InstaForex Forex Trading For Beginners Complete Step by Step Guide Free

<div dir="ltr" style="text-align: left;" trbidi="on"> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The Basics of FOREX Trading for Beginners</h2> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> What precisely is FOREX trading? Put simply, FOREX trading is the buying and selling of international currencies. Traditionally, participation in the FOREX market was confined to major banking and trading institutions. But in recent years, technological developments have opened up this once exclusive arena to smaller companies and even individuals by allowing them to trade currencies online.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The world's currency rates are not fixed. They follow a floating exchange rate and are always traded in pairs - Euro/Dollar, Dollar/Yen, etc. Most international transactions are exchanges of the world's major currencies.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> When it comes to Forex trading, there are a number of major currency pairs. : Euro v. US dollar, US dollar v. Japanese yen, British pound v. US dollar, and US dollar v. Swiss franc. These currency pairs are considered major in comparison to the other currency pairs because of their trading volume.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> In the FOREX market, these relationships are shortened: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. They may also be listed as follows (without the slash): EURUSD, USDJPY, GBPUSD, and USDCHF</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <span itemprop="articleBody"> </span><br /> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Below is a <strong>chart of 4 currency pairs clearly illustrating forex beginners their relationship to each other.</strong></div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong><br /></strong></div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="552" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0jL9w_NRbCGzlO6Paqj6Hh4vHivynpYgiK4ro2Pdvwx7B7bCXAWbqAoo6Wfi_p7Lc38hvdwJ7BT6M0ir0D-zzao7TxX24AAfZA8UM2W5bS4xlUXEfDeyZERzlZX-cilRvdffLl1ZTVD4/s1600/Forex_Trading_Image_002.jpg" width="640" /></span></div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody">Forex Trading For Beginners Chart 1.0 Major Currency Pairs - Daily Data</span></div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"><br /></span></div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> It is also important to remember that there are no dividends paid on currencies. If you are a trader in the FOREX market, you look to see whether one currency's value will appreciate against another currency. When this is the case, you exchange the latter for the first. Ideally, you will be able to exchange the first currency for the other at a later time and collect a profit from the trade.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> FOREX transactions are typically conducted by professionals at major banks and brokerage firms. FOREX trading has long been an important feature of the international market. At all hours of the day, currencies are being traded by brokers around the world.</div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> In fact, the FOREX market operates virtually twenty- four hours a day and five days a week with traders at international banking institutions working a number of separate shifts.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The FOREX market is different from the normal stock market in the fact that price shifts are much smoother and do not result in significant gaps. Each day the FOREX market turns over trillions of dollars, allowing traders to enter and exit certain position very easily. As you can see, the FOREX market is a dynamic and continuous system that basically never sleeps. To be sure, even on September 11 in 2001 it was still possible to obtain currency quotes.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: justify; text-indent: 0pt;"> Also known as the foreign exchange market, or FX, it is the oldest and most expansive financial market in the world. In comparison, the currency futures market is a mere one percent the size of the FOREX market.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Trades are brokered between major banking groups and circulate around the globe, from America to Australia, to Asia, to Europe, and back to the U.S. For a long time, financial prerequisites and hefty minimum transaction amounts put the FOREX market out of reach of small traders. Consequently, at one time major banks and financial institutions were the only parties that could benefit from participation in the FOREX market's fluidness and strong exchange rates.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Today is a different story. FOREX market dealers can divide large units within the market, allowing smaller corporations and even individuals the ability to trade these smaller units. Even though it is the oldest financial market in the world, the FOREX market has evolved a great deal in a short amount of time. High-speed internet connections and sophisticated online Forex trading platforms has definitely made it easier for individual traders to get involved in Forex trading and possibly be very successful at it. This basic guide is your first step towards a successful future in trading in the extremely lucrative FOREX market.