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Stochastic: What’s it Really Showing You?

by with No Comment Forex

Ever heard the expression “getting ahead of the curve?” In trading, this cliche perfectly reflects what every trader wishes they could consistently do. In addition to fundamental analysis, you might turn to charts to forecast price moves. A big part of using charts to make sense of the markets are indicators, but are they really any good? Many traders turn to the Stochastic indicator to check overbought or oversold levels, so just what insights does Stochastic analysis really offer, and how can you use these insights to determine when to open a position?

 

Here’s an overview of this popular indicator, why you might be struggling to use it, and some top tips that will help you avoid misinterpreting market moves.

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Overbought and oversold

The terms overbought and oversold describe a period where there has been significant movement in price without much pullback or reversion. Simply put, a rise or fall that doesn’t deviate far from the trend line.

What goes up…! You know the saying. Price trends can’t last forever. They eventually reverse, and trading close to that point of reversal is one way you can maximize your profits. In traditional technical analysis, traders expect overbought or oversold currency pairs to reverse, but that’s not always the case and it can be quite an expensive realization. To constantly set your trades based on the Stochastic indicator will yield mixed and likely disappointing results.

How to read the Stochastic

If you’ve already signed up with Exness, then you have access to a trading platform and a risk-free demo account. This is the perfect way to get familiar with any of the free and paid indicators available. Open up your platform and go to the Navigator pane on the left. Scroll down and then drag the Stochastic folder to the chart. A section will appear below the price chart with two lines tracing along, above, and below a central range.

The concept is fairly simple. The lower horizontal line represents a value of 20. The upper horizontal line is 80. Whenever the tracing line breaches 80, it indicates a possible overbought status, and traders expect a price correction. Likewise, if the lines cross below the 20-mark, it signals a possible oversold status, and a reversal might be imminent.

In the above EURUSD example, a downtrend started on May 19 and crossed the 20-line on May 22 [yellow]. Traders using the Stochastic indicator would normally take this as a sign of overbought, and they would set a buy order with the expectations of a reversal. They would consequently be very pleased with the rise that followed. Just five days later, Stochastic indicated another oversold status [blue], but traders clicking the buy buttonprobably lost whatever profits they’d achieved the previous week. So, what’s going on?

Indicators are not fortune-tellers

FX News does not recommend using the Stochastic indicator as a stand-alone forecasting strategy. Indicators are best used to confirm theories, not to create them. Having said that, Stochastic is one of the best indicators a trader can use, but you might consider adding a little common sense to the mix. In the yellow example above, you can see that the price line and the Stochastic lines match rather well in the days preceding the oversold signal—and continue to do so after the fact. The perfect example of how a Stochastic indicator can forecast a reversal!

The blue example a few days later shows a clear divergence. The Stochastic line falls dramatically in a complete reversal from overbought to oversold, but the price line barely moves in comparison. Consider that a warning sign! Another common indicator is that the reversal usually comes when the rise or fall happens in a short period of time. Watch out for steep peaks and valleys that accompany the overbought/oversold range.

Top trading tips for advanced traders

Although we’ve used a price line to better illustrate the price moves in the chart image, FX News suggests using candlesticks when performing chart analysis. Moreover, Stochastic’s default %K period and slowing is set at 5,3,3, but cautious traders usually use higher numbers. On the top menu, go to Insert > Indicators > Oscillators > Stochastic Oscillator and set to 15,5,5. You can run both settings at the same time to see the differences. Certain settings may work better for certain pairs, so play around with the levels before committing to one.

 

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blog28

Do Forex Signals Really Work?

by with No Comment Forex

So, you’ve funded your trading account, and you’re ready to make some trades. Now it’s time to analyze the market and find some attractive trading options. Researching currency pairs can take a big chunk out of your free time, and it’s not uncommon to end your market investigation as lost as when you started. If that’s you, don’t despair. You’re not alone, which is why professional market analysts and A.I. programmers got together to create forex signals. But are those signals any good?

Why do traders use forex signals?

Technical indicators, news reports, fundamental analysis, who has time to analyze the dozens of trading instruments available on your trading platform? If your life is like mine, it’s hard to find time to properly research the market. But what if somebody or something could do all the research for us and then send a report with statistics and clear conclusions?

It’s so convenient. Forecasts that normally take hours to perform just appear in your inbox or MetaTrader message board in the form of a signals report, all thanks to a team of professional forex analysts working in concert with A.I. technology.

Traders of all levels and experience use signal provider services and their associated apps. While some forex signals services are free, others have a fee; there are hundreds, so choosing which one to go with takes time and investigation. Moreover, some work better than others.

 

Which forex signals providers can you trust?

This question is difficult to answer. Forex signals get constant updates and performance changes with each update. Signal performance and accuracy also varies from brand to brand. From as low as 60% up to an unconfirmed 92% win/loss ratio. One forex signal provider’s performance might be strong during the time of writing this article, but things can change in a matter of days. Keeping current with the top signal providers can take up as much time as keeping current with the forex market. Fortunately, there is a solution.

The easy way to choose a signal provider

To make sure you’re getting the latest forex signals, just stick to the more established and popular services. There’s a reason they are so popular! One signal provider worth considering in 2019 is the award-winning Trading Central. For almost 20 years, Trading Central has been supporting investment decisions for forex traders, and it is a consistent leader in the industry. Professional analysts monitor Trading Central’s tried and tested algorithms, and their performance and reputation is solid, which is why Exness gives free access to Trading Central signals directly on your trading platform.

