InvestMacro FX

By Taro Hideyoshi

I wrote about trading volume and how to use it in trading before. Here, we will extend to the application of volume as an indicator in trading. Let’s see how we apply volume as a technical indicator.

Volume plays an important role as an indicator traders use to indicate price direction. Interpretation of volume signals will be one of the handiest tools in your trading toolbox.

Volume is like a form of energy, securities respond to energy. Traders’ energies translate into volume which is the number of shares traded in a specific period of time.

Typically, you can spot representation of trading volume and spikes that run along the bottom of charts we are observing. If you are looking at a daily candlestick chart, a spike below represents the total number of shares trading during that day.

As I mentioned in the beginning, volume is an important indicator, the following are general approaches to read trading signals from the volume.

First, look for high volume on price breakout. When price break its resistance and go up (or break its support and go down). As the price continues their direction, you expect for strong volume. When the price tops off and pullback, you have to make sure that the pullback volume is relatively low. If the pullback volume is strong, it is better to take profit.

Second, scan charts to find the securities that are building their bases by locating the security that increasing in volume while its price continues to trade in the same tight and price range as before. This pattern indicates a high possibility to that institutional investors are quietly accumulating. You have options to wait for the price breaks out or enter a trade while securities are still in the base. If you choose the second, you have to set your stop loss extremely tight to minimize risk.

The third is to use volume and chart pattern together. For example, after 2-3 days up, if today’s price makes a new recent high but the candlesticks form as a doji, star, or other reversal patterns. It’s good time to take profits.

Finally, if climatic volume designated by a huge volume spikes near the end of extended trend, it often indicates that the trend might soon slow or end. Conversely, just because a climatic volume signals a trend reversal, do not take this as a signal to start bottom fishing. The patterns sometimes take a few days or occasionally, misfire.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.

By Andrew Daigle

Forex trading is fast becoming the top method of making money on the internet and plenty of average people are trying their hand at becoming millionaires. For most people, forex trading is a much needed source of a second income, to supplement their current single income from their main profession. However, the true potential to become very wealthy is not tapped by most such investors and they earn mere pennies on the dollar, compared with what they could be earning. While everyone has their own forex currency trading system, this will be in proportion to your risk appetite and will only bring the returns that you strive for.

While there are many ways to invest your money in currency, most people play safe by either investing small amounts or spreading their money very thin across the various currencies they are invested in. This makes for a very small return but practically no risk potential, since the bases are mostly covered so that if one currency depreciates, the other appreciates and the losses are minimal. However, clearly this will never make the forex trader a millionaire.

Life is short, and most forex trading millionaires made their money fast off the forex market. These individuals are generally highly leveraged, because they know that money makes money, and the more money they invest, the greater the risk and the greater the potential reward. Also, betting on unlikely currencies is risky and can have a huge potential upside.

So what exactly will leveraging yourself mean for you? You can start with a portfolio, meaning that you put your investment towards buying a part of the forex trading. Then, you buy shares of the forex trading the world over, depending on what countries appeal to you. The prices of these shares may rise slowly to increase your portfolio, and you are still playing safe. Once your total portfolio value goes over the 5000 dollar mark, you as a forex trader can apply for something known as a console, which now puts you in the position to act as an agent for others. At this point, you can process exchanges for small investors who want to buy and sell currencies through you. For each transaction processed, you will earn a fee of 6% and this can roll into your portfolio, increasing further, making your status as a forex trader more credible.

Other than an unlikely event such as a war or natural calamity, nothing on the forex market will give you a sudden unexpected windfall. Do not expect to become a millionaire over night. You will have to plan and strategize, and most importantly, leverage yourself, to truly make a lot of money. The forex market will generally move like the stock market, in small digits and only when you have plenty of money spread out on the forex market do you stand a chance of making a great deal of profit.

While this type of trading is not for the faint hearted, experience in forex trading will bring some confidence to your forex trading strategy, especially as you learn which systems work for you and which don’t. As your level of confidence grows, the process will seem much less daunting. However, it is great to be cautious and be sure of any risks you take. That said, do remember that millionaires are always highly leveraged in the forex market – take calculated risks.