</div> <div class="s4" style="padding-left: 6pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> </div> <div class="s4" style="padding-left: 6pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <b>Why To Trade The FOREX Market</b></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div class="s5" style="line-height: 150%; padding-left: 6pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> If you asked Forex traders the number one reason they traded Forex most of them would say, “<b>profit potential</b>”</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="628" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-WEAcsVXh7m2LgvW6Vlnf1mHrnmLE7pQOVJDtuFf841wFL8SP6ESWhTPjqOZJ-99n5qBtGPT_FeSbkqOi2sd6rAYvzzatx93uk0SPYr8lLPdl5TSRqZ7YQUL-Y0hcqPGenYqE7tBx25c/s1600/Forex_Trading_Image_004.png" width="640" /></span></div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"></span></div> <h2 style="padding-left: 6pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Forex Trading For Beginners Chart 1.1 Daily GBPUSD Data</h2> <div style="line-height: 149%; padding-left: 6pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The chart above shows the daily GBPUSD (British Pound/US Dollar) currency pair. This chart shows the ?<b>BUY</b>? entry where the blue arrow is (the bottom left of the chart). This</div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> represents where a particular Forex trading system went long (bought).</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The profit so far in this trade is approximately $24,000 per Forex contract. This is from just one simple trade in the Forex market! So as you can see the profit potential is there and opportunities such as these exist in all Forex currency pairs.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> There is a unique and potentially very profitable opportunity offered through cash/spot FOREX markets regardless of the condition of the market.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> How To Get Started With Forex Trading</h2> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Learning to trade with Forex is not unnecessarily difficult; however, there are definitely a few items you must be aware of and instructions to follow. Before beginning any trading, obviously you need to locate and forge a relationship with a broker to execute the trades. Just as with doctors, lawyers and other professions, there are a multitude of Forex brokers from which you can select.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>To help you choose, here are some factors to consider:</strong></div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Minimal Spreads - <span class="p">Unlike standard stock trading brokers, Forex brokers do not charge any commissions on the trades. They earn their income from what is called a spread. The spread is simply the difference between the buy and sell price of currency at a particular point in time. As you locate and investigate the brokers, you should inquire as to the spreads they charge. The lower the spread, the less it will cost you to trade in Forex. This is the same rule as with traditional brokers. The higher their commission on the trades, the lower your profit at the conclusion of the buy and sell transaction. It is in your best interest to choose a Forex broker offering a low spread.</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>Compliance and Reputation</strong> - <span class="p">Traditional stock trading brokers generally operate through their own brokerage houses. Forex brokers, however, are most often affiliated with a large bank or other financial institution. This is due to the substantial sums of capital required. In addition, you should confirm that the Forex broker you choose is properly licensed and registered. Forex brokers should be registered with the Futures Commission Merchant (FCM). IN addition, they are regulated by the Commodity Futures Trading Commission (CFTC).</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> You can locate and verify the registration as well as other facts and background information at the CFTC website at http://www.cftc.gov .Without a doubt, you want to retain and trade through a broker who is affiliated with a reputable bank or financial institution.</div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;">   </div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <strong>Available Research Tools and Information <span class="p">-</span></strong><span class="p"> Like traditional stock and commodity brokers, Forex brokers maintain various types of websites, trading platforms and underlying research and information portals. The sites should provide you with real time information, current charts, technical information and comparison ability and other relevant data. A good Forex trader will also sustain the ability to trade on different systems. As with any major financial endeavor of this type, ask for free trials to you can evaluate the Forex broker's various trading platforms. Forex brokers should offer a wide array of information, schedules, tools and other support functions and records.</span></div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The bottom line is to locate a broker who will provide you with all the tools and services you require to be successful.