up, then you can reasonably consider that the uptrend will continue and the price keep hitting higher highs, forming the classic Bollinger band chart. However, if the price rises in an uptrend but the upper band responds by flattening down to run horizontally, you can expect that the price may touch or just penetrate the band, but will then reverse. Sometimes the reversal will not be strong, and the band will start back upwards, which may indicate that the price will revert to the upward trend.
When the price is falling, one of two situations may apply. If the lower band scuttles downwards, this indicates that the bearish trend has taken hold, and you can expect successive lower lows. On the other hand, if the falling price is met with a lower band which comes up to the horizontal, this will likely be a reversal point, and the start of an uptrend. The same caveat applies to this as to the previous case. If you find that the uptrend is only progressing weakly, and meantime the low band starts to go back downward, then the bears have won and the downtrend will take hold again.
Constriction in the Bollinger bands will tend to build up pressure for the price to break out, either upward or downward. While the bands provide good support and resistance levels, it is worth checking these against other natural support and resistance boundaries. Whenever several indicators suggest the same level of support or resistance then it is much more likely to hold.
Friday, August 14, 2009
Wednesday, July 22, 2009
Basics of Foreign Exchange Trading
Learning the basics of Foreign Exchange Trading could be as easy as learning A-B-C. To start with, the Foreign Exchange Market is the place where currencies are being bought and sold.
The Forex Market is different from the Stock Exchange Market because in here it is the currencies that are being traded, while in the Stock Market it is the bond or stocks. The size of the Forex Market also differs from the Stock Exchange Market because the Forex Market is by far the largest market in the world with its trades amounting to billions of dollars each day. Also, rules are not that strict in the Foreign Exchange Market, you can trade as much as you like. Compared to the Stock Exchange Market where you are constantly regulated by law to prevent one person or company to monopolize the stocks in the market.
Anyone could trade in the Forex Market since the market is available anywhere in the world, with the largest central marketplace located in the main cities of the world like New York, London and Tokyo. The Foreign Exchange Market is also available online. You could download a Forex Platform in websites made by brokers and could start trading there. So, there is almost nothing that could stop anyone from participating in foreign currency trading.
Here are some of the common terms you would likely encounter when trading in the Foreign Exchange Market:
1. RATE- the current price of a currency. 2. SELL PRICE- the amount in which traders could sell their currency. 3. BUY PRICE- the amount in which traders could buy a certain currency.
Further down the road of your trading career, you will encounter more complicated terms or jargons about the Foreign Exchange Market. Words like Cable, Greenback, Swissie, Aussie, Kiwi, Loonie, Figure and Yard. Don't worry; you will surely learn this and a lot of other terms eventually.
With this basic knowledge at-hand now, you can start to gather some in-depth information about how to trade in the Foreign Exchange Market. One way of learning is to enroll in a Forex Trading Course. These are tutorials on how to be a successful trader. Reputable traders share their knowledge and experiences through this courses so you better go for those traders who are highly known for their good and successful trades.
Another option to learn is to buy and read Forex books. You could buy this in bookstores or you could either download one from the internet. Be sure to ask some help in choosing Forex Books. Look in the internet for Forex books that other traders suggest. Just make sure that the author is well respected and the book will serve its purpose to you, not to someone else.
Now, with all these information with you, you can start trading like a seasoned trader in the Forex Market. Remember to start with low trades first before you go all out. So you can be sure that you'll end in good trades
The Forex Market is different from the Stock Exchange Market because in here it is the currencies that are being traded, while in the Stock Market it is the bond or stocks. The size of the Forex Market also differs from the Stock Exchange Market because the Forex Market is by far the largest market in the world with its trades amounting to billions of dollars each day. Also, rules are not that strict in the Foreign Exchange Market, you can trade as much as you like. Compared to the Stock Exchange Market where you are constantly regulated by law to prevent one person or company to monopolize the stocks in the market.
Anyone could trade in the Forex Market since the market is available anywhere in the world, with the largest central marketplace located in the main cities of the world like New York, London and Tokyo. The Foreign Exchange Market is also available online. You could download a Forex Platform in websites made by brokers and could start trading there. So, there is almost nothing that could stop anyone from participating in foreign currency trading.
Here are some of the common terms you would likely encounter when trading in the Foreign Exchange Market:
1. RATE- the current price of a currency. 2. SELL PRICE- the amount in which traders could sell their currency. 3. BUY PRICE- the amount in which traders could buy a certain currency.
