Contracting bands warn that the market is about to trend: the bands first converge into a narrow neck, followed by a sharp price movement. The first breakout is often a false move, preceding a strong trend in the opposite direction.

A move that starts at one band normally carries through to the other, in a ranging market.

A move outside the band indicates that the trend is strong and likely to continue, unless price quickly reverses.

A trend that hugs one band signals that the trend is strong and likely to continue. Wait for divergence (when the price is flat or rising or falling, but the MACD is going in the opposite direction, the price will break out in the direction of the MACD) or a Momentum Indicator to signal the end of a trend.

I use the BB's for indication of when a breakout or breakdown is imminent. When the outside bands get very narrow, it means the price is consolidating and is getting ready for a breakout, either up or down.

At this point, it's dangerous to have a position because you don't know if it's going to break up or down. When the bands get very narrow, it's almost better to close out your old positions, even at a loss, until you see a clear direction. If you don't want to close out an old position at a loss, at least hedge it.

The BB's can't tell you which direction the breakout will be, the Chaos Oscillator (MACD) and Momentum will do that, and I always trade in the direction the Momentum and Chaos (MACD) are going.

Sometimes when using the slower timeframes, I use the outer BB's as targets for my limit sell price. If the bands are really wide after a big move, I use the middle band as my limit target price.

Bollinger Bands are designed to capture the majority of price movement. When prices move beyond the upper or lower band, they are considered high (overbought) or low (oversold) on a relative basis.

More On Using Bollinger Bands:

First, the BB's can be used as I mentioned before, as price targets. If the bands are narrow, the price will be jumping up & down within the two outer bands. As mentioned before, this is not the best time to be putting on a trade, as the trading range is too narrow, unless you can make a decent quick profit in a 1 or 5 minute chart.

If the range isn't too narrow, you can ride it up and down and book pips. I only attempt this in a 1 or 5 minute timeframe using the 5/9/18/50 EMA's. Don't do it if you can't make at least 5-10 pips up and down. The danger is in whipsaws.

Most of the time, unless the bands are too narrow, you can make trades by literally bouncing off the outer bands.

This is called "The Bollinger Bounce".

When placing a trade, just set your stop at the outer BB and your price target limit sell order where the other outer band is.

If your trade rapidly approaches the limit price and all your indicators say that the price movement is just getting started & not likely to quickly reverse on you, then you should first either remove your limit price & let the price run, or, raise your limit price another 5-10 pips. Then raise your stop to either your entry point or past it, to lock in either breakeven or some profit in case the price suddenly reverses on you.

This is definitely what you should do in a price breakout. If the price keeps going up in an extended breakout, you just keep adjusting your stop upwards to lock in more profit (this is called a trailing stop, more later on this subject) and keep raising your limit also.

A Super Advanced method of using BB's is to use two sets of BB's, both with the middle band set at 18. Set one BB to a standard deviation of 3 and leave the other standard deviation at 1. This gives you 6 short term support/resistance lines to work with. Your initial stop and target are the outer bands, and your inner bands are used for your trailing stop and short term resistance and support. You can also trade off the two inner bands.

This method is very similar to using Fibonacci OR Average True Range (ATR), but is much easier to use and understand.

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Learning the basic skills in forex, such as how to read forex charts, is really important.

This is because once you have this vital skill under your belt, it will be a lot easier and quicker when the time comes for you to learn and practice an actual forex trading system.

By the time you finish this article, you'll learn how to read forex charts, as well as know the pitfalls that can occur when reading them, especially if you haven't traded forex before.

Firstly, let's revise the basics of a forex trading as this relates directly to how to reade forex charts.

Each currency pair is always quoted in the same way. For example, the EURUSD currency pair is always as EURUSD, with the EUR being the base currency, and the USD being the terms currency, not the other way round with the USD first. Therefore if the chart of the EURUSD shows that the current price is fluctuating around 1.2155, this means that 1 EURO will buy around 1.2155 US dollars.

And your trade size (face value) is the amount of base currency that you're trading. In this example, if you want to buy 100 000 EURUSD, you're buying 100 000 EUROs.

Now let's have a look at the 5 important steps on how to read a forex chart:

  1. If you buy the currency pair, that is, you're long the position, realise that you're looking for the chart of that currency pair to go up, to make a profit on the trade. That is, you want the base currency to strengthen against the terms currency. On the other hand if you sell the currency pair to short the position, then you're looking for the chart of that currency pair to go down, to make a profit. That is, you want the base currency to weaken against the terms currency. Pretty simple so far.
  2. Always check the time frame displayed. Many trading systems will use multiple time frames to determine the entry of a trade. For example, a system may use a 4 hour and a 30 minute chart to determine the overall trend of the currency pair by using indicators such as MACD, momentum, or support and resistance lines, and then a 5 minute chart to look for a rise from a temporary dip to determine the actual entry. So ensure that the chart you're looking at has the correct time frame for your analysis. The best way to do this is to set up your charts with the correct time frames and indicators on them for the system you're trading, and to save and reuse this layout.
  3. On most forex charts, it is the BID price rather than the ask price that's displayed on the chart. Remember that a price is always quoted with a bid and an ask (or offer). For example, the current price of EURUSD may be 1.2055 bid and 1.2058 ask (or offer). When you buy, you buy at the ask, which is the higher of the 2 prices in the spread, and when you sell, you sell at the bid, which is the lower of the two prices. If you use the chart price to determine an entry or exit, realise that when you place an order to sell when the chart price is say 1.330, then this is the price that you'll sell at assuming no slippage. If on the other hand, you place an order to buy when the chart price is the same price, then you'll actually buy at 1.3333. A forex system will often determine whether your orders will be placed simply according to the chart price or whether you need to add a buffer when buying or selling. Also note that on many platforms, when you're placing stop orders (to buy if the price rises above a certain price, or sell when the price falls below a certain price) you can select either "stop if bid" or "stop if offered".
  4. Realise that the times shown on the bottom of forex charts are set to the particular time zone that the forex provider's charts are set to, be it GMT, New York time, or other time zones. It's handy to have a world clock available on your computer desktop in order to convert the different time zones. This is important when you're trading major economic announcements. You'll need to convert the time of an announcement to your local time, and the chart time, so you'll know when the announcement is going to happen, and therefore when you need to trade.
  5. Finally, check whether the times on your forex charts corresponds to when the candle opens or when the candle closes. Your charting software may be different to someone else's in this way. The reason I mention this, is that if you need to trade major economic announcements, either by entering a trade based on the movements that happen after the announcement, or to exit a trade before the announcement in avoid getting stopped out during it, then you need to be precise (to the minute!) as these trades are performed according to what happens at the 1 minute immediately after the announcement, not the candle afterwards!

