What is the best time to buy and sell the market?

What is the best time to buy and sell the market?

Here are the top 3 factors that any trader must be aware of.

1. Moving averages

A lot of traders watch the moving averages for areas of support and resistance. Some use simple moving averages while others prefer exponential moving averages which are weighted towards more recent activity in the market. I can’t say that this is a reliable enough trading method for me to want to adapt it as my means of identifying support and resistance.

I do like to watch a 12 period exponential moving average (12ema) on any time frame though. It seems to act well as a region of balance between buyers and sellers and price activity does tend to hover around this moving average a great deal of the time. Any market that has traded well away from the 12ema though is probably getting ripe for a turn. It’s also very common to see a market retrace to the 12ema line then continue in the direction of the trend. Any strong breaks through the 12ema usually mean the trading will continue in that same direction.

2. Fibonacci based retracements

It’s part of every trader’s arsenal to know about Fibonacci based retracements. The most notable are the 38.2%, 50% and 61.8% retracement levels although there are other retracement levels that are not based on Fibonacci such as 86.6% which is derived from the square root of three. We can find support at areas of old resistance and vice versa. This happens fairly often so it needs to be on a trader’s radar. It’s not a guarantee of course that all areas of support will become resistance but add this concept to your awareness when reading a chart. The past tends to repeat itself in one variant or another.

3. Gaps in the market

While not necessarily areas of support and resistance, gaps in the market can mark important points on a chart. There is a well known phenomena that gaps on a chart will sooner or later be filled. This simply means that price action will often trade into the area of the gap, effectively closing or filling it. The warning here is that sooner or later may mean much later so don’t expect this phenomena to be reliable on your chosen time frame. Failed attempts at closing the gap signal market weakness and you can expect a strong move in the opposite direction.

Probably due to the fact that we chart market activity in graphical format we are somewhat trained to think of support and resistance as being horizontal or parallel to the time axis. Support and resistance can also be seen in other ways if we break out of the horizontal mind-set. For example support and resistance are often found on the drawing tool known as Andrew’s Pitchfork. Also known as the median line this tool was reputed to have been the instrument whereby its creator amassed a large fortune from trading.

A forex trader’s best weapon is the long and diligent study of market behavior with particular emphasis on analyzing and forecasting where probable future areas of support and resistance may lie. Good luck and happy trading.

Article Support and Resistance in the Forex Markets is by BRUCE WILSON

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Trade Like a Pro in 2018

Trade like a pro in 2018 by emulating the following habits of the pros.

1. Follow the trend

If selling signals are going up isn’t very difficult. You should try to select the trades based on trends.

2. Stick to your strategy

Stay the course with your plan and find that you will have more effective results.

3. Use your margin wisely to keep your profits

Margin can boost your profits. If margin is used carelessly, however, you may lose a lot of capital. Margin should be used when you feel comfortable in your financial position and at low risk for shortfall.

4. Make a list of goals and then follow them

Set goals and a date by which you want to reach them in forex trading.

5. Use proven winning strategies

Don’t try to be an island when you are going to go into forex trading on forex. The forex market is a vastly complicated place that the gurus have honed their skills over several years. You are just as likely to win the lottery as you are to hit upon a winning forex strategy all on your own. Do your homework and stick to what works.

6. Practice, practice, practice

You don’t need automated software system to exercise for Forex with a demo account. You can simply go to the Forex website and find an account there.

These tips are courtesy of people who have been associated with forex trading. You are not guaranteed that you will be successful in trading, but using these tips will help. By applying these tips, you may possibly profit from forex trading.

Forex Fundamental Analysis for 2018

Using fundamental analysis to trade Forex can be very dangerous when it is not done right. Ironically, traders relying upon fundamental analysis rather than some form of technical analysis tend to lose money more quickly than if they just stuck with technical analysis. This seems strange and counter-intuitive, but it is true. In this article, I will explain why using fundamental analysis exclusively can be dangerous, then I will show how the right type of fundamental analysis can be used to make your trading better, if it is something you really want to use. I will focus on what the fundamental situation will likely be at the start of 2018. You certainly don’t need to use fundamental analysis to make money over the long-term in the Forex market, but it can help.