Further down the road of your trading career, you will encounter more complicated terms or jargons about the Foreign Exchange Market. Words like Cable, Greenback, Swissie, Aussie, Kiwi, Loonie, Figure and Yard. Don't worry; you will surely learn this and a lot of other terms eventually.
With this basic knowledge at-hand now, you can start to gather some in-depth information about how to trade in the Foreign Exchange Market. One way of learning is to enroll in a Forex Trading Course. These are tutorials on how to be a successful trader. Reputable traders share their knowledge and experiences through this courses so you better go for those traders who are highly known for their good and successful trades.
Another option to learn is to buy and read Forex books. You could buy this in bookstores or you could either download one from the internet. Be sure to ask some help in choosing Forex Books. Look in the internet for Forex books that other traders suggest. Just make sure that the author is well respected and the book will serve its purpose to you, not to someone else.
Now, with all these information with you, you can start trading like a seasoned trader in the Forex Market. Remember to start with low trades first before you go all out. So you can be sure that you'll end in good trades
Friday, July 10, 2009
Day trading for a living
Securities trading on the basis of daily volatility is called 'day trading'. Depending on current market conditions, day trading is an excellent way to make money in the short time cycles. Two techniques are critical to day trading - reading market signals and triggering events, and using leverage.
Market signals and triggers are the key bits of information that you need to day trade for a living; they're indicators that it's time to buy or sell an equity, stock or bond position. When the markets are volatile (prone to sharp, short time rises and falls in prices), you can, by careful reads on the market, buy low, sell high, or use reverse or short selling strategies.
Day trading revolves around the speed of the transaction; this is one reason why most trading action is handled over the internet and via computer program. It's simply not possible to make a human to human trade over the phone rapidly enough to handle the volatility of the market on a trading strategy - not when the time from the triggering event to the buy (or more likely sell) order can be measured in a fraction of a second.
Day trading relies on making market bets and betting that your judgment as a trader is faster and sharper than the market aggregation; it also relies on knowing the ins and outs of whatever commodity you're trading, whether it's foreign exchange currency pairs, stocks, bond funds or mutual funds. This requires intense study and gearing yourself up for absorbing and acting on large volumes of data in a very short span of time. Bluntly speaking, it's not for sissies.
The other tool used for stock trading is a financial instrument called leverage. In a nutshell, leverage is taking out a short term loan from a lender, using it to buy stocks, selling them (or handling the short position), and paying back the loan at the end of the day out of the profits made on the sale.
When it works correctly, leverage allows you to multiply the size of your trades (and thus the size of your profits) considerably. When handled poorly, it can turn a minor trade that loses money into a major loss, so use it judiciously as a tool.
While we've mentioned programs that allow automation of day trading, be aware that day trading is, above all else, a job. If you're going to make a living doing day trading, you'll need to attend to it like a job...
If you're looking for a way to supplement your income, why not try your hand in the stock market?
Tackle the issues surround day trading by letting a professional software find the next big penny stocks for you.
Market signals and triggers are the key bits of information that you need to day trade for a living; they're indicators that it's time to buy or sell an equity, stock or bond position. When the markets are volatile (prone to sharp, short time rises and falls in prices), you can, by careful reads on the market, buy low, sell high, or use reverse or short selling strategies.
Day trading revolves around the speed of the transaction; this is one reason why most trading action is handled over the internet and via computer program. It's simply not possible to make a human to human trade over the phone rapidly enough to handle the volatility of the market on a trading strategy - not when the time from the triggering event to the buy (or more likely sell) order can be measured in a fraction of a second.
Day trading relies on making market bets and betting that your judgment as a trader is faster and sharper than the market aggregation; it also relies on knowing the ins and outs of whatever commodity you're trading, whether it's foreign exchange currency pairs, stocks, bond funds or mutual funds. This requires intense study and gearing yourself up for absorbing and acting on large volumes of data in a very short span of time. Bluntly speaking, it's not for sissies.
The other tool used for stock trading is a financial instrument called leverage. In a nutshell, leverage is taking out a short term loan from a lender, using it to buy stocks, selling them (or handling the short position), and paying back the loan at the end of the day out of the profits made on the sale.
When it works correctly, leverage allows you to multiply the size of your trades (and thus the size of your profits) considerably. When handled poorly, it can turn a minor trade that loses money into a major loss, so use it judiciously as a tool.
While we've mentioned programs that allow automation of day trading, be aware that day trading is, above all else, a job. If you're going to make a living doing day trading, you'll need to attend to it like a job...