About The Author

Andrew Daigle is the owner, creator and author of many successful websites including ForexBoost at http://www.ForexBoost.com , a free forex training resource and http://www.CashCurve.com for learning about many different online business opportunities.

By Danielle Franklin

After months of practice and learning, every struggling novice trader begins to wonder whether the decision to enter forex trading was actually a big mistake. Why do other traders make money and I don’t? Do these successful individuals possess any special qualities? Can I improve myself in order to finally start making money? In order to become profitable in forex, you need to not only learn and practice, but work hard in improving yourself.

Below are the major characteristics needed in order to become successful. If you already possess the essential traits – good for you! Just keep practicing and soon you will see the cash flow. If you don’t have the necessary traits yet – don’t give up. Start working on yourself. It is possible to craft yourself into a trader!

So, here goes:

1. Don’t Copy – Copying others is absolutely useless in forex. Every trader is unique and his/her strategies fit their personality and goals. You cannot rely on anyone else but yourself.

2. Be Disciplined – Stick to the plan, even when your self-esteem is over the top. Use your experience and knowledge of the market to make the right decisions, instead of irrational i-can-make-a-million-right-now conclusions, without skipping any important steps in your trading plan.

3. Accept Losses with Grace – Losses are not necessary a bad thing – write down the unfortunate experience in your trading journal, analyze why this happened and voila! You have received one of the valuable lessons by learning from your own mistakes. Practice makes perfect – so don’t freak out over the losses. Instead, learn from it and move on. The main difference between a successful trader and a novice beginner is in accepting the loss. The sooner you learn to lose, the faster you earn money!

4. Be Patient and Reasonable – Know exactly why and when to enter a trade. And here is a great tip – say all those reasons out loud. It is a great way to give a last glance before you make a final click. Don’t expect the profitable opportunities to pop up all day long. Sometimes, it is wise to give it a break and start again the next day with a clear head. Don’t worry about missing out either, because forex market is always on the move. Not catching the big wave doesn’t mean you will be left out without any profits for ages!

5. Control Your Money – Forex is not just about making more and more money, but also keeping what you have already made! You need to have very strict money management rules in order to keep your losses at minimum: * Never trade what you cannot lose * Determine your target gains and losses before opening a position * Use stop/loss orders to minimize the risks

6. Keep It Simple – You don’t need to use all available forex indicators and create a one of a kind Michelangelo-like-masterpiece trading strategy. Keep trading ideas to the minimum – know when to get in and out of the trades and stay away from sentences such as “Let’s stay a bit longer and see what happens”! * Try trading daily during the same hours in order to get full grasp of currency behavior, liquidity and volatility changes. * Don’t trade on Sundays, holidays and opening/closing of the specific market. * Stay informed – read the news, follow the economic calendar, keep your eyes on unemployment rates, decisions on interest rates, gross domestic products, industrial production price, index consumptions, retail sales etc. * Follow the trend – don’t try to find something that there isn’t, just follow the rend and identify the point of inversion.

7. Develop Strategies – Use free demo accounts to develop your own strategy and a good trading plan. List out several possibilities (plan a, plan b, plan c) – and always have a clear instructions from getting out of troubles. The key to success in forex is to know how to behave in different situations, instead of trying hard to predict what market will bring us today.

8. Control Yourself! – Here is the tough part – the psychological issues related to trading. It is important to stay as cold-blooded as possible by controlling your emotions. Most importantly, don’t blame the market – blame only yourself! Are your losses still greater than profits? Stop trading right now and start analyzing your strategy. There is a flow somewhere and it is up to you to fix it.

About the Author

Forex Broker Reviews – Forex brokers reviews and rating, comprehensive forex tutorials and articles, latest forex news and forex blog.

By Andrew Daigle – Trading in the forex market tends to be a little confusing when you’re first starting, which is why it’s vital to your success as a trader to understand technical indicators and use them within the framework of your forex trading strategy. Forex indicators assist traders in predicting the direction in which the currency market will travel. Following the indicators will give any forex trader the information they need to work their forex trading strategy. Because of its popularity with forex traders, we will begin with the moving average convergence/divergence (MACD) indicator.

