Forex Online Trading
- What is Forex ?
- Technical and Fundamental Analysis
- Psychology of Trading
- Forex vs Equities and Futures
- The 8 most important trading recommendations
- Why trade Forex with Realtime Forex SA ?
Fundamental analysts, however, tend to specialize due to the overwhelming amount of data in the market. However, there are two more factors that are critical to understanding short-term movements in the market. Profit potential exists in the foreign exchange market regardless of whether a trader is long or short, or which way the market is moving.
Types of Orders
- Types of Orders
- Market Order
- Limit Order
- Stop Orders
- OCO Order - One Cancels the Other
- IF DONE Order
- Loop Order
An 'OCO' order ('One cancels the other') is a special kind of order where a stop order and a limit order are linked in the same market. This order closes your position with a profit of 75 pip if the limit order is reached first, or a loss of 50 pip if the stop order is reached first. When the desired price for the active order is reached, it is executed, the dormant order becomes active and a new order (a copy of the one just executed) is created in a dormant state.
The Basic of Technical Analysis
- Support
- Resistance
- Trend
- Channel
- Double top (reversal formation)
- Double bottom (reversal formation)
- Triangle
- Head and Shoulders
- Fibonacci
A break in support would indicate further losses towards the target, which can be evaluated through the following procedure. A break through the resistance would indicate a further rise towards the target, which can be evaluated through the following procedure. After a significant price movement (up or down), prices will often follow a significant portion (if not all) of the original movement.
Types of Chart
- Introduction
- Line Chart
- Bar Chart
- Candlestick Chart
Bar chart: In principle, all properties mentioned for the line chart also apply to the bar chart. The bar chart consists of a high (highest price during a session), a low (lowest price during a session) and the closing price. The difference with the bar graph is that the open and the closed angle are the cornerstones for the so-called real body.
Candlestick
- Falling Three Methods
- Rising Three Methods
- Doji
- Engulfing Patterns
- Hammer
- Harami
- Long white (empty) line
- Long black (filled-in) line
- Doji
- Three Black Crows
- Three White Soldiers
The low point of the long lower shadow implies that sellers drove prices lower during the session. The low point of the long lower shadow confirms that sellers pushed prices lower during the session. A candlestick that forms in the right body of the previous candlestick is in Harami position.
Technical Indicators
Average True Range – ATR
BOLLINGER BAND
If the market is trending, then trending signals are likely to be more reliable. For example, if prices are in an uptrend, a safer trade entry can be achieved by waiting for prices to pull back giving a sell signal and then turn back. If you use Bollinger Bands in combination with an oscillator such as the Relative Strength Index (RSI), buy and sell signals are generated when the Bollinger Bands signal an overbought/oversold market at the same time the oscillator signals a divergence.
A period of low volatility often precedes a sharp movement in prices; low volatility will cause the bands to narrow. A top that breaks above the upper band, followed by another that is between the bands, indicates a potential top in the market. A bottom that breaks below the lower band, followed by another that is between the bands, indicates a potential bottom.
Bollinger suggested using a moving average that would catch the first retracement of an upward move.
CCI – Commodity Channel Index
In trending markets, the Commodity Channel Index can be used to indicate that the trend is weakening by signaling divergence. Deviation between the CCI line and the price indicates an upward or downward movement. Bearish Divergence occurs when prices make higher highs, but the CCI makes lower highs.
A bullish divergence occurs when prices make lower lows while the CCI makes higher lows. It is important to note that while the differences indicate a weakening trend, they do not by themselves mean that the trend has reversed. Confirmation or a signal that a trend has reversed should come from price action, such as when prices break a trend line.
If the commodity channel index is to be used as Lambert originally suggested, the observation period should be one-third of the cycle length. If the commodity channel index is to be used for purposes other than in relation to cycles, the observation period can be set so that the -100 to +100 bands contain 70% to 80% of the data.
Linear Regression
MACD - Moving Average Convergence Divergence
If a trend is gaining momentum, the difference between the short and long moving average will increase. Deviation between the MACD and the price indicates that an up or down movement is weakening. Bearish divergence occurs when prices make higher highs but MACD makes lower highs.
Bullish divergence occurs when prices make lower lows, but the MACD makes higher lows. The confirmation or signal that it should come from price action, for example a trend line break.
Momentum
Divergence between the Momentum line and the price indicates that an up or down move is weakening. Bearish divergence occurs when prices make higher highs, but the Momentum makes lower highs. Bullish divergence occurs when prices make lower lows, but the Momentum makes higher lows.