Why Mechanical Fundamental Strategies Perform Worse than Trend-Following Strategies

Fundamental analysis sounds like a sensible, conservative method to use to decide where to put your money. After all, if you were considering investing in a stock, you would feel good about performing due diligence on the company, checking its financial position, and being convinced that the economy was likely to grow over the time horizon of your investment. So, doesn’t it make sense to feel the same way about the country whose currency you are buying, even if your time horizon is shorter than that of a typical stock investment? Well, it’s a logical approach, but there are two immediate problems in applying this principle to Forex. Firstly, which fundamental indicators are you going to use to make your call on the fundamentals? Secondly, it seems clear that fiat national currencies are far less affected by economic fundamentals than stock markets are, so even if you pick the right variables for your analysis, they are not likely to be very useful. Currencies are not the “stock” of a nation, they are debt instruments issued by its central bank.

Let’s consider some of the most popular fundamental analysis indicators which can be applied to currencies:

  1. Fair Value: you consider the relative costs of a basket of goods in two different currencies, selling the one which seems overvalued, and buying the one which seems undervalued, hoping the values will merge. It is very logical, but it simply has not worked in recent decades. It completely discounts the fact that there are good reasons why goods and services are relatively more or less expensive in different countries.
  2. Interest Rate Differential: currencies with higher interest rates tend to attract more investment, meaning speculative money should flow from currencies with lower interest rates into currencies with higher interest rates. Therefore, it should be possible to profit from buying currencies with higher rates using currencies with lower rates. An added benefit of such a fundamental strategy is that the overnight fees charged daily by your broker should be low, or even positive in your favor, as they are based upon the market’s expectation of the future rates. The good news is that this strategy has been shown to generally produce a small positive edge. The bad news: the edge is small, and the strategy keeps you out of some great trades. It also tends to stop working during times of market turbulence. There can be strong, long-term price trends going against LIBOR rates for months without end. Furthermore, for some years now we have been living in an era of low interest rates, so the available differentials between the major global currencies are very small.
  3. Economic Growth: buy currencies with strong and/or increasing GDP numbers, and sell currencies with weak and/or falling GDP numbers. This sounds logical, yet there is no evidence it works as a standalone strategy.

Central Banks are Key

If typical fundamental approaches are flawed, what can you do? Well, a better fundamental analysis strategy is to be aligned with the positions of the currencies’ central banks. Consider the fact that any central bank can create as much supply of their currency as they want, and reduce a lot too, as well as (usually) having the power to set the currency’s interest rate. This is a lot of power to move the price. Unfortunately, central banks don’t put up signs saying “tightening” or “relaxing”, which would make this kind of strategy an awful lot easier! Yet it is possible to follow the central bank releases yourself, which are given monthly (in most cases), and to read intelligent commentary on them, to develop an opinion. You will probably require the intelligent commentary as even if you read the full texts of the central bank releases, unless you are very clear what you are looking for, you probably will not be able to come to a correct conclusion. Another approach which works well is to look for surprises in central bank releases. For example, at the time of writing, the Bank of Canada has just made it clear that they see a rate hike in January 2018 as less likely. This surprised the consensus, and the value of the Canadian Dollar continues to fall. It is normal for most central bank releases to move their currency, but when there is follow-though the next day instead of a reversion back to the mean, that can be a good sign that you have a fundamentals-driven price move going on which is likely to last longer.

Central Banks in 2018

A good starting point for a productive program of Forex fundamental analysis is to make a list of the major central banks, in order of importance, and to summarize their attitude towards their currency. Then it makes sense to check whether there are any trends which are matching any identified divergence between central banks. It is not an exact science, and it is important to realize that there are other major fundamental factors which can come into play. An excellent example is Britain’s impending departure from the European Union, the exact terms of which are still under negotiation. As Britain’s economy is highly dependent upon the terms of its trade with the European Union, the terms of that trade are going to affect the pound, with the pound advancing on a softer Brexit and falling on a harder one.

So here is my 2018 assessment of the currency stances of the important central banks (in order of importance), ranked by order of importance to the Forex market.

Federal Reserve (U.S. dollar) – tightening monetary policy, but concerned about the lack of inflation, meaning inflation rate data becomes important. If inflation is higher than market expectations, the USD should tend to rise on anticipation of more and faster future rate hikes.

European Central Bank (euro) – minor, very cautious tightening is possible in the shape of unwinding the balance sheet, but interest rates remain negative and inflation is almost non-existent. It is still hard to imagine rate hikes.

Bank of Japan (Japanese yen) – there is some economic growth, but it looks as if the BOJ is on autopilot as no tightening or rate hikes are expected throughout the entirety of 2018 and beyond. Inflation remains very weak.