    So there you have it.

You now have the 5 essential keys to how to properly read forex charts, which will help you to avoid the common mistakes which many forex beginners make when looking at charts, and which will speed up your progress when you're looking at forex charting packages, and forex trading systems that you want to trade!

Now that you know this, practice looking at forex charts with each of these 5 points in mind.

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It was mentioned in a past article that Fibonacci forex trading is the basis of many forex trading systems used around the world by profitable forex traders. These systems are all based on the famous Fibonacci ratios (.236, .50, .382, .618, etc.) and each of them can specialize in a particular ratio along with other minor indicators in order to make the pinpointing of the entry and exit levels as accurate and profitable as possible.

One of the widely used Fibonacci ratios is the 0.382 ratio. As it can be easily seen on any forex chart, currency prices are continually changing and they follow an oscillatory pattern with peaks and valleys. The limit of the peak is usually called a resistance level while the valley is usually called a support.

In order to find the 0.382 ratio level what you do is, first; measure the size of the drop or rise over your time of interest. Once you have that value you multiply this by 0.382. Now depending on what you are looking at, a rise or a drop on the price of the particular "currency pair" you are trading, you will add the last value you calculated to the total drop or subtract the value from the total rise.

These operations will give you the 0.382 Fibonacci ratio level, either for a rise or a drop on the chart you are analyzing. Once you have the value you can then start planning the strategy you will follow in order to make a high probability profit from this valuable information. For the 0.382 ratio level calculated for a recent rise in the "currency pair" exchange price, your calculated level will be a highly probable support and for the case of a level calculated for a recent drop of the prices your level will be a highly probable resistance.

Knowing this ahead of the market and having the proper secondary indicators, will give you a huge advantage over most forex traders, and that's something any trader would like they could count on. That's why Fibonacci trading is so widely accepted over the world, and of course, why it's so profitable and successful.

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It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade. Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action. As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from "bull" to "bear" or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible. Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work?

They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating Pivot Points

There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).
Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open : 1.2386
High : 1.2474
Low  : 1.2376
Close: 1.2458

The PP would be,

PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us?

It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session. Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT. Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.
Support 1    (S1) = (PP * 2) — H
Resistance 1 (R1) = (PP * 2) — L
Support 2    (S2) = PP — (R1 — S1)
Resistance 2 (R2) = PP + (R1 — S1)
Where, H is the High of the previous period and L is the low of the previous period. Continuing with the example above, PP = 1.2439
S1 = (1.2439 * 2) — 1.2474 = 1.2404
R1 = (1.2439 * 2) — 1.2376 = 1.2502
R2 = 1.2439 + (1.2636 — 1.2537) = 1.2537
S2 = 1.2439 — (1.2636 — 1.2537) = 1.2537
These levels are supposed to mark support and resistance levels for the current session. On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend. S1, S2, R1 AND R2...? An Objective Alternative As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective. We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.
HOPS1, high of the previous session.
LOPS2, low of the session before the previous session.
HOPS2, high of the session before the previous session.
PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective. Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method?

We use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio (RR) of any given trade based on where the is the market relative to the previous session.
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Price is the primary tool of technical analysis because it reflects everyfactor affecting the value of a market. However, price doesn't produce justtrend lines and basic chart patterns. Analysts have expanded their research farbeyond those basic elements to develop a number of technical indicators thatprovide more insight into price action than what you see on the surface. Youmay be able to see that a market is "extended" (overbought or oversold) just bylooking at a bar chart, but an indicator can put a number to it and confirmyour thinking.

First, a warning about indicators in general. Most analysts do not rely ononly one indicator but often use several indicators together to help make atrading decision because of the misleading information one indicator mightprovide. An oscillator indicator is not a trading system but only provideshelpful insights in certain market conditions.

Oscillators tend not to work well in markets that are in a strong trend.They can show a market at either an overbought or oversold reading for anextended period while the market continues to trend strongly. Another exampleof oscillators not working well is when a market trades into the upper boundaryof a congestion area on the chart and then breaks out on the upside of thecongestion area. At that point, it's likely that an oscillator would show themarket as being overbought and possibly generate a sell signal when, in fact,the market is just beginning to show its real upside power.

Strength and Sentiment Indicators

Although most technical indicators are based on price data and variousmanipulations of that data, a few are based on other market activity. Forexample, when prices make a move, how many traders are participating and whoare they? Volume and open interest are indicators that reflect some basicnumbers about how traders are driving the market, and Commitments of Tradersreports reveal the caliber of participants involved.

Volume and open interest - In and of themselves, volume and open interestdata may not be that valuable other than to indicate the liquidity of a market.But used in conjunction with price action, these numbers serve as a strengthindicator that can provide some meaningful verification about the significanceof a price move.

Volume is the number of transactions in a futures oroptions on futures contract made during a specified period of time, usually onetrading session. One buy and one sell equals a volume of one.

Open interest is the total number of futures or options onfutures contracts that have not yet been offset or fulfilled by delivery. It isan indicator of the depth or liquidity of a futures market, which influencesthe ability to buy or sell at or near a given price.

Open interest can be a little confusing. If a new buyer (a long) and newseller (a short) enter a trade, their orders are matched and open interestincreases by one. However, if a trader who has a long position sells to a newtrader who wants to initiate a long position, open interest does not change asthe number of open contracts remains the same. If a trader holding a longposition sells to a trader wanting to get rid of his existing short position,open interest decreases by one as there is one less open contract.

Volume and open interest are "secondary" technical indicators that helpconfirm other technical signals on the charts. If an upside price breakout isaccompanied by heavy volume, that is a strong signal that the market may wantto continue to move higher because it indicates more traders jumped on therising prices. On the other hand, a big upside move or a move to a new highthat is accompanied by light volume makes the move suspect and indicates a topor bottom may be near or in place. Also, if volume increases on price movesagainst the existing trend, then that trend may be nearing an end.

To validate an uptrend, volume should be heavier on up days and lighter ondown days within the trend. In a downtrend, volume should be heavier on downdays and lighter on up days. A general trading rule is that if both volume andopen interest are increasing, then the trend will probably continue in itspresent direction. If volume and open interest are declining, this can beinterpreted as a signal that the current trend may be about to end.

