These are used to smoothen out the price fluctuations so that the trend can be more easily seen. Examples of these are moving averages and trend lines.
Strength indicators
These are used to indicate how intense are the sentiments of the market by looking at the market positions held by the market participants. The core ingredients of strength are Volume or open interest.
Cyclic indicator
One of the most famous and commonly used theories to explain cycles in price fluctuations is the Elliot Wave theory. It looks at recurring season to try to determine when the next cycle will be.
Support & Resistance
In simple terms, Support and Resistance levels are levels where the market prices normally try to breach repetitively but fail to do so. A good example of this is trend lines.
Momentum indicators
With Momentum indicators, you can establish how strong or weak a trend will be as time passes. Momentums are usually the strongest when trends just started and weakest when they transformed.
What is Forex Day Trading -
Day Trading Indicators and Indicator Trading?
By definition, day trading is defined as the purchase and sale of a financial instrument within a single trading day. This is achievable in all the financial markets but is especially prevalent in the Forex market as this market of the MOST liquid of all financial markets. Normally day traders are a class of trader by themselves. They are well informed and are well capitalized. They use a high level of leverage to maximize their profit levels. They play a very important part in the Forex market as they essentially provide the Forex market with liquidity. In addition, they facilitate the smooth running of the Forex market with arbitrage. This article will take a look at day trading and the traders behind it.
As mentioned earlier, day traders are a class of their own as they are well educated and they do this kind of trade for a living. Unlike many retail traders, day traders are truly professional. And this class of traders has an in-depth knowledge of the Forex market. Thus to be classified as a day trader, there are some criteria to be met:
• In-depth knowledge and experiences with the market
Those who are new to Forex are strongly discouraged from trying to day trade. In most likelihood, novice traders will end up incurring losses.
• Enough working capital
Day traders only utilize their risk capital to free them from the stress and risk of possible financial ruin. In addition, because the margin are ultra thin, a day trader need a large capital to be able to profit form the intra-day price fluctuations.
• A Trading strategy
For one to have an edge over everyone else in the market, one must have a proper strategy before embarking in day trading.
• Discipline
Day traders are normally individuals with a strong sense of discipline. Without discipline, it is easy for one to end up trading based on emotion.
To help day traders in their trading decision, they rely heavily technical indicators indentify opportunities to make money. Some of the technical indicators used by them are:
Flag Indicators
This is a charting guide that looks like a flag with a mast on either side. This kind of pattern results from narrow price fluctuations and signifies a consolidation before the proceeding movement resumes. Elliott Wave Theory
The Elliot wave theory, discovered by Ralph Nelson Elliott, explains that the financial markets move in an identifiable and repetitive waveform. Chart breaks
This is another type of indication that a day trader will look for in their trading strategy. With this, day traders look for assets that are trading near support and resistance levels. To help them discern a breakout point, day trader will utilize tools like:
• Channels
• Fibonacci levels
• Gann levels
• Triangles
• Wolfe Waves
Even though day trading is a controversial topic, it is becoming more common as advances in technology allows the average traders access to software tools that are available only to large institutional traders. Nevertheless, novice traders are strongly discouraged from embarking on day trades until they have gained sufficient experiences and risk capital to enable them to trade properly and efficiently.
Currency Trading -
The Seven Most Traded Currencies in Forex
Currencies on the Forex market are traded in terms of “lot” sizes. Each lot is equivalent to $1,000. With leverage through margin trading, a Forex trader can control $100,000 worth of currency with a capital outlay of just one thousand dollars. Currencies are also bought and sold in the Forex market in terms of pairs. Each currency is always denoted by 3 letters like listed below:
• AUD for the Australian Dollar
• CAD for the Canadian Dollar
• CHF - for the Swiss Franc
• EUR for the "EURO"
• GBP for the British Pound
• JPN - for the Japanese Yen
• USD for the US Dollar
When a Forex trader buys and sells a currency pair, he is buying or selling the currency pair in terms of the “base” currency. For example for the USD/AUD currency pair, what this means is that one US dollar is worth so much in terms of the Australian dollar. The most common pairs are:
1. EUR/USD (Euro & US Dollar) known by just the "Euro"
2. USD/JPY ( US Dollar & Japanese Yen) known by just the "Dollar Yen"
3. GBP/USD ( British Pound & US Dollar) normally called "Cable"
4. USD/CAD (US Dollar & Canadian Dollar) known by just the "Dollar Canada"
5. AUD/USD (Australian Dollar & US Dollar) known by just the "Aussie Dollar"
6. USD/CHF US (Dollar & Swiss Franc) known by just the "Swissy"
7. EUR/JPY (Euro & Japanese Yen) known by just the "Euro Yen"
Thus, when you buy the EUR/USD currency pair; you are by definition buying the Euro while selling the US dollar at the same time. When you sell this specific pair, you are selling the Euro and simultaneously buying the US dollar. You transaction will always be by the base currency in contrast to the counter currency.
