blog18

Want To Trade Forex Like An Expert? Plan Your Profits

by with No Comment Forex

Why Letting Profits Run Can Sometimes Pay Off

Just as many forex traders are too slow to cut their losses, many are also too quick to close their trades to claim their profits when a trade does go their way. Closing a trade too early prevents you from taking full advantage when, for example, a major market shift occurs in your favor. How do you avoid missing out? First, you can use an analytical tool like average true range (ATR) to predict periods of volatility in the market before they occur. How to recognize this? One sign can be periods of unusually low volatility. These often precede big swings up or down in the price of an item. When this is the case, you can use trailing stops, an automatic stop-out order you set with your broker where the limit follows the price upwards, or you can cash out only partially as your profits mount.

 

Top Tip: Learning when to let profits run takes planning, time, and experience — but is well worth doing

 
 
 

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AUD, Brexit, Brexit, Banks, CAD, CHF, CNH. currency hedging, CZK, Donald Trump, EU EUR, forex trading, GBP, Global, Growth, Fears, Gold Prices, Government Shutdown, HKD, Is forex trading profitable, JPY Leverage, Mean Reversion, MXN, NOK, NZD, Passive income, popular strategies, Risk Management, RUB, Safe, haven currencies, second referendum, SEK SGD, Silver, Price, technical indicators, trading account, Trading Basics, trading psychology, Trailing Stop, trump wall, TRY USD, USD Price, Chart, XAG, XAU, ZAR,

blog19

Bars, Lines, or Candlesticks? Reading Forex Charts Like a Pro

by with No Comment Forex

Are you struggling to find trading opportunities when you use fundamental analysis? News reports and eco releases can be strong influencers of market price, but sometimes they don’t give a clear enough indication of what to trade, and more investigation is called for. Time to check the forex charts!

Some traders use indicators to make sense of price history, while others prefer to “eyeball” the situation and make their own conclusions. Either way, it comes down to technical analysis and recognizing patterns in the price history, which brings us to the topic of this article. Which forex chart type reveals more? Should you use lines, bars, or candles? Here’s a simple breakdown of those options so you can start using the one that best suits your trading style.

Line charts

Right-click on an open forex chart and you’ll see three viewing options: lines, bars, and candlesticks. Lines display a currency pair’s price history in a much cleaner way. Lines track a simple straight line between the opening price and the closing price. Anything that happens between those two points will not be visible on a line chart. Since line charts don’t show the daily highs and lows, it makes them better suited to long-term analysis offering a wider simplistic overview. If you are planning to keep an order open for more than a week, then lines give a much cleaner picture from which to base forecasts. For short-term orders that present a risk of volatility, a bar chart is much more informative.

 

Bar charts

Like lines, bars also show the opening and closing prices, but bars display price highs and lows. The lowest and highest levels on each bar represent the lows and highs for the selected period. To the left of the bar is the opening price, to the right is the closing price

Most traders find bars harder to read than price lines, but there are certain advantages to using bars when performing technical analysis. When setting ‘Stop Loss’ (SL) and ‘Take Profit’ (TP), it can be useful to indicate just how extreme the lows and highs are compared to the closing prices. If the bars are long, but the opening and closing prices are crammed closer to the middle, it can mean that the selected period is experiencing price volatility. Extreme highs and lows tend to prematurely trigger a tight ‘SL’ or ‘TP’ order. If you’re opening a trade for the day, check the previous candlesticks to see if the wicks were far from the open and close? Set your ‘SL’ or ‘TP’ accordingly.

 

Candlestick charts

Candlesticks are probably the most popular way to view forex charts. This type of chart shows the same trading information as bars, but many traders prefer the style and insist that they are easier to read.

CSimilar to bars, the candlestick body shows the opening and closing prices, and the wicks that are sticking out of the top and/ or bottom represent the highs and lows of the selected period. The direction of the price for the period is shown by the color used. The most popular contrasts being green for a rise and red for a fall, but this is a completely customizable feature.

Just remember that the highs and lows never change, but the opening price on a candlestick switches place whenever the price direction changes. A rising trend opens on the bottom. A declining trend opens on the top. Candlesticks take a little getting used to, but when you do, there are dozens of patterns to watch out for that have a history of indicating rally moves or crashes.

 

So which forex chart is better for forecasting?

 

Take a look at the three forex chart screenshots in this article. Which one seems the easiest to read or analyze? It’s really down to your own personal preference. Lines are great for a quick and easy overview, but they show much less when you’re looking at a one-minute timeframe. Consider using lines for long-term trading analysis or quick checks on how a fundamental release is affecting market prices. If you tend to open and close orders in the same day, candlesticks might be a better choice.

 

Test your analytical eye on the foreign exchange market

 
 

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Tags:

 

AUD, Brexit, Brexit, Banks, CAD, CHF, CNH. currency hedging, CZK, Donald Trump, EU EUR, forex trading, GBP, Global, Growth, Fears, Gold Prices, Government Shutdown, HKD, Is forex trading profitable, JPY Leverage, Mean Reversion, MXN, NOK, NZD, Passive income, popular strategies, Risk Management, RUB, Safe, haven currencies, second referendum, SEK SGD, Silver, Price, technical indicators, trading account, Trading Basics, trading psychology, Trailing Stop, trump wall, TRY USD, USD Price, Chart, XAG, XAU, ZAR, indicator, Forex Millennium, Karl , golden rebate, rebate, cashback,

 
 
 
blog22-3

The Basics of Forex Theory An introduction to the Foreign Exchange, the Major Currencies and Reason

by with No Comment Forex

What is a Currency Pair ?