Changes in open interest can help a trader gauge how much new money isflowing into a market or if money is flowing out of a market, a valuableinsight in evaluating a trending market. Open interest does have seasonaltendencies - that is, it is higher at some times of the year and lower atothers in many markets. Look at the seasonal average (five-year average) ofopen interest in your analysis.

If prices are rising in an uptrend and total open interest is increasingmore than its seasonal average, it suggests new money is flowing into themarket, indicating aggressive new buying, and that is bullish. However, ifprices are rising and open interest is falling by more than its seasonalaverage, the rally is the result of holders of losing short positionsliquidating their contracts (short covering) and money is leaving the market.This is usually bearish, as the rally will likely fizzle.

Here are two more rules for open interest:

  • Very high open interest at market tops can cause a steep and quick price downturn.
  • Open interest that is building up during a consolidation, or "basing" period, can strengthen the price breakout when it happens.

Commitments of Traders Reports - Open interest can be takenone step further by examining the Commitments of Traders (COT) report issuedevery Friday afternoon by the Commodity Futures Trading Commission (CFTC).

COT reports provide a breakdown of the preceding Tuesday's open interest formarkets in which 20 or more traders or hedgers hold positions equal to, orabove, reporting levels established by the CFTC.

The report breaks down open interest for large trader positions into"commercial" and "non-commercial" categories. Commercial traders are requiredto register with the CFTC by showing a related cash business for which futuresare used as a hedge. The non-commercial category is comprised of largespeculators, mainly commodity funds. The balance of open interest is qualifiedunder the "non-reportable" classification that includes both small commercialhedgers and small speculators.

To derive the net trader position for each category, subtract the shortcontracts from the long contracts. A positive result indicates a net longposition (more longs than shorts). A negative result indicates a net shortposition (more shorts than longs). The results may mean different things indifferent markets, so it usually takes some experience with COT numbers beforeyou can see their value in trading.

The most important aspect of the COT report for most traders is the changein net positions of the commercial hedgers. The premise of COT analysis is thatcommercials are the "smart money" because they have a strong record inforecasting significant market moves, have the best fundamental supply anddemand information and have the ability to move markets because of the largesize they trade. That's the side of the market where you want to be.

Some traders like to take positions opposite of what the COT report suggeststhat small traders (non-reportable positions) are doing, assuming most smallspeculative traders are usually under-capitalized and/or wrong about themarket.

Trend Indicators

Trend lines are the basic indicator of trend, but they are quite subjective,depending on the eye of the beholder. So analysts have refined technicalindicators such as moving averages or the directional movement index toquantify the data and smooth out day-to-day fluctuations to present an overallview of price direction and the trendiness of the market.

Moving Averages - Perhaps the simplest to understand andmost widely used technical indicator is a moving average, which smoothes pastdata to illustrate existing trends or situations where a trend may be ready tobegin or is about to reverse. A moving average helps you spot market directionover time rather than being caught up in short-term erratic marketfluctuations. There are three main types of moving averages:

  • Simple.
    Each price point over the specified period of the moving average is given an equal weight. You just add the prices and divide by the number of prices to get an average. As each new price becomes available, the oldest price is dropped from the calculation.
  • Weighted.
    More weight is given to the latest price, which is regarded as more important than older prices. If you used a three-day weighted moving average, for example, the latest price might be multiplied by 3, yesterday's price by 2 and the oldest price three days ago by 1. The sum of these figures is divided by the sum of the weighting factors - 6 in this example. This makes the moving average more responsive to current price changes.
  • Exponential.
    An exponential moving average (EMA) is another form of a weighted moving average that gives more importance to the most recent prices. Instead of dropping off the oldest prices in the calculation, however, all past prices are factored into the current average. The current EMA is calculated by subtracting yesterday's EMA from today's price and then adding this result to yesterday's EMA to get today's EMA. An EMA generally produces a smoother line than other forms of moving averages, which can be an important factor in choppy market conditions.

Closing prices for a period are usually used to calculate a moving average,but you can also use the open, high or low or some combination of all of them.Moving averages are often used in crossover trading systems. A buy signaloccurs when the short- or intermediate-term averages cross from below to abovethe longer-term average. Conversely, a sell signal is issued when the short-and intermediate-term averages cross from above to below the longer-termaverage.

Another trading approach is to use the "current price" method. If thecurrent price is above the moving average, you buy. Liquidate that positionwhen the current price crosses below your selected moving average. For a shortposition, sell when the current price falls below the moving average. Liquidatethat position when the current price rises above the average.

Because the moving average changes constantly as the latest market dataarrive, many traders test different "specified" time frames before they come upwith a series of moving averages that are optimal for a particular market.

Some use combinations such as 5-day, 10-day and 20-day moving averages,taking crossovers of the shorter moving average over the longer moving averageas a trading signal. Still others use longer-term moving average lines asanother point of support or resistance.

In short, moving averages have a number of applications and are easy tounderstand, making them a clear indicator choice for many traders.

Moving Average Convergence Divergence (MACD) - MACD is amore detailed method of using moving averages to find trading signals fromprice charts. MACD plots the difference between a longer-term exponentialmoving average and a shorter exponential moving average (the chart below uses21 days and 9 days). Then a 9-day moving average of this difference isgenerally used as a trigger line.

The MACD indicator is used in three ways:

  • Crossover signals.
    When the MACD line crosses below the trigger line, it is a bearish signal; when it crosses above it, it's a bullish signal. Another crossover signal occurs when MACD crosses above or below the zero line.
  • Overbought-oversold.
    If the shorter moving average pulls away from the longer moving average dramatically, it indicates the market may be coming over-extended and is due for a correction to bring the averages back together.
  • Divergence.
    As with other studies, traders look at MACD to provide early signals or divergences between market prices and a technical indicator. If the MACD turns positive and makes higher lows while prices are still tanking, this could be a strong buy signal. Conversely, if the MACD makes lower highs while prices are making new highs, this could be a strong bearish divergence and a sell signal.

With its moving average base, MACD is a lagging indicator and requiresrather strong price movement to generate a signal. Therefore, it works best inmarkets that make broad moves but does perform well in choppy, congestedtrading conditions.

Directional Movement Index - The Directional MovementIndicator (DMI), also called the Directional Movement System, is used todetermine the strength of a market trend. The Average Directional Movementindex, or ADX, is part of the DMI and gauges the trendiness of the market. Whenused with the up and down Directional Indicator (DI) values - Plus DI and MinusDI - you could have a trading system.