To avoid confusion, you can regard the currency pair as just one item. It is perfectly alright to ask for a currency pair quote by the base currency. Your Forex broker will be able to understand what you mean and you are still able to place trades through him. The distinction between the two currencies in the pair is drawn with regard to fundamental analysis concerns. The concept of the base and counter currencies is useful to demonstrate what is essentially happening in a Forex trade. In the financial markets, you are able to execute trade through short selling.
Short selling is when you sell a financial asset first and then proceed to buy that asset back later at a lower price, thus reaping a profit. However, short selling in the equity market is controlled by the regulatory bodies. Whereas in the Forex market, because you are continuously buying the base currency and selling the counter currency, you are able to flip the transaction as to which will be the base currency and which is the counter currency. The transaction is in essence the same and this permits you to short sell a currency pair with any restrictions like those in the equity market. With short selling, you are able to profit from a Forex trade regardless of whether the market is falling or on the up trend. With short selling, you can only make money when the market is on the upswing.
Forex Trading -
The Psychology of Traders?
Developing the proper trading psychology is crucial if a trader is to have any trading successes. This is an area that many novice traders tend to overlook while they are educating themselves. Sad to say, there is no magic formula with which a trader can forgo having to develop the correct “Trader’s Mindset”. As mentioned earlier not having the proper “trader’s mindset” can result in a costly and negative experience with trading in Forex.
evertheless, before all else we need to be able to recognize that the psychological aspect to trading is tantamount. For us to correct our short comings and minimize the losses that we suffer when we trade, we first need to know what is the problem and the issues surrounding the problem. Success in Forex trading is a combination of proper trading strategy, prudent money management appropriate capitalization and having the proper psychology. All these factors must work in synchronization in order for a Forex trader to be successful in his trading.
Some of the common psychological issues that a new trader will face are:
A fear of having to take a loss:
This is a result of a trader’s ego. In fact this reason is the most common reason why Forex traders fear having to take a loss. As a result, they try to go against the market trends trying to beat the market.
Exiting a trade prematurely:
A novice trader will exit a market position prematurely mainly due to the fact that he lacks confidence. He exits his position before he should because he wishes to relieve himself of the anxiety of closing a market position.
Holding on to a losing position for too long:
This happens because a trader refuses to acknowledge that he made a mistake. He holds on to the losing position hoping things will turn around and correct his mistake. Again, this is due to ego.
Strength indicators
These are used to indicate how intense are the sentiments of the market by looking at the market positions held by the market participants. The core ingredients of strength are Volume or open interest.
Cyclic indicator
One of the most famous and commonly used theories to explain cycles in price fluctuations is the Elliot Wave theory. It looks at recurring season to try to determine when the next cycle will be.
Support & Resistance
In simple terms, Support and Resistance levels are levels where the market prices normally try to breach repetitively but fail to do so. A good example of this is trend lines.
Momentum indicators
With Momentum indicators, you can establish how strong or weak a trend will be as time passes. Momentums are usually the strongest when trends just started and weakest when they transformed.
What is Forex Day Trading -
Day Trading Indicators and Indicator Trading?
By definition, day trading is defined as the purchase and sale of a financial instrument within a single trading day. This is achievable in all the financial markets but is especially prevalent in the Forex market as this market of the MOST liquid of all financial markets. Normally day traders are a class of trader by themselves. They are well informed and are well capitalized. They use a high level of leverage to maximize their profit levels. They play a very important part in the Forex market as they essentially provide the Forex market with liquidity. In addition, they facilitate the smooth running of the Forex market with arbitrage. This article will take a look at day trading and the traders behind it.
As mentioned earlier, day traders are a class of their own as they are well educated and they do this kind of trade for a living. Unlike many retail traders, day traders are truly professional. And this class of traders has an in-depth knowledge of the Forex market. Thus to be classified as a day trader, there are some criteria to be met:
• In-depth knowledge and experiences with the market
Those who are new to Forex are strongly discouraged from trying to day trade. In most likelihood, novice traders will end up incurring losses.
• Enough working capital
Day traders only utilize their risk capital to free them from the stress and risk of possible financial ruin. In addition, because the margin are ultra thin, a day trader need a large capital to be able to profit form the intra-day price fluctuations.
• A Trading strategy
For one to have an edge over everyone else in the market, one must have a proper strategy before embarking in day trading.
• Discipline
Day traders are normally individuals with a strong sense of discipline. Without discipline, it is easy for one to end up trading based on emotion.