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>A Variety Of Leverage Options - </strong><span class="p">To succeed in Forex trading you Leverage the price spreads on your trades. The price differentials are minute down to the small percentages of a penny. You are, however, using more than your actual capital borrowed from the broker to make the trades which is how you Leverage larger amounts for your trades than you actually have in cash. This allows you to earn money on the small price deviations. As an example, if you are leveraging at a ration of 100 to 1, this means that for every one of your dollars with which you are trading, you are borrowing 100 from the broker. A wide majority of brokers will allow you to leverage up to a 250 to 1 ratio.</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> You need to be careful, however, because the leverage ratio is directly related to risk. The higher the ratio, the more you are effectively borrowing from the broker. While you can earn more profit from the trades, you can also lose more if the price fluctuation is not in your favor. This risk reward evaluation is based on your own capital amounts and your tolerance level for profits and losses on the trades. If you are flush with capital, leveraging a higher amount is not as much of a concern. Nevertheless, brokers offer a large number of leveraging ratios and you will certainly find one or more to fit your desires and financial constraints. Even if you have a good amount of capital and can accept a certain amount of risk, you may not want to leverage a high amount if the market becomes volatile such as with exotic currency pairs.</div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <br /></div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <strong>Types of Accounts <span class="p">- </span></strong><span class="p">You will need to open an account with a broker to execute trades. There are a variety of types of accounts which you can maintain. The lowest account is referred to as a mini account. It has a low minimum opening balance requirement of approximately $300.00. A mini account provides you with the highest ratio of leverage since you are using a small amount of capital with which to execute larger sums in your trades. Aside from the mini account is a standard account. That type of account provides a multitude of various leverage ratios. It has a higher minimum balance to open of approximately $2000.00. Finally, another type of account which brokers offer is a premium account. These require substantially higher minimums to open. They also offer you multiple ratios of leverage as well as give you access to additional platforms, tools and services. As you evaluate and pick a broker, find one that has the right mix of accounts, leverage, information and services for your requirements and financial circumstances.</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>Stay Away From Disreputable Brokers -</strong> <span class="p">Just like in any profession, there are good and bad representatives. Brokers are no different. Some are reputable and others are the ones you just need to avoid, especially as a forex trading beginner. These are the brokers who do not have your best interest in hand and simply buy prematurely or sell near a preset price point to increase their own profits.</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> These brokers will pick up a fraction of a penny always against on your trades. None of the brokers you evaluate will ever admit to such trading, but there are methods to determine if you are considering a broker who engages in this practice. You can speak with other brokers to get their opinion on the one or more that you are considering. You can ask if they are aware of the brokers trading proclivity in terns of the buying and selling near the price points.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> There is no organization that tracks this type of activity. You can try to look on the Internet for discussion boards or messages that might disclose certain brokers and their trading activity.</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Margin Calls and Requirements <span class="p">- Obviously since leveraging is all about borrowing money from the broker you need to understand exactly how much risk your broker is going to allow you to take on trades. Once you establish that together and discuss it, the broker will know the prices and differentials in the fluctuations within which to trade by buying or selling. This can, however, adversely impact you if the broker has that discretion and trades at losses.</span></div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> For example, assume you maintain a margin account and your positions dramatically fall before turning around and rising substantially even exceeding the beginning price. Whether or not you have sufficient capital, a broker might have traded out your position during the fall to lessen the broker's risk and potential loss. That trade could have been at or near the bottom of the price fluctuation. That would result in a margin call to you and you could be liable for substantial sums of money even though the price rebounded after the broker liquidated your position.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Opening a Forex account, regardless of the type, is similar to taking out a rotating equity loan or maintaining an equity account. The main thing that separates them from the Forex account is that you are required to execute a margin agreement with relation to your Forex accounts. The margin agreement acknowledges that you are trading with money borrowed from the broker and that the broker can insert itself into your trades as necessary to lower its risk and protect its interest. It also explains your liability relating to any losses. After you execute the agreement and deposit the beginning capital to the account you opened, you are ready to begin trading.