The basic rules for a DMI system include establishing a long positionwhenever the Plus DI crosses above the Minus DI. Reverse that position -liquidate the long position and establish a short position - when the Minus DIcrosses below the Plus DI.

The ADX line (green on the chart below) is perhaps the focal point of theDMI for most traders. If the ADX line is trading above 30, then the market isin a strong trend, either up or down. ADX does not indicate the direction ofthe trend. If the ADX line is below 30, it means the trend is not a strong one.If the market is in a solid trend and scoring new highs and the ADX line showsdivergence and turns down, that is a warning signal that the market trend islosing power and a market top or bottom may be close at hand.

Volatility Indicators

Volatility shows how active a market is as reflected by the size of priceranges without specifying a price direction. An indicator such as BollingerBands reveals changes in volatility levels, which often lead changes inprices.

Bollinger Bands - Bollinger Bands are volatility curvesused to identify extreme highs or lows in relation to price. They establishtrading parameters, or bands, above and below a moving average at a set numberof standard deviations from this moving average. Both the length of the movingaverage and the number of standard deviations can be modified to fit themarket.

Traders generally use Bollinger Bands to determine overbought and oversoldzones, to confirm divergences between prices and other technical indicators andto project price targets. The wider the bands on a chart, the greater themarket volatility; the narrower the bands, the less market volatility.

Some traders use Bollinger Bands in conjunction with another indicator suchas the Relative Strength Index (RSI). If the price touches the upper band andthe RSI does not confirm the upward move (i.e. there is divergence between theindicators), a sell signal is generated. If the indicator confirms the upwardmove, no sell signal is generated - in fact, a buy signal may be indicated. Ifthe price touches the lower band and the RSI does not confirm the downwardmove, a buy signal is generated. If the indicator confirms the downward move,no buy signal is generated - in fact, a sell signal may be indicated.

Another strategy uses Bollinger Bands without another indicator. In thisapproach, a chart top occurring above the upper band followed by a top belowthe upper band generates a sell signal. Likewise, a chart bottom occurringbelow the lower band followed by a bottom above the lower band generates a buysignal.

Bollinger Bands also help determine overbought and oversold markets. Whenprices move closer to the upper band, the market is becoming overbought; as theprices move closer to the lower band, the market is becoming oversold. Pricemomentum should also be taken into account. You should always look for evidenceof price weakening or strengthening before anticipating a market reversal.

Momentum Indicators

No market can go up or down forever, and momentum indicators reflect when aprice trend may be weakening or strengthening. These indicators are usuallybased on a scale from 0 to 100 and produce "overbought" and "oversold" signals.Although these indicators do not perform well in extended trending markets, oneof their most useful applications is the concept of "divergence" - that is,prices go in one direction and the momentum indicator in another. If pricesmake a new high but the indicator makes a lower high, for example, thedivergence suggests internal weakness that could signal the end of the upmovein prices.

Stochastics - The basic premise of the stochastic indicatordeveloped by George Lane revolves around the position of the close relative tothe high or low of the day. During periods of price decreases, daily closestend to accumulate near the extreme lows of the day. During periods of priceincreases, closes tend to accumulate near the extreme highs of the day. Thestochastic study is an oscillator designed to indicate oversold and overboughtmarket conditions.

Stochastics are measured and represented by two different lines, %K and %D,and are plotted on a scale ranging from 0 to 100. Readings above 80 suggest anoverbought situation; readings below 20 an oversold zone. The %K line is thefaster, more sensitive indicator while the %D line takes more time to turn.When the %K line crosses over the %D line in overbought or oversold territory,this could be an indication that a market is about to reverse course.

Some technical analysts prefer the slow stochastic rather than the normalstochastic. The slow stochastic is simply the normal stochastic smoothed via amoving average technique. The most important signal is divergence between %Dand price, which occurs when the stochastic %D line makes a series of lowerhighs while prices make a series of higher highs (see black lines on chartbelow). This signals an overbought market. An oversold market exhibits a seriesof lower lows while the %D makes a series of higher lows.

When one of the above patterns appears, you should anticipate a marketsignal. You initiate a market position when the %K crosses the %D from theright-hand side. A right-hand crossover is when the %D has bottomed or toppedand is moving higher or lower and the %K crosses the %D line. The most reliabletrades occur with divergence and when the %D is between 10 and 15 for a buysignal and between 85 and 90 for a sell signal.

Relative Strength Index (RSI) - The main purpose of theRelative Strength Index (RSI ) created by J. Welles Wilder Jr. is to measurethe market's strength or weakness. To calculate RSI, you figure out the averageof the up closes and the average of the down closes for the study period(typically 14 days), then divide the average of the up closes by the average ofthe down closes to get a relative strength figure. Then you add 1 to thatrelative strength figure, divide that sum into100 and subtract that result from100. If all that sounds complicated, remember that many analytical softwareprograms do all those calculations for you.

A high RSI reading, above 70, suggests an overbought or weakening bullmarket. Conversely, a low RSI number, below 30, implies an oversold market ordying bear market. However, blindly selling when the RSI is above 70 or buyingwhen the RSI is below 30 can be an expensive trading system. A move to thoselevels is a signal that market conditions are ripe for a market top or bottom,but it does not, in itself, indicate a top or a bottom.

Although you can use the RSI as an overbought and oversold indicator, likemany indicators, it works best when a failure swing occurs between the RSI andmarket prices. For example, the market makes new highs after a bull marketsetback but the RSI fails to exceed its previous highs.

Commodity Channel Index (CCI) - The Commodity Channel Index(CCI) was designed to detect the beginning and ending of market trends bymeasuring the distance between the market price and its moving average,providing a measurement of trend strength and/or intensity. The CCI iscalculated as the difference between the mean price of a market and the averageof the means over a chosen period. This difference is then compared with theaverage difference over the time period.

Values of +100 to -100 indicate a market with no trends. About 70%-80% ofall price fluctuations fall within +100 and -100, as measured by the index. Buyand sell signals occur only when the +100 line (buy) and the -100 (sell) arecrossed. The way this indicator works is almost the opposite of how you woulduse an oscillator (overbought/oversold) such as the Relative Strength Index(RSI) or Slow Stochastics.

To trade using CCI, establish a long position when the CCI exceeds +100.Liquidate when the index drops below +100. Your reference point for a shortposition is a value of -100. Any value less than -100 suggests a shortposition, while a rise to -85 tells you to liquidate your short position.