The WHAT? – The MACD indicator sounds complicated so it must be, right? Wrong! The MACD indicator is one of the easiest trading indicators to analyze because it allows you to quickly identify and exploit a short-term trend. Composed of two colored lines, generally red and blue, the MACD forex indicator tells you if a currency is experiencing an up trend or a down trend. The first line, the MACD line is the total difference between two exponential moving averages, commonly referred to as EMAs, whereas the second line is the signal line. The signal line (blue) is plotted on top of the MACD line (red) to show you when to buy or sell.

Interpreting MACD – Now that you have a basic understanding of the MACD forex trading indicator, we will discuss two of the most common techniques used to make a forex technical analysis. First, are crossovers, which are indicators based on when the signal line and the MACD line “crossover” one another. When the MACD line crosses below the signal line that’s a technical indicator that you should sell or go short. If however, the MACD cross above the signal line, that’s a sign that it’s a good time to buy.

Next is the divergence technique, which generally signals to traders that a current trend will end soon. You will notice that the price is moving in the opposite direction of the MACD when a trend is coming to an end. With this technique you must also be on the lookout for positive or negative divergence. Positive divergence happens when the foreign exchange rate makes a new low, but the MACD begins to clime. Negative divergence occurs when the currency exchange rate makes a new high, yet the MACD falls and often closes lower than the previous day’s high.

The MACD is the most popular forex technical indicator because its clear signals are a simple indicator to buy or sell. Additionally this indicator eliminates the need to guess which way the trends are going, because the crossover and divergence techniques lets traders know they are trading in the direction of the trends. If you’ve chosen to use a short term forex trading strategy, you will find the MACD indicator especially useful due to its reliability when tracking short term trends in the market.

When using the MACD indicator, traders should be aware of whipsaw patterns that occur in the forex market. Whipsaw patterns involve a foreign exchange rate heading in one direction, and then quickly moving in the opposite direction. These patterns can cause the foreign exchange rate to fall or surge quickly relative to its position prior to the whipsaw.

About the Author

Andrew Daigle owns many successful websites including http://www.ForexBoost.com , a free Forex educational site to learn Forex trading strategies and partners with http://www.FX-Instructor.com for live forex trading sessions and professional educational services.

By Kareen Pollard – A managed Forex account works in much the same way as a traditional mutual fund; an outside trader (CTA) is managing the accounts transactions on behalf of the account owners. The Forex trader (CTA) watches the market and attempts to create profitable trading opportunities for the individuals.

The Forex market include countries from around the world therefore, it is important to understand the regulations and laws regarding Forex trading and what companies are permitted to work with the public dealing with managed Forex accounts. This is another benefit of a managed Forex account verses going it alone as a CTA is responsible for understanding the Forex industry regulations and staying in compliance with them.

Even though using a managed Forex account can be beneficial, it can also be very risky. It is your responsibility to research and select the best investment organization or other experienced individual CTA to manage your account. Past history, rate of average loss and general reputation of the amount of profit yielded are all factors that should be taken into consideration when doing your research.

As with most things, there is a cost associated with a managed account. The cost or payment structure for a managed Forex account will vary based upon the CTA. Most managed Forex accounts are set up to keep a portion of the profits that are made from trading. This type of an arrangement usually works best for new investors. With this payment arrangement, the CTA does not make any money unless he is successful in the market. The percentage of the profit kept can be large. In some cases, the CTA will keep upwards of 30 percent of the profit.

Managed Forex accounts are for those who don’t have the time to devote to the markets rapid pace. It’s also for those who don’t have the expertise to deal in the foreign exchange market. Professional CTAs and investment firms are there to help manage your account. Leverage their experience and potentially lower your overall portfolio risk and enhance your overall portfolio returns.