</div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Introduction To A Basic FOREX Strategy for beginners</h2> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Technical analysis and fundamental analysis are considered the two main forms of analysis in both the FOREX market as well the equity markets. However, most FOREX traders opt for using technical analysis.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The following is a quick overview of both types of analysis and how they are used in FOREX trading.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>Fundamental Analysis for Forex Trading Beginners</strong></div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Using fundamental analysis in the FOREX market tends to be somewhat difficult and is generally used to forecast long-terms trends. There are, of course, some traders who conduct their trades on a short term basis solely on current news releases. There are many fundamental indicators of currency values that are released at various times so we have provided a list of a few for to be aware of:</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span> <span itemprop="articleBody"> </span></div> <ul id="l3"> <li style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <div style="display: inline;"> Non-farm Payrolls</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 12pt; text-align: left; text-indent: -7pt;"> <div style="display: inline;"> Purchasing Managers Index or PMI</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 12pt; text-align: left; text-indent: -7pt;"> <div style="display: inline;"> Consumer Price Index or CPI</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 12pt; text-align: left; text-indent: -7pt;"> <div style="display: inline;"> Retail Sales • Durable Goods</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Of course these are not the only fundamental indicators you need to be aware of. There are also several meetings that can provide you with additional information that may affect a market. These meetings usually focus on interest rates, inflation, and other causes of currency value fluctuation. Sometimes a volatile market is caused by something as simple as the wording of issues such as the Federal Reserve chairman's discussion on interest rates.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The most significant meetings you should be aware of are the Federal Open Market Committee and Humphrey Hawkins Hearings. Simply studying the commentary can</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> help FOREX fundamental analysts to better understand long-terms market trends and can also help short-term traders capitalize on the market.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: justify; text-indent: 0pt;"> Should you opt for the fundamental strategy, you should keep an economic calendar on hand so you know when these reports are available. Your broker should be able to keep you up-to-date on this information as well.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Technical Analysis for forex trading beginners</h2> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Technical analysis helps FOREX traders analyze price trends much like their counterparts in the equity market. The only difference is that FOREX markets are open 24 hours every day. In order to work with that 24 hour a day time frame, some types of technical analysis to be changed or modified.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The following is a short list of technical analysis tools that are most commonly used in FOREX:</div> </li> <ul id="l4"> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Moving Averages</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Stochastic Oscillator</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Channel Breakout</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> MACD (Moving Average Convergence Divergence)</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Candlestick charts</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Elliott Waves</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Fibonacci Studies</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Parabolic SAR</div> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"> <div style="display: inline;"> Pivot Points</div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Introduction To Forex Charts for beginners</h2> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> No discussion of technical analysis would be complete without an introduction to Forex chart basics. The very first Forex chart we will start with is called a ?bar? chart. It gets its name because of its elongated bar-like shape. The typical bar on a bar chart is composed of 4 components:</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgeDsJjibQGShyphenhyphen2583bAj08-bH_LfgCkuc2nF54rxWSx-wEHKpaUC_bi8Ud3cWk-Uytyx_J5z1B8_NqidN3zYXTXsQ5t55YjrNP6xzjuZB_FhE9BOwMKSM7n8lsatEyXLgtYuQbhtRI-xQ/s1600/Forex_Trading_Image_007.jpg" style="cursor: move;" width="150" /></span></div> <h2 style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Open <span class="p">– Opening price of the time period used </span>High <span class="p">- Highest