The confirmation or signal that the trend has reversed must come from price action, for example a trendline break.
MOVING AVERAGE
A common method involves looking at the slope of the Moving Average and the price relation to the Moving Average. For example, if the Moving Average is sloping down and prices are below the Moving Average, then prices are considered to be in a downtrend. If prices move above and below the moving average and the moving average is flat, then a non-trending market exists.
If the market closes above the moving average, a buy signal is generated, if the market closes below the moving average, a sell signal is generated. Buy and sell signals are generated when the short moving average crosses the long moving average. For example, if the short moving average crosses above the long moving average, a buy signal is generated; a sell signal is generated when the short moving average crosses below the long moving average.
The exact averaging period to be used will depend on the purpose of the moving average. If you are using moving averages to identify the trend, the length of the averaging period should reflect the length of the trend you are trying to identify. For example, if you look at a daily chart to identify the long-term trend, you may decide to use an averaging period of 200.
A shorter averaging period will generate more signals and require fewer price moves before a response, but the risk of the signal being false increases.
PARABOLIC TIME PRICE - SAR
By using parabolic time pricing in conjunction with market trend analysis such as the MACD, you would only consider long trades when the trend was up and only short trades when the trend was down. When a trade is closed using another method or technique, SAR Parabolic Time Price points are used to track stops on the position. Acceleration increase is the rate at which SAR points will gradually tighten prices each time a new extreme in the direction of the trend is reached.
A value greater (less) than 0.02 means that the SAR points will tighten prices faster (slower), leaving less (more) room for price movements against the trend. When a new signal is given, the acceleration factor will use the starting acceleration as its initial value. Each time a new extreme is made in the direction of the trend, the acceleration factor will increase by the value of the acceleration step, until the acceleration factor is equal to the maximum acceleration.
A value greater (less) than 0.2 means that SAR points will tighten faster (slower) on prices, leaving less (more) room for price movements against the trend.
ROC – Rate of Change
Usually the observation period is set to half the cycle length of the underlying instrument. Using a shorter observation period increases the responsiveness of the Rate of Change oscillator, while increasing the risk of false signals. In trending markets, the most reliable signals will be in the direction of the trend.
Upper bound percentage (default 70); it provides the upper limit expressed as a percentage of the instrument's value. Reducing the observation period increases the sensitivity of the RSI to changes in price, resulting in a more responsive RSI. Slow Stochastic is the more commonly used of the two Stochastic types - Fast and Slow.
If the close is equal to the highest value of the high-low range, the indicator will read 0 (the highest value). If the cutoff is equal to the lowest value of the high-low range, the result is -100 (the lowest value). This is when the interest rates of the base currency are lower than those of the second quoted currency pair.
This is when the interest rates of the base currency are higher than those of the second quoted currency pair.
Calculating Premium and Discount
Economic Indicators
APICS SURVEY
BANK RESERVE SETTLEMENT
BUSINESS INVENTORIES
The pattern of consumer spending is one of the most important influences on the stock and bond markets. The focus in the bond market is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks the fine line between strong growth and excessive (inflationary) growth, which is what happened throughout much of the nineties.
If and when the party ends, it's likely that a change in the economic trend will disappoint us. Consumer spending makes up two-thirds of the economy, so if you know what consumers are doing, you'll have a pretty good handle on where the economy is going. Chain store sales not only give you a sense of the big picture, but also trends between individual retailers and different store categories.
These trends from monthly store data can help you identify specific investment opportunities without waiting for quarterly or annual reports. To gain insight into this year's sales, it is important to know how strong sales were a year ago.
CONSTRUCTION SPENDING
CONSUMER CONFIDENCE
CONSUMER CREDIT
CONSUMER SENTIMENT
CPI (Consumer Price Index)
CURRENT ACCOUNT
DURABLE GOODS ORDERS
EXISTING HOME SALES
FACTORY ORDERS
GDP (GROSS DOMESTIC PRODUCT)
HICP (Harmonised Index of Consumer Prices)
HOUSING STARTS
IFO Business Climate in industry and trade
IMPORT AND EXPORT PRICES
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
INTERNATIONAL TRADE
ISM (Institute for Supply Management)
JOBLESS CLAIMS
LEADING INDICATORS
MONEY SUPPLY
NEW HOME SALES
NONFARM PAYROLL
PERSONAL INCOME
PHILADELPHIA FED SURVEY
PPI (Producer Price Index)
RETAIL SALES
RPI (Retail Prices Index)
UNEMPLOYMENT RATE
ZEW