About the Author

This article was provided by Franklin Global Capital LLC, NFA member (#0391263), a Spot Forex management and investment research firm. They specialize in providing investors alternative market opportunities to diversify portfolio risk. For more information about all of their services, please visit their new website at: www.franklinglobalcapital.com

By James McKee

Japan has a very respectable position in the world’s economy as possessing the world’s third largest GDP. This gives Japan the predominant identity of an exporting nation, which it is. Any rise in the value of the Yen makes Japanese exports less appetizing to importing nations because those imports become more expensive. The bank of Japan has recently been making large efforts to reduce the value of its currency wherever possible in an effort to boost export rates. Forex exchange traders have been watching the bank of Japan issues a semi annual report in April and October that detail their upcoming predictions with regard to several possible developments for the Yen.

The overall Outlook Report makes predictions about where the interest rate is headed and speculates on the overall GDP of the country for the upcoming 6 months. The CPI is the consumer price index or the price increase experienced by consumers. Industrial production refers to the overall number of products produced in factories in the country. Increased levels of production indicate a growing economy, while a decrease indicates a possible slowdown for that economy. The Japanese economy overall has suffered tremendous problems in regard to its currency increasing in value and as a result has suffered a decreased rate of exports.

Japan is responsible for many of the world’s high tech innovations including hybrid cars, advanced computers and electronics and many other items. Due to this the Japanese Yen is incredibly vital within the Forex market. Its inherent sensitivity with regard to import/export levels fluctuating makes the Japanese Yen a great currency to pair. The bank of Japan’s recent intervention measures have been clear indicators to Forex traders that it is time to examine the currency closely and pair it a stable currency such as the Canadian Dollar. Happy Trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

By Taro Hideyoshi

By getting started with reversal patterns, we should start with the most basic patterns because it is easier for you to recognize them in charts. Therefore in previous article, I introduced you to the most basic and well-known reversal patterns; Double Top and Double Bottom.

In this article, I am going to introduce you to another popular reversal patterns among traders; Head-and-Shoulder and Reverse Head-and-Shoulder patterns.

Head-and-Shoulder

The head-and-shoulder pattern shows up less often and also harder to detect than double top.

In an uptrend, the price goes up. Then sellers come in at the highs make the prices slow down and roll over that form the left shoulder (beginning neckline).

Buyers soon return and push the price through the left shoulder’s high which at first glance appears as a bullish new high. However, the new highs are quickly turned back and form the head (continuing neckline).

A trend line for this pattern is drawn from the beginning neckline to the continuing neckline.

Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high. Ultimately, buying dries up and the market tests the downsides yet again to form the right shoulder and complete the pattern by breaking the neckline.

The key points

– It indicates that bear is coming
– If the price tumbles through neckline support, it will probably initiate a downtrend.
– If you are holding a long position, cover it now! If you are targeting to open a short position, wait for the price traded below the neckline support to confirm the pattern.

Reverse Head-and shoulder

The reverse head-and-shoulder pattern is a reverse version of head-and-shoulder as its name. Of course, it shows up less often and also harder to detect than double bottom.

The key points

– It indicates that bull is coming
– If the price rises through neckline resistance, it will probably initiate an uptrend.
– If you are holding a short position, cover it now! If you are targeting to open a long position, wait for the price traded above the neckline resistance to confirm the pattern.

In head-and-shoulder & reverse head-and-shoulder pattern, Volume has a great importance.

Generally volume follows the price higher on the left shoulder. However, the head is formed on diminished volume indicating the buyers are not as aggressive as they once were. And on the last rallying attempt-the left shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted themselves.

These patterns take trained eyes to detect them. However, with a little practice, you will learn to locate them.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.

EUR/USD

Daily graph: http://www.real-forex.com/charts-daily/011110W/EUR_DAILY_011110.JPG

The pair is currently navigating between 1.4058 (resistance) and 1.3702 (support). This navigation started about 3 weeks ago after a serious uptrend.