Top tip: Some signal providers have had better performance percentages than Trading Central, but their consistency is lacking and not really worth mentioning. Try comparing multiple signal providers. Keep a diary of the signal forecasts then go back and check to see which ones gave better signals. If the majority of signal providers are saying the same, then you might be onto a sure thing.

As always, FX News recommends that you understand every order you make, and not blindly follow forex signals or forecasts. Find time to conduct your own market research and learn and grow as you go.

Try signals trading and see if it’s right for you!

 

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Want To Trade Forex Like An Expert? Control Your Environment

by with No Comment Forex

Why  Building A Supportive Forex Trading Environment Is Important

What do I mean by supportive trading environment? I mean that no one exists in a vacuum. Many things outside the actual forex market itself — from the physical environment you trade in to your personal circumstances at the time you are trading — can impact your trading performance. Maybe you have skeptical family members that are giving you a bad case of performance anxiety. Maybe you don’t have enough funds in reserve, which causes adverse anxiety and pressure that impacts your performance. Whatever the reason may be, the outside world impacts your performance just as much as market conditions.

Top Tip: The Outside World Matters

Knowing what outside factors impact your trading performance — and setting up your environment to support your best performance — can be a good way to improve your trading.

 

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Want To Trade Forex Like An Expert? Control Your Risk

by with No Comment Forex

Want to step above the crowd? Knowing when to cut your losses and being consistent and disciplined about doing so can help you truly elevate your trading game.

Why Controlling Risk Is Key To Developing As A Trader

At first glance, this sounds rather obvious, doesn’t it? It may surprise you, but far too many traders lose more money than they can afford by sticking with bad trades in the hope that things will turn around for them. In reality, this rarely happens.

Smart traders, in contrast, set firm stopping points with their broker before ever opening their trades. If their losses drop below the level set, they understand that the best thing they can do is to walk away.  While this sounds easy enough to do, actually doing it consistently in real life can be quite hard. It’s basic human psychology to try to hold on to what we perceive as ours and to recoup losses. Fighting through that urge and learning to walk away will put you head and shoulders above many traders, however.

Top Tip: Planning Is Key

Have a plan about how and when to cut your losses and be disciplined and consistent about sticking to it. For example, determine what percentage of your equity can you afford to lose before making a trade and set a stop-loss order to ensure you don’t go beyond it.

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What Is The Best Forex Trading Platform For You?

by with No Comment Forex

Author:Exness Broker

As a trader, there are several factors that you should consider when choosing a forex trading platform. Some of these factors include your experience level, your trading preferences, and the tools you need for both technical and fundamental analysis.In this article, we shall analyze the different trading platforms offered by Exness to all its traders. Exness offers MetaTrader 4, MetaTrader 5, Mobile, WebTerminal, and MultiTerminal trading platforms.

MetaTrader 4 The MetaTrader 4 platform is one of the most popular forex trading platforms in the world and is used by millions of traders across the globe. This platform is quite easy to use and is ideal for traders getting started with forex for the first time. The MT4 platform offers 30 built-in indicators, as well as an additional 2,000 free custom indicators that any trader can download and use to perform their technical analysis.

The MT4 platform also allows traders to enter numerous types of orders depending on the market conditions, as well as allowing trading directly from the MT4 charts. The platform also allows traders to back test their trading ideas and strategies through the MT4 History Center.

MetaTrader 5 The MetaTrader 5 platform is an advanced version of the MT4 platform that offers more functionality such as the ability to execute more order types, and view the market across a wider range of time frames. This platform is well-suited to advanced traders who would benefit from the ability to build powerful EAs and sell them in the MetaTrader Market.

Mobile Platforms Given near universality of mobile devices such as smartphones and tablets, many traders are switching to mobile forex trading terminals in order to trade on the go. Although most mobile trading platforms offer limited functionality in terms of the tools available to traders, their main advantage is that they allow traders to trade wherever they are.Traders only require a stable internet connection and a mobile device that is compatible with their chosen mobile trading platforms, such as the MT4 and MT5 mobile trading platforms.

WebTerminal The WebTerminal is a trading platform that allows traders to trade directly from their web browser without having to download and install additional software. This is an excellent choice for traders who do not feel comfortable downloading trading software onto their computers, such as the MT4 or MT5 trading platforms. The WebTerminal is a stripped-down version of the downloadable trading software providing all the essential functionality with only the more advanced tools missing.

MultiTerminal The MT4 MultiTerminal is an advanced trading platform that allows traders to trade and manage different accounts. This platform is best suited for sophisticated traders with multiple accounts dedicated to trading different instruments, different strategies, or for the management of the accounts of other people.Institutional investors could also benefit greatly from this platform given their complex trading needs. The MetaTrader MultiTerminal allows traders to place new trades and allocate lots across different accounts simultaneously, which is vital for traders managing multiple accounts.

Conclusion To sum up, it is crucial to note that each of the above forex trading platforms has different functionalities that are suited to different types of traders.For most beginner traders, the MT4 platform is their best choice, although they might not utilize all of its functions. The choice of a trading platform is largely subjective and depends on a trader’s needs. The best course of action for most traders is to open a demo account in order to test their preferred trading terminal before engaging in live trading.