If you're looking for a way to supplement your income, why not try your hand in the stock market?
Tackle the issues surround day trading by letting a professional software find the next big penny stocks for you.
Thursday, June 25, 2009
Forex Money Management
Why do some forex traders fail while just a handful succeed?
Why do so many new and intermediate traders blow up their accounts (again and again?) How can you prevent blowing out yours?
It's not the answer you likely want to hear.
The answer is not to have the best strategy. You should be well aware that there are many, many forex strategies that work well - technical strategies, trending strategies, price action strategies, scalping strategies, and even discretionary strategies and so on.
So why does one trader trade a strategy successfully and another trader trade the same exact strategy unsuccessfully?
The answer is this: The successful trader uses good money management.
I could write a lot more on the rationale for this. But I don't want to bore you or start preaching about it.
Instead I will just tell you what to do to make sure you are using good money management. Ready?
Again, it's probably not something you want to hear.
Rule 1 )
Never risk more than 5% of your account on any one trade. (If you want to know why, then just do a Google search for the rationale. I'm not here to preach this to you or convince you. I just want to keep it simple so you can apply the guidelines and start successfully trading quickly.)
Rule 2)
Stop Loss - Set your stop loss so that you never lose more than 5% on any one trade. If you see a trade set up, but you also see that the set up requires a stop loss that will cause you to risk more than 5% on the trade - then DON'T take that trade. There will be another trade that fits your parameters soon. Take the good trade that allows you to stay within your money management parameters.
Yes, I know that applying forex money management seems to take some of the fun and excitement out of Forex.
But if you want to trade Forex as a business and for profit, you will treat it as such and always apply proper money management. Money management is the difference between the person who is "gambling in forex" verses the person who is successfully managing their forex business.
Why do so many new and intermediate traders blow up their accounts (again and again?) How can you prevent blowing out yours?
It's not the answer you likely want to hear.
The answer is not to have the best strategy. You should be well aware that there are many, many forex strategies that work well - technical strategies, trending strategies, price action strategies, scalping strategies, and even discretionary strategies and so on.
So why does one trader trade a strategy successfully and another trader trade the same exact strategy unsuccessfully?
The answer is this: The successful trader uses good money management.
I could write a lot more on the rationale for this. But I don't want to bore you or start preaching about it.
Instead I will just tell you what to do to make sure you are using good money management. Ready?
Again, it's probably not something you want to hear.
Rule 1 )
Never risk more than 5% of your account on any one trade. (If you want to know why, then just do a Google search for the rationale. I'm not here to preach this to you or convince you. I just want to keep it simple so you can apply the guidelines and start successfully trading quickly.)
Rule 2)
Stop Loss - Set your stop loss so that you never lose more than 5% on any one trade. If you see a trade set up, but you also see that the set up requires a stop loss that will cause you to risk more than 5% on the trade - then DON'T take that trade. There will be another trade that fits your parameters soon. Take the good trade that allows you to stay within your money management parameters.
Yes, I know that applying forex money management seems to take some of the fun and excitement out of Forex.
But if you want to trade Forex as a business and for profit, you will treat it as such and always apply proper money management. Money management is the difference between the person who is "gambling in forex" verses the person who is successfully managing their forex business.
Ways to Improve Your Forex Campaign to Make Better Money
The forex market is a great place to make a living, but it can be difficult for newer traders to break into. If you're new to this market or you've been at it for awhile but still aren't making the kind of money which you should be making, consider these ways to improve your forex campaign.
Have a Trading Strategy - This can be as simple as saying to yourself that you're going to go short on a trade which you are invested in once it reaches a certain point. The important thing is to never trade blindly and always have an exit strategy for whatever trade which you enact, and definitely always follow through with it til the end.
Trade Without Emotions - Emotions and any outside human factors can wreck even the most promising trades. For example, if you are invested in a long profitable trade, but suddenly the market fluctuates out of your favor, oftentimes undisciplined traders will stay loyal to that trade even while they are hemorrhaging profits, all the while hoping for another reversal. More often than not it doesn't work like that right away, so make sure that you trade completely without emotions.