price of the time period used </span>Low <span class="p">- Lowest price of the time period used </span>Close <span class="p">– Last price of the time period used Below is a typical bar of a bar chart</span></h2> </li> </ul> <li style="text-indent: -22.6666660308838px;"><span itemprop="articleBody"><h2 style="padding-left: 5pt; text-indent: 0pt;"> Forex Trading For Beginners Bar Chart 1.1</h2> <div style="padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> <strong>Open</strong> <span class="p">– Tick on left side of bar</span></div> <div style="line-height: 7pt; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-indent: 0pt;"> <strong>High </strong><span class="p">– Top of bar</span></div> <div style="line-height: 7pt; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-indent: 0pt;"> <strong>Low</strong> <span class="p">– Bottom of bar</span></div> <div style="line-height: 7pt; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-indent: 0pt;"> <strong>Close</strong> <span class="p">– Tick on Last price of the time period used</span></div> <div style="line-height: 7pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-indent: 0pt;"> The chart below is a monthly chart of the EURUSD (Eurodollar/US Dollar) currency pair. Monthly charts are longer-term charts used to get a feel for the ?big picture? of the market. Many traders start here and then work their way through a series of smaller timeframe charts.</div> </span></li> </ul> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="553" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMaBpEGpv53i8SaTl-yUpDFsU1OSjruvP1SAbQZdCOTvIfcpLEp-DEBmkHYbDWi7IQ-WTiftVRUWwu84YMbMMJabocqhDGOoRcRxEISNcurqfLcQ0uRKb27SOkn2YxTK_TFOM5tglc5NY/s1600/Forex_Trading_Image_009.jpg" width="640" /></span></div> <div> <span itemprop="articleBody"><div style="padding-left: 5pt; text-indent: 0pt;"> <strong>Forex Trading For Beginners Chart 1.2 Monthly EURUSD Data</strong></div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> The weekly chart is the next timeframe available. The weekly chart confirms the EURUSD's upward movement since the beginning of 2009.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="556" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOx8CD-67HoLtKW3zpuv1UDjXv8oSbo6ukVgK1Lwy85bQ2-O-OxaOsIHgt7IA3IiHb-TOOSOOdKZ8quDXXvOjM8JtJEIr2ffnFJrlbOCwH9uRPEGQdGAnaxEVeYrKRRlkJGmBR8B-bKH8/s1600/Forex_Trading_Image_011.jpg" width="640" /></span></div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> <strong>Forex Trading For Beginners Chart 1.3 Weekly EURUSD Data</strong></div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> When we focus in on the daily chart we see that the market continues to be in an uptrend.</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Traders who are trend followers often take this ?top down? approach to gain perspective on the market's movements and establish the direction of the trend. If a trader using this method feels that the upward trend will continue they will see to find a suitable entry point for a long position in this market.</div> </span></div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="556" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsGzGSQ0AFSmRAU9bNx2ewOMt2p1TuPZAdl6x9fPv5EvlPXe-MhwS_pj9WQwEJctMUqoXoG_E3FDeAvVdSZr_f31k4m1mLr-c41XeGqOTrFVYnf0skrLXZpa3A7pSihwuhz5Bi1q6RVMA/s1600/Forex_Trading_Image_013.jpg" width="640" /></span></div> <div> <span itemprop="articleBody"><h2 style="padding-left: 5pt; text-indent: 0pt;"> Figure 1.4 Daily EURUSD Data</h2> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> Below is a very popular timeframe to use in Forex charting. It is a 4-hour bar chart. The 4-hour chart is an excellent chart to use in trading. It has become increasingly popular with those traders who feel that the smaller timeframes, i.e., 15 minute, 5 minute, etc. move too erratically to base trading decisions on.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="558" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3Ff8w3AKPEkVAp3DNgaSOcZHm0V8_g1un5_cRhaZJ8o23Z4FgyudpRFA4Tfd7tqsaQXrU9F3_4ph5DB8zgFnSk4wmGHMZ-wpwe1EeTznQojYs1qc6mTGPRFnFnjL4Dbuy3qc_cYzUBnM/s1600/Forex_Trading_Image_015.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.5 4-Hour EURUSD Data</h2> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The hourly chart is by far one of the most popular. It may be used by longer-term traders to refine their entries and exits. The 1-hour chart is also used by day traders who wish to gauge short-term market direction.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtTJF5XuaLoFiQjKqrAJgSgfj8yS_8rlYENPvEb2S3ej204GAUpV2LaD-5oyLA8usJY7guEw3OFxogtYFvPYX6nyEx_ts_EUo4YouT0_s-ezLsvUjv0p-xGGhVLI9f1fpywSgWcB2R7aI/s1600/Forex_Trading_Image_017.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.6 1-Hour EURUSD Data</h2> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The 5-minute chart is used almost exclusively by day traders.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="556" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifEc1e27RjAE6VtZlbaVadRkJgzFPAtmO7rOfA-cLDHrpWed75PIjb0MVaOT7ZfFEjPobloZVEDRJKSGUUTt4smiyNLjWK_4uLU1bVfBsmJMlhCYRC3HtFpkBXFwOog8EV5j5MCLwBxDk/s1600/Forex_Trading_Image_019.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.7 5-Minute EURUSD Data</h2> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Another form of Forex chart is the candlestick chart. Candlestick charting originated in Japan and is one of the oldest methods of charting in the world. Candlestick charting has enjoyed increased popularity and is now used by more Forex traders than ever.