Actually the pair is on its way to the upper level. Our analyses suggest that the resistance will be tested again. There are several possible interpretations once the resistance will be reached:

1. On a daily graph, a vain breach occurs, indicating a reversal which should last until the support mentioned earlier. This should create an opportunity to go “Short” until 1.3702.
2. The pair is reaching the resistance, without crossing it. In this case, waiting at least a session and a half and, once a descending configuration is identified on one-hour graph, and, only after, going “Short” could be a good option.
3. The resistance is crossed and broken. It may be better to go “Long” only after the breach and its correction, by looking for an increasing configuration in one-hour graph.

GBP/USD

Daily graph: http://www.real-forex.com/charts-daily/011110W/GBP_DAILY_011110.JPG

A clear navigation between 1.6020 (resistance) and 1.5658 (support), started a few weeks ago, is identifiable on this daily graph. However, during the last session, the navigation may have been stopped since the pair crossed the resistance mentioned and closed above it on the resistance 1.6040.

Our actual hypothesis: the navigation stopped and a new uptrend started. Nevertheless, this hypothesis has to be confirmed in order to beneficiate from this new situation. We would wait to the following template:

• The pair keeps growing.
• Technical correction which won’t cross the support of 1.6020 (daily support) downward.
• Renewal of the increasing process trough the identification of an increasing configuration, vain breach or reversal template.

Once the above template occurred, an opportunity to go “Long” may be created.
USD/CHF

Daily graph: http://www.real-forex.com/charts-daily/011110W/CHF_DAILY_011110.JPG

The last three weeks corrected the previous bearish trend , until the resistance of 0.9933. As you can see on graph, this is quite an important resistance zone. The pair stopped exactly on the resistance and started to decrease back. After such a correction (~ 450 pips), our analysts anticipate the renewal of the original downtrend.

The pair is likely to reach the last low occurred at 0.9462 and to test it.

We suggest being careful with longer term transactions in order to avoid potential losses in case of suddenly reversal of the trend.

USD/JPY

Daily graph: http://www.real-forex.com/charts-daily/011110W/JPY_DAILY_011110.JPG

The last three sessions show a clear navigation between 81.96 (resistance) and 80.42 (support). Actually, the pair is on the low point of the navigation. There are two possible ways to approach the situation:

1. Vain breach (test) below the support, followed by an uptrend until the high level of the navigation, creating the opportunity to go “Long”.
2. The support is crossed and broken downward, closing a daily session below what is appearing to be the new resistance. The best attitude to adopt here could be waiting for a technical correction, and after that, try to enter a “Short” position.

Reminder: Night trading on Sunday when markets open is not recommended since some unexpected movement can occur.

Have a profitable week!

Real-forex team.

Real-Forex team

By James McKee – To be sure the current market is not a favorable one where the USD is concerned, this year’s G20 summit is sure to shake things up further despite recent prosperity in the DJIA. Doubts have risen regarding the US Dollar’s future and the recent uptrend, many traders believe the recent G20 summit points to further gains regarding the USD but I wouldn’t bet on it. The G20 summit of 2010 included with action taken to increase involvement of “emerging” economies in IMF policies, such involvement would go against the best interest of the US economy.

For the time being it looks as if the USD will be riding high on fictionalized pipe dreams in the Forex currency exchange, these “false” gains will likely rupture sometime in the next couple months. Until then I’m sure the coming fluctuations will total out to a hundred pips in either direction for the dollar, but nothing severe. The lesson learned here is that with enough propaganda and political maneuvering you can turn an elephant into a mouse and shove the elephant into a closet. What is ultimately important though is that the elephant grows, and it becomes angry and does it really make sense to put an angry elephant into a closet?

By continuing to deny the extreme issues the US economy currently faces and continuing to pile on the debt the US dollar is facing a blowout of epic proportions in the years to come. There was a time as a boy in school that I saw a picture of an Italian man in the 1920s with a wheel barrel full of Lira and I asked my mother “Did he just win the lottery?” “No he is going to the store to buy a loaf of bread.” Such facts put things into perspective for me as a child and they still do today, the value of currency is a very important thing to keep under control.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

By Frank Silvester – Every forex beginner knows what is forex trading but the only one question for them is to how to start. As of now there are many tools, trading systems and software that are in use in daily trading. The big mistake that every beginner does is that they get tempted to the hype of forex trading robots or to some forex trading software and they start trading and finally end up with loss.