Bank of England (British pound) – there is little economic growth, but the BoE seems set on a course of further tightening of monetary policy by hikes in the rate of interest, because the rate of inflation has climbed to a relatively high 3.1% annualized rate. Without the inflation, there would probably not be any hikes happening soon.

Swiss National Bank (Swiss franc) – this is a special case. As almost all major national currencies are extremely weak, the SNB maintains an extremely loose monetary policy with a negative interest rate of -0.75% to stop the Swiss Franc from appreciating as a safe-haven investment. The policy has succeeded in stabilizing the Franc, and this currency is an extremely dangerous bet. It has a strong tendency to revert to the mean and stay stable, rather as Gold has over recent years. Growth and inflation are extremely weak, so the SNB is determined to stop the currency from appreciating.

Bank of Canada (Canadian dollar) – GDP and inflation have been relatively healthy, with the interest rate also at a reasonable level of 1.0%, but recent concerns about a slowing of growth have staved off the likelihood of monetary tightening happening soon. This is one to watch carefully, but we might be seeing the start of a fundamentally-driven long-term weakening in the Canadian Dollar.

Reserve Bank of Australia (Australian dollar) – despite historically low interest rates, inflation and growth remain stubbornly low, and they seem to be taking a turn for the worse as poorer than expected trade data comes in. While it doesn’t look like we are going to see any weakening of policy, further tightening appears to be convincingly off the agenda.

Reserve Bank of New Zealand (New Zealand dollar) – growth is relatively healthy, though the GDP is still barely 1%, and the rate of inflation is marginally higher than the relatively high interest rate. The new government seem to be determined to pursue a balancing act of avoiding any real tightening while also avoiding significant loosening. All this suggests a somewhat weak monetary policy, although the market has been impressed by the nomination of a new Governor of the RBNZ who is expected to keep managing inflation as a high priority.

Conclusion on the State of Forex Fundamentals

There is no doubt that the global picture of the advanced economies listed above is one of a generally weak monetary policy, with little divergence in terms of growth, policy, or interest rates. This points to a dull Forex market, which is what we are currently experiencing. However, it can be said that fundamentally, the U.S. dollar currently looks relatively strong, followed by the euro. Continuing weakness looks most likely in the Canadian dollar. This suggests that the most fundamentally convincing Forex trades which match the technical picture are long USD/CAD, and possibly long EUR/CAD as well.

It is crucially important to only trade fundamental conclusions you might arrive at when they are matched by the technical picture. There should be a reasonably long-term trend in the direction of the fundamentals, or at least it should be clear that the price is continually failing to move against it. This is the best way to use fundamental analysis in Forex trading. Now, this would suggest that the trades best supported by a combination of fundamental and technical factors are likely to be long USD/CAD, long EUR/CAD, and possibly long USD/JPY as well. Fundamental analysis, just like technical analysis, requires constant review of the situation, which can change from month to month, so the current picture is not guaranteed to last throughout 2018.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment. Learn more from Adam in his free lessons at FX Academy.

The Best Money Making Strategies for 2018

Many investors think that defining their risk to 2-3% per trade and calculate the distance for the stop loss and the pip value in every trade is money management. This is an important part of a money management strategy, but there is a lot more in it…

So, how can we manage money correctly?

1) Fixed $ Amount in draw downs

This money management strategy is helpful for recouping quickly from losses, the trader will trade a % of the account when successful but will trade a fixed amount when an unsuccessful trade hits:

e.g.

10.000$ 2% risk = 200$ RR= 2:1 GAIN= 400$

10.400$ 2% risk = 208$ RR= 2:1 GAIN= 416$

10.816$ 2% risk = 216$ RR= 2:1 LOSS= 216$

10.600$ FIXED A= 216$ RR= 2:1 LOSS= 216$

10.384$ FIXED A= 216$ RR= 2:1 GAIN= 432$

10.816$ 2% risk = 216$ RR= 2:1 GAIN= 432$

11.248$ 2% risk = 224$ and so on…

It takes you only one trade to recoup completely from two losses.

2) Compounding

Compounding is a very powerful long term money management strategy. Basically reinvesting the gains of each successful trade and avoid making withdrawals for a relatively long period of time will boost your account like you never imagined!

3) Segregated capitals

This concept allows a more aggressive trading approach.