Percent Range - The Percent Range (%R) technical indicator,often associated with Larry Williams and called Williams %R, attempts tomeasure overbought and oversold market conditions. Like other indicators, %Ralways falls between a value of 100 and 0 and measures where the current day'sclosing price falls within the price range for a specified number of days.

The %R study is similar to the Stochastic indicator except that theStochastic has internal smoothing and %R is plotted on an upside-down scale,with 0 at the top and 100 at the bottom. A value of 0 indicates the closingprice is the same as the period high. Conversely, a value of 100 shows that theclosing price is identical to the period low. A reading above 80 indicates anoversold condition; a reading below 20 an overbought situation.

On specifying the length of the interval for the %R study, some techniciansprefer to use a value that corresponds to one-half of the normal cycle length.If you specify a small value for the length of the trading range, the study isquite volatile. Conversely, a large value smoothes the %R and generates fewertrading signals.

As with other indicators, selling just because a %R shows a market to beoverbought (or buying just because it is oversold) may take a trader out of theparticular market long before the price falls (or rises) because %R can remainin an overbought/oversold condition for a long time.

Momentum or Rate of Change - The whole group of momentumoscillators involves the analysis of the rate of price change rather than theprice level. The speed of price movement and the rate at which prices aremoving up or down provide clues to the amount of strength the bulls or bearshave at a given point in time, a key indicator regarding the viability of atrend and whether it is about to end or begin.

Momentum can be calculated by dividing the day's closing price by theclosing price X number of days ago and then multiplying the quotient by 100.The momentum study is an oscillator-type indicator to interpretoverbought/oversold situations. By determining the pace at which price isrising or falling, the indicator shows whether a current trend is gaining orlosing momentum, whether or not a market is overbought or oversold, and whetherthe trend is slowing down.

Momentum is calculated by computing the continuous difference between pricesat fixed intervals. That difference is either a positive or negative valueplotted around a zero line. When momentum is above the zero line and rising,prices are increasing at an increasing rate. If momentum is above the zero line but declining, prices are still increasing but at a decreasing rate.

The opposite is true when momentum falls below the zero line. If momentum is falling and is below the zero line, prices are decreasing at an increasing rate. With momentum below the zero line and rising, prices are still declining but at a decreasing rate.

The normal trading rule is: Buy when the momentum line crosses from below the zero line to above. Sell when the momentum line crosses from above the zero line to below. Another possibility is to establish bands at each extreme of the momentum line. Initiate or change positions when the indicator enters either of those zones. You could modify that rule to enter a position only when the indicator reaches the overbought or oversold zone and then exits that zone.

You can specify the length of the momentum indicator based on your trading needs and methods. Some technicians argue the length of the momentum indicator should equal the normal price cycle, but you can make it more or less aggressive, depending on the market or your trading style.