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="558" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgH7ETAilCBiLV-LkaWkiljBSHq9b9Cog3MRUBrLjq2xZxaqRfoqIg-dP4V-6vPyr3AR-3GDEHQX09RKz_1A87d9GQIWJBSNzoRLsjrlb6mOI4Xw-eEz-S-sOC1sJrUpfFpxqiLguje7DI/s1600/Forex_Trading_Image_021.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.8 Daily EURUSD Candlestick Data</h2> <div style="line-height: 9pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The name ?candlesticks? comes from the appearance of the data on the chart. They price data looks like a ?candle? with a ?wick? on each end. In the chart above the solid green and solid read areas are known as the ?real bodies?. The gray lines that are extending from each end are known as ?wicks?. You may also here ?wicks? referred to as ?shadows?</div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Candlesticks have become so popular because you can look at a candlestick chart and instantly get useful information. For instance, the green candles are called ?bullish candles? because the price moved in an upward direction.. The closing price for a green candle is always higher than the opening price. Red candles are called ?bearish candles? because the price moved in a downward direction. The closing price for a red candle is always lower than the opening price.</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody">The chart below shows a green candle at the start of a strong uptrend (see blue arrow).</span></div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="556" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtYpAeGRE-YN6QviBp4tp2cmlqystf0HWmNnxQVLJZu0RI9j3ec2FZ01jvNCO76Tp9hNq5-IoCBhZRbEaT3G2r_7dyErqzuby9R7aL5nKT12CYA6FUlJK9OKIDwDqfnHdABZgptvMW3wI/s1600/Forex_Trading_Image_023.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Figure 1.9 Daily EURUSD Candlestick Data</h2> <div style="line-height: 5pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The chart below shows a red candle at the start of a strong downtrend (see red arrow).</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZNV_qXHrkEzAfPs1u6Lwpe4niz_wpUV9mEiwF3sotKuS87arJX53Jo6FuuPn9sxehyphenhypheng33wzgQ2Jk4brv-0yYPAnIjqiGQ6TRFXYwN8_9CrDTlScboTNMjKHwKuvTUlLzVdnU7p0UPrQo/s1600/Forex_Trading_Image_025.jpg" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.10 Daily EURUSD Candlestick Data</h2> <div style="line-height: 9pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Consecutive candles of the same color generally indicate the continuation of a trend.</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> You can see from this brief introduction to candlestick charts that they can be very useful. After our brief introduction to candlestick charts it's time to move to our next topic.</div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span class="h2">Forex Charts, Technical Indicators, and Forex Trading Systems</span></h2> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Forex charts and technical indicators, also known simply as ?<b>indicators</b>? have become a standard of Forex market analysis. An indicator is a visual element that is placed on the same Forex chart as the currency pair. It gets its name because it ?indicates? something. An indicator can tell a trader when prices are at a favorable level to place a trade such as a buy trade or a sell trade.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZfg9xkw507k-BI4a7UmCGHh_P8PWUVmDGk2VcYjgcC8-E6HL99NgzV6ZTSQid4BCAjZ-24OQ-fFU8RvqtWr-0VaYlLWkPLlgGBkgr_VUm0Np6HndCy-ZHc51zrfcFp8GnMn9Clm081Vg/s1600/Forex_Trading_Image_027.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.11 Daily EURUSD Data</h2> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-align: justify; text-indent: 0pt;"> The green line we see below is an example of an indicator. This particular indicator is called a ?<b>simple moving average</b>? or <b>SMA</b>. Arrows have been placed on the chart to represent buy and sell triggers. The ?triggers? in this case are as follows:</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> When the price closes above the moving average then we have a buy trigger. When the price closes below the moving average we have a sell trigger.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoniulzBGtMOBCJo7vxfr-1QD1Kjgsw6a-lzTMJW9fe5tA3hG5BD8IYIJyLYLO0rIhIwi7SVrh8xNGtkF9IDVK-hJoUTNTyznbAPQo40MVYoChKN6xSMYd7Ik13ARynUhwbb81c5Tz2e4/s1600/Forex_Trading_Image_028.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.12 Daily EURUSD Data</h2> <div style="line-height: 9pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="text-align: left; text-indent: 0pt;"> <br /></div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> One question you may ask is, ?When we see a trigger what do we do?? That's a good question. The standard way of using a moving average is to take the trade on the next</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> bar after the trigger. This means that we would buy on the open of the bar ?after? the trigger bar (blue up arrow bar in this case). The reverse is true of selling.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: justify; text-indent: 0pt;"> This is a simple example how you can use a simple Forex indicator to make a trading decision. Notice that this is just an observation and that in order to profit in Forex you will need to analyze the market further.