To help day traders in their trading decision, they rely heavily technical indicators indentify opportunities to make money. Some of the technical indicators used by them are:
Flag Indicators
This is a charting guide that looks like a flag with a mast on either side. This kind of pattern results from narrow price fluctuations and signifies a consolidation before the proceeding movement resumes. Elliott Wave Theory
The Elliot wave theory, discovered by Ralph Nelson Elliott, explains that the financial markets move in an identifiable and repetitive waveform. Chart breaks
This is another type of indication that a day trader will look for in their trading strategy. With this, day traders look for assets that are trading near support and resistance levels. To help them discern a breakout point, day trader will utilize tools like:
• Channels
• Fibonacci levels
• Gann levels
• Triangles
• Wolfe Waves
Even though day trading is a controversial topic, it is becoming more common as advances in technology allows the average traders access to software tools that are available only to large institutional traders. Nevertheless, novice traders are strongly discouraged from embarking on day trades until they have gained sufficient experiences and risk capital to enable them to trade properly and efficiently.
Currency Trading -
The Seven Most Traded Currencies in Forex
Currencies on the Forex market are traded in terms of “lot” sizes. Each lot is equivalent to $1,000. With leverage through margin trading, a Forex trader can control $100,000 worth of currency with a capital outlay of just one thousand dollars. Currencies are also bought and sold in the Forex market in terms of pairs. Each currency is always denoted by 3 letters like listed below:
• AUD for the Australian Dollar
• CAD for the Canadian Dollar
• CHF - for the Swiss Franc
• EUR for the "EURO"
• GBP for the British Pound
• JPN - for the Japanese Yen
• USD for the US Dollar
When a Forex trader buys and sells a currency pair, he is buying or selling the currency pair in terms of the “base” currency. For example for the USD/AUD currency pair, what this means is that one US dollar is worth so much in terms of the Australian dollar. The most common pairs are:
1. EUR/USD (Euro & US Dollar) known by just the "Euro"
2. USD/JPY ( US Dollar & Japanese Yen) known by just the "Dollar Yen"
3. GBP/USD ( British Pound & US Dollar) normally called "Cable"
4. USD/CAD (US Dollar & Canadian Dollar) known by just the "Dollar Canada"
5. AUD/USD (Australian Dollar & US Dollar) known by just the "Aussie Dollar"
6. USD/CHF US (Dollar & Swiss Franc) known by just the "Swissy"
7. EUR/JPY (Euro & Japanese Yen) known by just the "Euro Yen"
Thus, when you buy the EUR/USD currency pair; you are by definition buying the Euro while selling the US dollar at the same time. When you sell this specific pair, you are selling the Euro and simultaneously buying the US dollar. You transaction will always be by the base currency in contrast to the counter currency.
To avoid confusion, you can regard the currency pair as just one item. It is perfectly alright to ask for a currency pair quote by the base currency. Your Forex broker will be able to understand what you mean and you are still able to place trades through him. The distinction between the two currencies in the pair is drawn with regard to fundamental analysis concerns. The concept of the base and counter currencies is useful to demonstrate what is essentially happening in a Forex trade. In the financial markets, you are able to execute trade through short selling.
Short selling is when you sell a financial asset first and then proceed to buy that asset back later at a lower price, thus reaping a profit. However, short selling in the equity market is controlled by the regulatory bodies. Whereas in the Forex market, because you are continuously buying the base currency and selling the counter currency, you are able to flip the transaction as to which will be the base currency and which is the counter currency. The transaction is in essence the same and this permits you to short sell a currency pair with any restrictions like those in the equity market. With short selling, you are able to profit from a Forex trade regardless of whether the market is falling or on the up trend. With short selling, you can only make money when the market is on the upswing.
Forex Trading -
The Psychology of Traders?
Developing the proper trading psychology is crucial if a trader is to have any trading successes. This is an area that many novice traders tend to overlook while they are educating themselves. Sad to say, there is no magic formula with which a trader can forgo having to develop the correct “Trader’s Mindset”. As mentioned earlier not having the proper “trader’s mindset” can result in a costly and negative experience with trading in Forex.
evertheless, before all else we need to be able to recognize that the psychological aspect to trading is tantamount. For us to correct our short comings and minimize the losses that we suffer when we trade, we first need to know what is the problem and the issues surrounding the problem. Success in Forex trading is a combination of proper trading strategy, prudent money management appropriate capitalization and having the proper psychology. All these factors must work in synchronization in order for a Forex trader to be successful in his trading.
Some of the common psychological issues that a new trader will face are:
A fear of having to take a loss:
This is a result of a trader’s ego. In fact this reason is the most common reason why Forex traders fear having to take a loss. As a result, they try to go against the market trends trying to beat the market.
Exiting a trade prematurely:
A novice trader will exit a market position prematurely mainly due to the fact that he lacks confidence. He exits his position before he should because he wishes to relieve himself of the anxiety of closing a market position.
Holding on to a losing position for too long:
This happens because a trader refuses to acknowledge that he made a mistake. He holds on to the losing position hoping things will turn around and correct his mistake. Again, this is due to ego.
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