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Looking for information on the Forex Autopilot Robot ? Here is an update report of the experts who should know. If you are interested in Forex, you may have met at least a review of Forex autopilot robot. Forex Autopilot is advertising heavily and this has been done by media companies such as Business Week, CBS and NBC News. Reading the review of the product does not mean that it will start cutting money during the night. We also need to know about currency trading strategies, economic conditions and other factors. The review should be considered as useful tips to help you select the robot Forex Trading. Review and take a look at this program and learn what makes the Forex autopilot so special and unique among commercial Forex robots used for automated trading. Forex Autopilot Robot is a system that allows you to trade without any prior knowledge about the foreign exchange markets. Such a system has been developed for Meta Trader 4 Forex trading platform known as EA (E-consultant). These robots will work 24x7x365, market analysis and order B of your name. Forex Autopilot robot created by Markus Leary (Forex Trader) Steven Strauss (developer). Today both are pleased to earn money from the comfort of their homes. In a recent review of robot creators to share intelligence software, along with Alligator, MA Demark and indicators, and also uses the Fibonacci Formula which determines when it would be beneficial both to enter and exit the market. This product has excellent support and level of customer service is trying to answer your questions as soon as possible, in my case was less than 24 hours for e-mail and phone responses were given immediately. But the autopilot software Forex realistic , if so, how? Knowledge can give you a real advantage. To ensure that you have full knowledge of autopilot, keep reading. If you want the autopilot Forex trading software to work for you as well as for other people (8 people actually became millionaires with him) should spend time on knowledge systems. Some tips to put an end to this review:
  • At the market you will receive immediate access to the member area of the site where you can download the software and manual FAP step by step how to install and use the autopilot in foreign currency. Please read carefully and make sure you understand them before you begin negotiations, and always start with a demo account. Furthermore, using a trial period for you, and remember that you can request a refund if you are not satisfied.
  • Based on my experience this year, implementation of the robot, it appears that the system works best with a long (buying), but not short (sell) trades. Thus, the use of MT4 version of the robot on the ground that only large firms.
  • Please note that any negotiation, either manual or automatic, requires a certain degree of risk, and the purpose of this study is not to convince you that you will always win. However, based on my experience and observations and feedback from other users, you should expect to get a reasonable profit.
Forex Autopilot Robot software created by Markus Leary is a widely used software that allows you to make more money in Forex. It is regarded by many as one of the best Forex trading software on the market today, particularly for users. Please look around the comments of other Forex Autopilot robot, and if you find this review helpful, please leave this review with Forex forums and blogs. Hopefully this will help others make an informed decision to purchase Forex Autopilot robot or not! Hopefully more funds contributed to the understanding of the Forex Autopilot robot. Share your knowledge on Forex Autopilot Robots with others. We thank you.
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The Fibonacci indicator has been talked about a lot in the realm of Forex trading. While some experts dismiss it as just another exaggerated term, others think that there is credence to this theory. Using the Fibonacci indicator, you can maximize your understanding of currency trends as well as your profit margins in trading. By using the Fibonacci method or Forex trading strategy you can estimate expected price targets. This is applicable even after experiencing a major price swing. The concept of Fibonacci should be applied only in certain instances. Therefore, before this concept is applied, one should understand that at times, support levels, which are broken, can get resistant in later rallies. This happens especially when support levels of broken kind coincide with retracement levels of the Fibonacci trend. One of the central driving factors behind the Fibonacci Forex trading strategy is that when the market swings towards the same path, the trend relates to one another after the breakout phase. The two different swings relate to one another only from breakout point and not from where the second swing happened in a similar direction. Thus, breakout points can be a crucial element in retracing using the Fibonacci method. By making the assumption that one breakout point is a retracement level for a particular Fibonacci, you can safely assume that this trend will keep continuing until it reaches resistance levels and initiates a countertrend. Do These Terms Sound Like Latin To You? If so, it could be because you do not have the right knowledge about the Forex trading market. Strategies like the Fibonacci one are explained in detail in Forex training programs. Such Forex training courses not only explain the definition of these strategies but also use charts to explain how to apply such strategies to make a winning profit. Many experts have used such strategies to establish price targets set in the future. This is like pre-emptive reasoning, to make more money without letting existing capital be destroyed! Several Forex trading experts have used indicators to estimate currency trends and thus made huge profits in the process. There are many indicators to choose from. Yet the Fibonacci remains one of the most respected and tested ones today. While indicators help you establish currency price patterns and trends and thus understand where your money should be, they should not be the only guiding factor for you. In addition to such indicators, you also need access to good quality Forex training courses. Such courses teach you the intricacies of each strategy, which situation it is applicable to and when to use it to make a profit. Along with this, money management practices are also critical. These tactics help you protect your capital by spreading it across several Forex trading systems. This way, even if there is a loss, it does not affect all of your money since it is spread across different systems. These are tricks, which can be learnt from a good quality Forex training program.
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I'm sure you have heard of the great mathematician Leonardo of Pisa, also known as Leonardo Fibonacci? He was a highly influential Italian who lived almost 800 years ago, so you're probably wondering what Fibonacci has to do with forex trading, I'll get to that shortly. He is most famous for developing the numerical sequence that is widely known as the Fibonacci Numbers or the Fibonacci Sequence (he is also credited with introducing the decimal system in Europe). The very first number of the sequence is 0 and the second is 1. The sequence develops as each subsequent number is the sum total of the previous two numbers. In mathematics it's known as a recurrence relation. Below are the first numbers in the sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, and so on. e.g. 2 + 3 = 5, 3 + 5 = 8, 5 + 8 = 13 etc. Leonardo Fibonacci discover that the Fibonacci sequence and their ratios could be found everywhere throughout the natural world, existing in the most unlikely places, almost as universal rule. So how does Fibonacci and forex trading go hand in hand? The Fibonacci numbers are important for charting, spotting patterns and indicators in the forex markets, and are used as an important method of analysis Why? When you analyse the currency markets carefully, you often find the same ratios as those in the Fibonacci number sequence. You'll also find them in investments such as stocks. The main three numbers you need to be aware of, and ideally should commit to memory are 0.618, 0.500 and 0.382. There are other numbers, but for starters these are the big 3 and most important. So what are they used for? The Fibonacci numbers are used by forex traders to calculate what are known are retracement levels, which are used to determine when to place buy orders or sell orders. It works like this: If a currency pair is trending upward lets assume, then history will tell us then at some point it's going to hit a peak and go into at least a temporary decline or reversal, and then resume the upward trend. When it starts the reversal, that's where the Fibonacci numbers come into play. The prices of the currency pair that are following the upward trend is usually predicted to reverse/decline backwards to one of the key Fibonacci numbers, and then bounce back again to follow the upward trend. The key is to forecast this point accurately so that you can buy in before the trend continues upward, so that you capitalise on the reversal and then profit. You should have a charting mechanism built into your online trading platform which will chart the Fibonacci numbers. Your retracement levels should be automatically mapped on your chart when you simply draw a line up from the low point to the high point. Obviously there are other things to take into account, it's not as simple as just buying into a trade when the price hits a Fibonacci number. For a start you never know which retracement level the price will drop to and stop at. If you opted for 0.382 and the price ended up dropping to 0.618, you've just lost a whole load of pips. Conversely, if you buy in at the wrong high or low points, the retracement levels are going to be completely out of sync. It can be problematic. They sometimes don't work at all. The forex market is such a dynamic complex system with so many variables at play it would be foolish to rely solely on one method to predict price changes. Moral of the story? Find a trading system or strategy that incorporates as many elements and variables as possible, do lots of research, data mining and plenty of good old hard work.