Using a Forex Auto Trading System - A forex auto trading system is one which automatically enacts and ends trades on your behalf. It reacts to changes in the market around the clock which is a major advantage considering that the market takes place over a number of international markets and consequently remains open for a full 24 hours a day. Ultimately it works like a full service broker for you around the clock to ensure that you always land on the winning ends of your trades however the market reacts, but it's much more affordable, hence a full 30% of all traders using these systems
Have a Trading Strategy - This can be as simple as saying to yourself that you're going to go short on a trade which you are invested in once it reaches a certain point. The important thing is to never trade blindly and always have an exit strategy for whatever trade which you enact, and definitely always follow through with it til the end.
Trade Without Emotions - Emotions and any outside human factors can wreck even the most promising trades. For example, if you are invested in a long profitable trade, but suddenly the market fluctuates out of your favor, oftentimes undisciplined traders will stay loyal to that trade even while they are hemorrhaging profits, all the while hoping for another reversal. More often than not it doesn't work like that right away, so make sure that you trade completely without emotions.
Using a Forex Auto Trading System - A forex auto trading system is one which automatically enacts and ends trades on your behalf. It reacts to changes in the market around the clock which is a major advantage considering that the market takes place over a number of international markets and consequently remains open for a full 24 hours a day. Ultimately it works like a full service broker for you around the clock to ensure that you always land on the winning ends of your trades however the market reacts, but it's much more affordable, hence a full 30% of all traders using these systems
Monday, February 23, 2009
Margin
Margin is the amount required of you to deposit with your broker to serve as collateral which enables you to access leverage. Leverage means loan. Let's assume you have opened a forex account with a broker and deposited $500. Depending on the range of leverage your broker offers and what you choose, you can use the meager $500 to control a standard account worth $100,000. You may also decide to only go for a $10,000 mini account or even $1000 micro account. Factors that will lead to a margin call: 1. Ignorant of news events. Most ignorant traders often have their accounts wiped out during news events releases. I therefore recommend that you get familiar with Economic calenders. 2. Over trading: don't open more positions than you should so that you will not exceed your trading limits and goals. 3. Have a trading system. To succeed in trading you need a proven and tested decent trading system.4. Develope a trading plan: a plan gives you the road map to your destination. When you have no plan you will surely not know when you miss the way. 5. Know where to place your stop loss orders to avoid being stopped just before price resumes in your analyzed trend and entry direction. 6. Monitor your margin account. If you do not know when your account is running into Margin Call you certainly will not know when you should cut your losses. 7. Identify market trend: your trading system should be able to tell you how to identify new market trends, trend corrections and trend reversals. 8. Don't allow maximum draw down in your account.
Thursday, February 12, 2009
I made $5000 last month
I made $5000 last month. Is very easy if you have been following my teachings on currency trading recently.
Let me just emphasise on the rules and principles once again:In forex you have to be disciplined in the sense that you need only 10% or 20% of your account to trade; don't risk exposing all your account. When trading try always to maintain exit target, you must have a set target to exit in order to achieve your desired result. Always use a stop loss order: A stop loss order is your ability to close trade at a point of certain loss.
All these can only be achieved by the use of "forex tool" like softwares. Infact after acquiring some basic knowledge on forex the next things are tools to perfect on your strategy of making lasting profits. There are best tools for forex on www.forextradinonline.blogspot.com , these softwares like The Best Forex Avenger, Killer sale letter, Forex Massacre perform wonders in trading and have been helping me make a lot of profit. You too can make $5000 monthly like me by using these great tools.
Just rush to www.forextradinonline.blogspot.com and learn the basics of forex free of charge and also buy some softwares that would guarantee you maximum profit in currency trading. However, to profit in forex you have to invest your time and money which include buying of tools like softwares and investing magazines etc.
Let me just emphasise on the rules and principles once again:In forex you have to be disciplined in the sense that you need only 10% or 20% of your account to trade; don't risk exposing all your account. When trading try always to maintain exit target, you must have a set target to exit in order to achieve your desired result. Always use a stop loss order: A stop loss order is your ability to close trade at a point of certain loss.
All these can only be achieved by the use of "forex tool" like softwares. Infact after acquiring some basic knowledge on forex the next things are tools to perfect on your strategy of making lasting profits. There are best tools for forex on www.forextradinonline.blogspot.com , these softwares like The Best Forex Avenger, Killer sale letter, Forex Massacre perform wonders in trading and have been helping me make a lot of profit. You too can make $5000 monthly like me by using these great tools.
Just rush to www.forextradinonline.blogspot.com and learn the basics of forex free of charge and also buy some softwares that would guarantee you maximum profit in currency trading. However, to profit in forex you have to invest your time and money which include buying of tools like softwares and investing magazines etc.
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