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Why analyze a market? You need to analyze a market in order to make a decision to buy or sell…or do nothing at all. Let's further explore how Forex technical indicators can be used to help us make trading decisions. In fact, we are going to look at how technical indicators can be used to create simple Forex trading systems.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Simply put, a Forex trading system is a set of rules designed to help you trade Forex profitably. A Forex system generates trading signals. These trading signals tell the trader to take a certain action such as BUY or SELL.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The moving average we are using is a 9-period moving average. Since we are working with daily data this we will be using a 9-day moving average.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Date Open High Low Close Avg.</h2> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="186" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsHR4UWjXQ6q08IuOW0GLYqWJiAWlAvpw8uQBL7TKhpCICr8YAXnnzxAOm3sl9nJHegY5COed_n-t4G6byE3TOClbf4-4jSLfYRjPhBpyLnOnFk5Jb2gfi6Do46ZOOrEIRsRsuPOLUDWo/s1600/Forex_Trading_Image_031.png" width="640" /></span></div> <div> <br /></div> </span></div> <div> <span itemprop="articleBody"><h2 style="padding-left: 5pt; text-indent: 0pt;"> Table 1.1 Daily EURUSD Raw Data with Simple Moving Average</h2> <div style="line-height: 9pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> The table above shows the open, high, low, and close prices with the moving average values in green. As you can see the values of the moving averages changes as the prices of the EURUSD changes,. It ?moves? as the price moves, hence the name</div> <div style="padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> moving averages.</div> <div style="line-height: 8pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-indent: 0pt;"> This particular moving average is calculated using the last 9 ?closing? prices (listed under Close in the table).</div> <div style="line-height: 10pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-indent: 0pt;"> Below is a daily EURUSD chart showing the buy and sell signals generated by using a simple 9-period moving average trading system we created.</div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="558" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3G5RT6wDX1ppBmVFO418s-KDdfmAyZ8DdhkRk4KHyPsEu8BewfmnmTvVeIG9w9uVbCFTS16DLoU4zb3H4AhM_R-UYfNG0P3lNDIM8fwqsHgLlga255TsHWUOVS8hRIDz3mls3OyvCbyk/s1600/Forex_Trading_Image_033.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.13 Daily EURUSD Data with Simple Moving Average</h2> <div style="line-height: 9pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> One of the greatest advantages of using trading systems is to see how they would have performed on past data. If the results on past data look favorable then we may have a</div> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> system that will work on future data as well. So how did our 9 period moving average system perform? Let's take a look:</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <h2 style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Test Period: 1/20/2003-1/20/2008 Stop Loss Amount = $1000 (100pips)</h2> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> We have added a risk control measure in the form of a stop loss. A stop loss is an order designed to ?stop loss? on a trading position. If the market moves in a way that causes your position to lose value the stop loss is designed to limit the amount of that loss.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> 10 Day Simple Moving Average System Net Profit = ~ <span style="color: red;">- $2,300</span></div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> So far this doesn't seem to be the type of moving average system that we would like to trade. Fortunately for us we can change the parameters of this indicator and research to find one which best suits our needs.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> We have run a few tests and found the following:</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> 42 Day Simple Moving Average System Net Profit = ~ $23,000</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> That's quite a difference in net profit isn't it? As you can see from this simple example it pays to do your research to find indicator settings that work well.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> <h2 style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> Note: <span class="p">The above examples and all examples that follow are for the purposes of illustration only. They are not meant to suggest that the displayed settings are to be used.</span></h2> <div style="line-height: 5pt; text-align: left; text-indent: 0pt;"> <br /> </div> <h2 style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> Introducing The Stochastic Oscillator</h2> <div style="line-height: 7pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> The next indicator we will explore is called the stochastic oscillator or stochastics for short. Unlike the simple moving average the stochastic oscillator is not displayed on the same scale as the price. It is typically displayed below the prices as shown below.