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Trending the price moves of stocks helps any investor make the buying and selling decisions they need. Stochastic allows investors the ability to track the move of the market through price and time and is based on the idea that prices moves in waves. The high and the low movements of the stochastic signify the overbought and oversold levels of stocks, and day traders can see that as price trends develop and mature, the closing price will show the shift that is occurring with the stock. When a stocks closing price is going higher, the stochastic will show this trend as moving upward. Conversely, when a stocks closing price is going down, the stochastic will be moving in a downward trend. To make this day trading strategy effective, traders need to understand what the stochastic tells them. The display of the stochastic is typically made up of two moving averages - %K, which is the faster-moving average, and %D, which is the slower-moving average. The typical timeframe for the stochastic is 14 periods, but keep in mind that the timeframes can be changed depending upon the timeframes a trader wants to examine. With that in mind, the timeframe of %K is generally in multiples of 7, while the timeframes for %D are moving averages of 3 or 5 periods. Experienced traders are taught to examine the stochastic for a breakout – when %K crosses %D, but traders cannot use this method blindly. Traders need to look for another important factor when using this tool. They need to check for a confirmation of the crossover and ensure that it occurs between the 80 & 20 area. You might notice on your stochastic that the faster line crosses the slower line trending upward when both lines are beneath the 20 area (oversold area), but you need to get a confirmation before taking action. Wait until both the fast and slow lines have crossed the 20 line before deciding what to do, as this area will tell you that the stock could be at a near-term reversal or that it is at support. In the overbought area (above the 80 line), the stochastic will tell you that the price could also be at a near-term reversal or that it may have encountered resistance. In terms of day trading tips, you can use the stochastic to help you determine entry and exit points in the trade. In designing day trading systems, areas of support and resistance need to be identified on the chart. As %K and %D trend higher, look for areas of retracement as areas of support. If the price moves higher, but doesn’t move higher on the stochastic and the support line is broken, this may signify a potential point of exiting the trade. The stochastic is a popular momentum indicator that is used with both short term and long term trades. When day trading online, one thing to always keep in mind when trading against the stochastics is to confirm the price with the information you gather from the chart itself so that you are positioning your trade for success.
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Most traders have a favorite technical indicator. The one that they have the most confidence in. The one that, from experience, they trust the most. Or the one that they always look at first. For some it is the RSI. Others like the Stochastic or the MACD . Or one of the literally hundreds of other indicators that are available. Well, I love the MACD. And the Stochastic is also a favorite. But there is one indicator that I refer to more often than any other. However, before I tell you what it is, it is important that this discussion is placed in context. I always stress with the traders that I mentor that the most important part of your analysis is price action. By this I mean that the very first thing you should look at is the shape of the stock's chart. And any patterns that you may be able to identify. In particular, look for trends and consolidation. Candlestick reversal patterns and support and resistance levels. And be particularly aware of all time or 52-week highs or lows. Also, be on the lookout for double tops and bottoms and triangles and head and shoulder patterns. Because it is only in the context of the basic price action that you can make your trading decisions. And it is only from this understanding that you should begin to apply your technical indicators. So, establish the context for your further analysis. Indeed, use this first process as a screening device. Because, unless the chart immediately “speaks” to you, you should eliminate the stock from any further review. What I mean by this is that unless there is a clear reversal pattern or potential for a breakout, move on. Don't waste time analyzing charts that have no likelihood of immediate movement. And one of the best patterns for short-term trading is the channel. Always keep an eye out for these and when you find one, give serious consideration to trading them. Now, let's get back to our earlier discussion. What is the most important indicator? Well, whilst this might surprise some of you, I believe it is volume. You see volume is an indication of the strength of price action. A market needs high volume or increasing volume to sustain a movement in price. So we want to see volume moving in the direction of the price. Increasing both in an uptrend and also a downtrend. But realize that it takes more effort to push prices higher than it does to cause them to drop. So increasing volume is more significant in an uptrend than a downtrend. If volume is diverging from the trend [going down instead of up] then we would normally not carry out any further analysis. Because the lack of volume means that there is a lower probability of price movement in the direction of the current trend. Note however, that divergence can be an indication that a trend is about to end. So this can be an early sign of a reversal. Another important aspect to volume that is often overlooked is in regard to retracements. Because the volume during retracements gives us a significant indication of the strength of the overall trend. A strong uptrend should have higher volume on the upward legs of the trend and lower volume on the downward or corrective legs. Similarly in a downtrend. Volume is best plotted below your chart as a histogram, or series of vertical lines. And it helps to add a moving average line over the histogram to smooth the volume readings. I use a 3 day MA but you can experiment to see what works best for you. But most importantly, always consider volume before entering a trade. The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn't worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.
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FOREX traders almost always rely on analysis to make plan their trading strategies. There are two basic types of FOREX analysis – technical and fundamental. This article will look at fundamental analysis and how it used in FOREX trading. Fundamental analysis refers to political and economic conditions that may affect currency prices. FOREX traders using fundamental analysis rely on news reports to gather information about unemployment rates, economic policies, inflation, and growth rates. Fundamental analysis is often used to get an overview of currency movements and to provide a broad picture of economic conditions affecting a specific currency. Most traders rely on technical analysis for plotting entry and exit points into the market and supplement their findings with fundamental analysis. Currency prices on the FOREX are affected by the forces of supply and demand, which in turn are affected by economic conditions. The two most important economic factors affecting supply and demand are interest rates and the strength of the economy. The strength of the economy is affected by the Gross Domestic Product (GDP), foreign investment and trade balance. Indicators Various indicators are released by government and academic sources. They are reliable measures of economic health and are followed by all sectors of the investment market. Indicators are usually released on a monthly basis but some are released weekly. Two of the most important fundamental indicators are interest rates and international trade. Other indicators include the Consumer Price Index (CPI), Durable Goods Orders, Producer Price Index (PPI), Purchasing Manager's Index (PMI), and retail sales. Interest Rates - can have either a strengthening or weakening effect on a particular currency. On the one hand, high interest rates attract foreign investment which will strengthen the local currency. On the other hand, stock market investors often react to interest rate increases by selling off their holdings in the belief that higher borrowing costs will adversely affect many companies. Stock investors may sell off their holdings causing a downturn in the stock market and the national economy. Determining which of these two effects will predominate depends on many complex factors, but there is usually a consensus amongst economic observers of how particular interest rate changes will affect the economy and the price of a currency. International Trade – Trade balance which shows a deficit (more imports than exports) is usually an unfavourable indicator. Deficit trade balances means that money is flowing out of the country to purchase foreign-made goods and this may have a devaluing effect on the currency. Usually, however, market expectations dictate whether a deficit trade balance is unfavourable or not. If a county habitually operates with a deficit trade balance this has already been factored into the price of its currency. Trade deficits will only affect currency prices when they are more than market expectations. Other indicators include the CPI – a measurement of the cost of living, and the PPI – a measurement of the cost of producing goods. The GDP measures the value of all goods and services within a country, while the M2 Money Supply measures the total amount of all currency. There are 28 major indicators used in the United States. Indicators have strong effects on financial markets so FOREX traders should be aware of them when preparing strategies. Up-to-date information is available on many websites and many FOREX brokers supply this information as part of their trading service.
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When trading in the foreign exchange market, part of the process involves forecasting future price movements in order to determine the best time to buy and sell. One method, called technical analysis, takes a look at the market’s past price movements to determine where the numbers will go in the future. Most investors who employ this type of analysis look mostly at price data, but sometimes information such as volume and open interest in futures contracts are also taken into consideration. If you’re just starting out in forex, the rule of thumb is to keep your methods simple - follow the basics, which have been proven over time, and only when you have gained some experience introduce more difficult techniques into your plans.