The trader split his total trading capital in two, one for risk and one for safe.

The risk account is the 5% of the total trading capital, the rest 95% is in a separated safe account. The trader will only trade with the risk account (5% of total trading capital), but will risk 15-20% of the risk account. Each time he doubles the account he recalculates the 5% of the total invested capital and re-split the money equitably in the two accounts.

Implementing one of those Forex money management strategies or mix a few of them will allow you to maximize profits and minimize losses the best way possible.

“Pro Retail Trading (David & Nathan) is a group of professional full time traders committed to educate and empower traders from all walks of life, no matter their experience level.”

Discover The Exact Systems We Use To Exploit Institutional Order Flow And Make Consistent Profits Daily In Less Than 4 Hours of Work Per Day, Completely FREE At: [http://www.thebestforexsysteminfo.com/]

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3 Little Known Commandments of Trading Success

Learning how to trade forex successfully and being a full time forex trader is a lot more than analyzing forex charts, then jumping in on your forex investment. There are plenty of currency traders that are successful for a short period of time and then fall apart and lose their edge.

As a professional and full time forex trader myself, I’ll like to share the 3 cardinal rules as a personal advice to help you sustain your career as a full time forex trader.

1. Check your economic calendar

It sounds like something that should be obvious, but you would be surprised at the number of currency traders who forget to simply check the economic calendar each and every morning to make sure that they don’t miss out economic data releases. If you want to avoid a situation where you spend all day trying to find a good investment opportunity and then have it fall by the wayside because of this, go to a site like the Forex Factory each and every day before you jump into the action.

2. Use economic forums to your advantage

When you are trading, forex forums can serve two purposes for you. First, they’re going to provide you with a productive way take a break during slow periods of business. The life of a full time trader can be very boring. Second, you’re going to have a way to discuss forex trading intelligently with other like-minded individuals as you’re rarely going to be in a situation where someone else in your household could even care what you are talking about.

3. You work hard for that money, now make it work for you

Forex trading is not the only place where your money can grow. Once you have established yourself as a successful trader, pull some of that money out and put it to work in other areas. You may decide to buy some investment properties or dive into a separate market and allow your money to grow in other ways. It also serves to diversify your portfolio.

To learn how to trade forex successfully using a simple, time-tested and proven forex trading system, instantly download my FREE 56-page “Forex Trading To Riches” ebook at [http://www.forextradingpower.com] now.

The author, Daniel Su, is the founder of [http://www.forextradingpower.com] where you can get free premium forex trading tips and resources. Daniel Su specializes in teaching real people how to trade the Forex market for long term financial success.

Article Source: http://EzineArticles.com/expert/Daniel_S./276770

The Big Ben Forex Strategy – An Easy Forex Strategy For the London Market Opening

The Big Ben strategy is an easy forex strategy that takes advantage of a common price action pattern that occurs with the opening of the European markets each day.  Using the strategy enables the intraday forex trader to identify when the first major directional move of the London session will occur, and to then take advantage of it!

This strategy is designed specifically for the GBP/USD (another reason why it is referred to as the “Big Ben” strategy). The time frame to begin observing the price movements of this currency pair starts with the Frankfurt opening (currently 1 a.m. EST, but  check  your world clocks first because sometimes it is 2 a.m. depending if it is daylight savings time or standard time). Begin monitoring the price at that time and be aware that the London market opens 1 hour later.

Trading volume is usually quite thin before London opens, so when the UK comes on board at that time, there is an obvious surge in trading. Observing for the Big Ben pattern allows you to take advantage of this time specific strategy.

The rules for this strategy are written below. The rules are written for trades going short on the GBP/USD, simply reverse the rules for long trades. The setup is simple:

1. Look for the pair to make a new low that is at least 25 pips from the Frankfurt opening.

2. Then look for the pair to reverse and trade 25 pips or more above the opening price.

3. Watch for the pair to reverse again to trade back below the intraday low from step 1 above.

4. Sell a break of at least 7 pips below the low.  Place the initial stop no more than 40 pips above the entry price.

5. As the pair moves lower, trail the stop.

This is a very effective strategy/price pattern to base your trading on.  Use it to assist yourself in siphoning more pips out of the market at this specific time of the trading day!

Have you discovered the forex strategy or strategies that are BEST for you? Visit Ann Pevey’s site http://www.fxstrategyhub.com for information on forex strategies, worldwide forex news, free forex training videos and more – all about FOREX.

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