</div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <br /></div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody">The stochastic oscillator is grouped within type of technical indicators called oscillators because its value move or oscillate between two extremes. These extremes range between 0-100.</span></div> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="552" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsNo7ql_xqhnQ-onxb7eV9pkbExYSkfGUN3dDg1k5BRjBWoDyFdtp3LwzmttsZDNEmt5a15PAEiG3gCpSALT3Wr6VmXqoPNqF_PAkkKKk4n-i6Zf2EbbvrbVqu1x83GE1B02hpSJS0xyo/s1600/Forex_Trading_Image_035.jpg" width="640" /></span></div> <h2 style="padding-left: 5pt; text-align: left; text-indent: 0pt;"> Figure 1.14 Daily EURUSD Data with 14-period Stochastic</h2> <div style="line-height: 5pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; padding-top: 3pt; text-align: left; text-indent: 0pt;"> The typical interpretation of the stochastic oscillator is as follows:</div> <div style="line-height: 8pt; text-align: left; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <span itemprop="articleBody"> </span></div> <ul id="l5"> <li style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <div style="display: inline;"> When the stochastic is over 80 that indicates that the market is overbought and losing upward momentum. Traders can either look to liquidate their long (buy) positions or look to sell.</div> <div style="line-height: 10pt; text-align: left; text-indent: 0pt;"> <br /> </div> </li> <li style="line-height: 150%; padding-left: 5pt; text-align: left; text-indent: 0pt;"> <div style="display: inline;"> When the stochastic is below 20 that indicates that the market is oversold and losing downward momentum. Traders can either look to liquidate their short (sell) positions or look to buy.</div> </li> </ul> <div class="separator" style="clear: both; text-align: center;"> <span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="554" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFwJeqialRmOoG3_oqRVFuSv0fgB_86sPDv6U5QKryLMOoE7YE1tijMRDC_riqX21bOMjc51eKI6B9npmsrwdb4rt661Q3zLALE85fs_tcPmPgtZmR4eSaCRKkW7uqvWSE2x31ziSeHzw/s1600/Forex_Trading_Image_037.jpg" width="640" /></span></div> <div> <span itemprop="articleBody"><ul id="l3"> <li style="padding-left: 12pt; text-align: left; text-indent: -7pt;"><ul id="l4"> <li style="padding-left: 41pt; text-align: left; text-indent: -17pt;"><h2 style="padding-left: 5pt; text-indent: 0pt;"> Figure 1.15 Daily EURUSD Data</h2> <div style="line-height: 149%; padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> The above chart shows entries and exits based upon using a 14-day stochastic oscillator.</div> <div style="line-height: 10pt; text-indent: 0pt;"> <br /> </div> <h2 style="line-height: 150%; padding-left: 5pt; text-indent: 0pt;"> Test Period: 1/20/2003-1/20/2008 Stop Loss Amount = $1000 (100pips)</h2> <div style="line-height: 10pt; text-indent: 0pt;"> <br /> </div> <div style="padding-left: 5pt; text-indent: 0pt;"> 14 Day Stochastic Oscillator System Net Profit = ~ <span style="color: red;">- $1,900</span></div> <div style="line-height: 8pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 300%; padding-left: 5pt; text-indent: 0pt;"> So far this doesn't seem to be the type of system that we would like to trade. We have run a few tests and found the following:</div> <div style="padding-left: 5pt; text-indent: 0pt;"> 6 Day and 46 Day Stochastic Oscillator System Net Profit = ~ $22,000</div> <div style="line-height: 8pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 149%; padding-left: 5pt; text-indent: 0pt;"> That's quite a difference in net profit isn't it? In this example you are shown two different parameters for the stochastic oscillator to introduce you to a new concept. In the first test we used a single parameter for both the buy and the sell trades. In the second test we used 6 days for our buy entries and 46 days for our sell entries.</div> <div style="line-height: 10pt; text-indent: 0pt;"> <br /> </div> <div style="line-height: 150%; padding-left: 5pt; text-indent: 0pt;"> Why does this seem to work so well? Because market may behave differently when moving downward than they do when moving upward so the best parameters for a bull market will not necessarily be the best parameters for a bear market.</div> <div style="line-height: 10pt; text-indent: 0pt;"> <br /> </div> <h2 style="line-height: 150%; padding-left: 5pt; text-indent: 0pt;"> Note: <span class="p">The above examples and all examples that follow are for the purposes of illustration only. They are not meant to suggest that the displayed settings are to be used.</span></h2> <h2 style="padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> </h2> </li> </ul> </li> </ul> <div class="s2" style="padding-left: 5pt; padding-top: 3pt; text-indent: 0pt;"> In Conclusion</div> <div style="line-height: 8pt; text-indent: 0pt;"> <br /> </div> <div class="p" style="line-height: 149%; padding-left: 5pt; text-indent: 0pt;"> The rules, tips, and techniques laid out in this Forex Trading For Beginners guide are designed to lay the groundwork for you to trade successfully. Some of these are hard and fast rules that you definitely must not ignore. Many of the hard and fast Forex trading rules have to do with discipline and risk control. Without these you simply cannot be successful. Even if you are exceptionally well capitalized you can easily make your account disappear without risk control.</div> </span></div> </span></div> <div style="text-indent: -22.6666660308838px;"> <br /></div> </div>

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