Technical analysis is almost always used on some level because price charts provide a good visual representation of the price history of a particular currency. At the very least, they can help you determine ideal entry and exit points for a trade based on the historical data. You can decide whether or not you’re buying at a fair price, selling at the top of a cycle, or entering into a shaky market.

It may seem as if adherents of technical analysis disregard market fundamentals in favor of mounds of charts and data, but they argue that these fundamentals are ingrained in the actual numbers. Something unpredictable may cause the numbers to unexpectedly spike, but you can still analyze the data, and identify patterns that will aid you in forecasting future prices.

Essentially, technical analysis can be summed up in three points. First of all, as mentioned above, technical traders assume that market fundamentals are tied to the price data. This is why factors such as the fear, hope, and mood of market participants are not contemplated directly. Secondly, the idea that history repeats itself is core to this system of analysis. It is possible to look for patterns in price movement (called signals) because the market is predictable. When you look at past market signals you should be able to predict future signals.

Lastly, technicians rely on trends. From this analytical perspective, the market is not irregular or unpredictable. Rather, you can determine, to a high degree of accuracy, what direction a price will take: up, down, or sideways. In addition, trends are expected to continue for a period of time, making it possible to formulate predictions.

But it’s important to understand that technical analysts use more than price charts to determine good entry and exit points. Price charts are used in conjunction with volume charts, and other mathematical representations of market signals. Called studies, these additional pieces of information add another layer of data to the analysis. They let the trader look at the strength and sustainability of trends, in addition to the bare statistics.

Technical analysis is, of course, quite complicated - but for the new trader just starting out in forex, following the basics is a good place to begin. After you gain some experience and learn more about the foreign exchange market, you can delve into more complex research strategies.

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What are the advantages of Forex over other types of investments? LOW RISK - HIGH YIELD is the first thing that comes to mind. Forex Trading can be risky and the general rule for investing is: When the return is high the risk is high, but with correct planning and strategy combined with a certain amount of self discipline you can bring the risk factor down to a level that is quite low. It is even possible to strategically plan your market entry and exit levels and control exactly how much you profit or lose.

This can be done in a way that allows the investor to still profit even when they misjudge the market 50% of the time! Compare that to other types of investments.

GEARING, is another area that stands out as a major advantage; this also substantially reduces the risk to you the investor. When you trade 1 forex "Mini lot" you will be trading a parcel of money valued at $10,000 USD And you only need $100 USD of your own money! If you trade a regular "Lot" you only need $1,000 USD to trade $100,000 USD. How's that for gearing? Try and do that with other kinds of investments!

LOW CAPITAL REQUIRED, many investments require a substantial amount of capital before you can take advantage of a particular investment opportunity, with Forex You only need $300 USD to "get into the market", and only need to have $100 USD in order to trade your $10,000 "Mini Lot".

CONVIENIENCE, if you have a laptop and an internet connection you can make a trade in 5 - 10 minutes! Depending on how long your computer takes to start up, and the speed of your connection.

LIQUIDITY, many other forms of investing require tying your money up for long periods of time, and if you need to use the capital it can be difficult or impossible to access to it without taking a huge loss (Real Estate). Not so with Forex trading. With Forex Trading you have full control of your capital.

CAN PROFIT IN BULLISH OR BEARISH MARKETS

Stock market traders need stock prices to rise in order to take a profit, Real Estate prices must go up in order to make a capital gain.

However, The Forex investor can make a profit in both situations, a rising or falling market.

The Forex Market is open 24 hrs a day.

Can anyone do it or do you need to be some kind of super genius?

Forex Trading isn't for the faint hearted so be warned, while you can get yourself a "Demo Account" and practice as you learn in real time in the real market.

You can't experience the emotions that come with putting your real money on the line.

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Foreign exchange is the largest financial market and everyday new investors plan to jump in when they learn of the benefits, that is, high returns on investment which is as high as 20% per month a month. However, inexperience and over enthusiasm can only do bad and bring in losses so, you'll need an experienced forex broker to help you put your money in the right place at the right time.

A forex broker with a cool head, preferably with a long list of satisfied clients and experience is the right guy. Once you've found the right forex broker, all that's to be done is, keep a regular check on your investments and it is advised to do it independently to avoid scams, because one can never know. So, how to find the right forex broker, is that the question? Well, good news, this article was written just for you.

In a market where cash flows faster than the F1 circuit, scams should come as no surprise even with reputed names and it's your responsibility to be aware of where the money is and keep a check on the movement and earnings. Different people prefer different levels of risk and depending on that factor you might like to check how different forex broker work and then select the one from them.

Even before you start the search, remember to strike down brokers promising windfalls, they are scams without doubt and same for brokers who are promising huge profits or no risk. Trading always involves some form of risk because of the nature of the market which you must be prepared to incur.

Make sure to check the spread of the forex broker as that's where they earn their money, read their terms of service carefully and check the services offered. There might be a lot of services being offered upfront at no cost but you might be billed for them later on, so make sure to sign up only for the services that are required.

A forex broker is a long term partner for financial success so, make sure to research their background well. All that's to be done is put in a little effort by checking the credibility of the forex broker or company upfront for peace of mind in long term.

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There is a lot of interest out there in running Metatrader 4 on the Linux platform, however until Metaquotes does a native Linux version,the only option if you want to do it is to run it under WINE emulation.

What follows is a step by step guide to installing MT4 in Linux. I have used the excellent Ubuntu distribution for this task though you may adapt it your distribution easily. This also works on Gentoo for example.

Anyway...

  1. Install WINE if it's not already installed.
    sudo apt-get install wine
    Once WINE is installed you need to configure it. This is pretty easy. As a normal user (Not Root!) run winecfg from a terminal and it should set itself up. If you want to do any more configuration or tweaking, have a look around the tabs, but for now I suggest keeping it as default.
  2. From a valid windows installation, copy over all the fonts into your wine installation. It also assumes you told Ubuntu to mount your windows partition in /windows.
    cp /windows/WINDOWS/Fonts/* ~/.wine/drive_c/windows/fonts/
  3. Copy 2 needed DLL files from your valid windows installation.
    cp /windows/WINDOWS/system32/mfc4* ~/.wine/drive_c/windows/system32/
  4. Download mt4setup from your favourite broker, or one of the broker suggestions on rebatefx.com
  5. Install MT4.
    wine mt4setup.exe
  6. You should now have an icon on your Desktop and a working install of MT4 under Linux! Double click it to launch. Don't be alarmed if it takes a while to run first time.

There are some small problems at the time of writing though. This is to be expected when emulating software written for another platform. These problems may include (They don't happen to everyone), not being able to place limit or stop orders due to an invalid parameter error, not being able to change the width of trend lines, and indicator lines, and in some cases the Meta Editor will refuse to run without a copy of Internet Explorer 6 or better being installed also. While it's no guarantee to fix the problem it's useful to have Internet Explorer installed for those web pages that insist on you using it or for web page development.

To install ie6 you can use the excellent ies4linux package. The following commands should get IE6 installed on your linux machine.

sudo apt-get install cabextract
wget http://www.tatanka.com.br/ies4linux/downloads/ies4linux-latest.tar.gz
tar xzvf ies4linux-latest.tar.gz
cd ies4linux-*
./ies4linux

So there you have it. Metatrader 4 working in Linux. Well, mostly ;)

It's not perfect, but it's a workable solution if you trade by entering at market prices. It's certainly good for news trading when an unexpected virus check or annoying windows update popup steals the focus from the trading terminal losing you precious seconds which may mean all the difference between making a lot of money or just a little. Even worse, losing your chart setups or even your whole account to a virus or keylogger attack.

Good luck and Happy Trading!

 
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