Currency is always measured against another currency and they are referred to as currency pairs. Currency pairs are generally segregated into groups. These groups are known as Majors, Minors and Exotics. Major currency pairs are generally the most popular traded currency pairs. Almost all currencies are free floated, meaning that they don’t have a set representation of value to another currency and can rise and fall in value independently. Some of currency pairs offered by HotForex available for trading are:

 
 

What is a Pip ?

A pip is a small measurement of change in the underlying currency. Generally, it is the forth (0.0001) decimal place of a currency price, except with the Japanese Yen, where they have no denomination for cents in their currency (in the Japanese Yen, the pip is the second decimal place). Shown below is an image representing an order window reflecting the price of the AUD/USD Currency Pair

The fourth decimal place is circled red to show which decimal the pip is in reference to. If the price 0.84693 moves to 0.84683 then there was a 1 pip movement. Please note that the fifth decimal represents 1/10th of a pip.

 

A pip is a good reference measure to how much a trader can make based on the volume of their trades. For example, if a trader purchases a full contract the value of potential return and risk is $10 profit or loss (of the second named currency in a pair) per pip movement. You can follow the table below as a reference to potential risk or return:

 
 

Quite often, the annotation used to measure how well a trader is doing is to mention how many pips they have gained in a set time period.

What is Bid & Ask and Spread ?

With currency quotes, they are always represented with a Bid offer and an Ask offer. This denotes the price difference between buying and selling.

If you BUY, you are buying at the ASK price. if you SELL, you are selling at the BID price. Shown below is a list of currency pairs all showing a Bid and Ask offers.

Remember, if you opened a BUY position and you wish to close it, you are essentially selling it back, therefore the price you will be closing the position at is the BID price and vice versa.

The spread is the pip difference between the BID and ASK. If you were to look at the above image and referred to the AUD/USD then you will notice the BID as 0.84767 and the ASK as 0.84786.

This is a spread of 1.9 pips. 0.84786 – 0.84767 = 0.00019 0.00019 = 1.9 pips

What is Leverage and How much do I need to trade ?

Leverage is the amount that you are borrowing based on the deposit in your account. Default leverage is set at 100:1, meaning that for every $1 you have in your account, you have a buying power of $100. If you have $1,000 in your account, you have buying power of $100,000. Something to remember is a full contract is $100,000 of the base currency. So if you were looking to trade a Full Lot of the EUR/USD, then you would need the equivalent of EUR$100,000 in your account to trade this. If you wanted to trade a full contact and you had a leverage of 500:1, then you could take this position with only $200 in your account ($200 x 500 = $100,000). High leverage can help you take larger positions based on smaller capital in your account, but it is not without its pit falls. Larger positions result in larger dollar movements per pip and as such can wipe out smaller capital amounts in a short period of time.

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The Basics of Forex Theory An introduction to the Foreign Exchange, the Major Currencies and Reasons

by with No Comment Forex

Foreign Exchange Definition

Foreign exchange (Forex) is the cross-country exchange of currencies and is, single handedly, the largest and most liquid financial market in the world. With an estimated $1.5 trillion in currencies traded in a single day, it eclipses the trading of other types of commodities. Unlike other commodity trading, Forex has no centralized exchange and is traded primarily through banks, brokers, dealers, financial institutions and private individuals. Due to this ability for financial institutions to trade Forex, the Forex market is open 24 hours, 5 days a week (closes Saturday morning).

Prior to the late 1990’s, Forex trading was only the practice for institutional traders and even though retail traders had access to trade the Forex market, only recently has it become popular and more common for individuals to trade Forex for profit. Most of the world’s different country currencies are free floating; meaning they retain an individual value and will appreciate and depreciate against other currencies. Currencies are always listed in pairs as they need another currency to benchmark against.

Reasons for Trading Forex

Trading Forex has many purposes and you’ll be surprised of the many levels traded that impact you and you’re not even be aware of it. For every purchase you make, the contents, ingredients, by-products, parts or materials may not necessarily be from a domestic source. It could have been bought internationally and as such the exchange of foreign currency would have had to be taken place.

From a financial perspective, some people may trade the Forex market for profit. By taking a cross currency pair, they may exchange currency to a foreign designation hoping for domestic currency values to depreciate, thus when you convert it back you will receive more than you initially started.

For international importer or exporter of goods and services, there are great opportunities by having access to the international market. However, with fluctuating international currency rates, payment can sometimes be difficult. Initially companies make a sale for an agreed price, then on the day of payment the agreed value is significantly less than agreed to, due to a currency fluctuation is known as foreign exchange risk.

You will find all types of businesses, from large financial institutions to small retail freight forwarders will practice foreign exchange hedging. Simply put, these companies will put in place measure to ensure that their agreed payment value will represent the same value at the day of payment regardless of currency value fluctuations.

The Eight (8) Major Currencies

Internationally, there are eight (8) currencies that are traded more than other currencies. These are often referred to as Majors. These currencies are as follows:

USD – Unites States Dollar

JPY – Japanese Yen

GBP – British Pound

CAD – Canadian Dollar

EUR – European Currency Unit

CHF – Switzerland Dollar

AUD – Australian Dollar

NZD – New Zealand Dollar.

Certain parts of the world have part of their Saturday to trade, as it’s still Friday in other markets.
Financial institution in these countries may be dealing with the Forex market during their work hours, the Forex market is open and trading 24 hours, 5 days a week. For someone living in the East Coast of Australia, the market hours for the corresponding markets are outlined below:

New York session opens at 10:00pm and ends around 7:00am

Sydney session starts at 7:00am and ends around 4:00pm

Tokyo session begins at 9:00pm and ends around 6:00am

London opens at 5:00pm and ends around 2:00am.

 
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