I am not against to the forex trading robots or to any software, but my point here is that it is not the right time to use a forex trading robot or a software when you are as beginner. We can use the robots and software at a later stage.

Here is a step by step plan on “How To Start Trading”. So let’s start.

Plan For The First 15 Days – Phase 1:

Before you start trading you should always know the basics of forex trading and the terminology related to the forex market. This is not a big problem. If you google it, you can get lot information which you can’t even digest. Or visit my website and subscribe to the free e-course in which you will be provided with all the needed knowledge and information on forex trading. At this stage nothing to hurry up, first finish off the basics of forex trading. Normally 10 to 15 days of time is really good enough for any average joe to be ready with basics. But we shall put it to 15 days of time.

Note: At this stage my kind request is not to get tempted to start real trading. Please do not start.

When you start learning basics in the first 15 days, along with it you also need to get register with any forex brokerage firm which is in this industry for a long time and very reliable. I suggest you to go for Easy Forex Brokerage firm or Forex Yard Brokerage firm as they are very reliable and the registration is completely free. After registering you can use their demo accounts for your practice and they will never force you to start real trading. So you can take enough time to practice on their demo accounts. Practice on the demo accounts as much as possible until you feel comfortable with them and this practice is really needed.

Be patient. There is still a long way for us to go and do not start real trading!

Plan for the Next 10 Days – Phase 2:

Now in phase 2, you need to learn when to start a trade by finding the entry points and also need to learn when to exit the trade by finding the exit points. For this you need to learn in depth of what technical analysis is and what fundamental analysis is. You can google them, but you cannot put them in an order to learn. If you subscribe to our forex beginner course, you will also be provided with free e-books on technical analysis and fundamental analysis at the end of forex basics course. I kindly request you to go through all of those e-books steadily, but do not hurry up. This is very critical phase which you need to concentrate a lot because this is the point where you exactly learn what is the real forex trading and this phase leads you to become a forex winner. To learn about all the useful technical analysis methods and fundamental analysis methods, normally 10 days is good enough.

Even now please do not start real trading.

Plan For The Next 15 Days – Phase 3:

The next 15 days you need to apply what you have learned till now and practice on demo accounts of either Easy Forex Broker or Forex Yard Broker.

Watch any of the TV channels such as NBC News, CNN Money, Forex News Channel, etc which provides you the Forex news. Now pick the points in the forex news. Now start co-relating the news with what you have learned in technical analysis and fundamental analysis and you need to find the entry and exit points for a trade.

Daily try to find at least 8 to 10 profitable entry points and exits points and start trading on your demo account. Make a note of all the entry points which have given you the profits and also remember the factors depending upon which you have derived that profitable entry point. Practice this for at least 15 days and at the end of 15th day you will be able to find at least 5 best profitable entry and exit points a day. Finding the best profitable trades is nothing but building a forex strategy for your trading.

So end of 40th day you will be in a position to trade forex on real account. Till now you have practiced the trades on a demo account so there will not be any involvement of emotions but once you start trading with real account emotions come in and they may lead you into loss. So you need to control your emotions and need to exit the trades as per your calculated exit points. Now you can go little advanced and try some automated tools such automated forex trading signal software which can generate the entry and exit points for you.

All the hard work in 40 days needs to be done by you as there won’t be any mentor for you other than yourself. Right now there are some online forex mentors who can mentor you such as FAP Winner as they are the best till now in mentoring the beginners. But they will charge you around $300 a one time payment. It is up to you to decide it or practice by yourself.

About The Author

We have researched, tested & reviewed 100s of Forex Courses, Software Systems and Brokerage Firms which we only list our TOP 10 to help you LEARN FOREX TRADING. For 100s of FREE FOREX TUTORIALS please visit LEARN CURRENCY TRADING. Good Luck! I look forward to seeing you on the trading floor making money! Frank Silvester.

For more information, Visit => http://www.forex-trading-pro.info/

Frank has been an active participate in markets as both a trader and researcher in excess of twenty years.