The Equilibrium Chart will make you a better trader

The equilibrium chart also known as the Ichimoku Kinko Hyo is an extraordinary trading technique that will certainly enhance your trading. This technique isolates higher probability trades by illustrating where the prices are more likely to go and when to enter the trades. This is possible because the Ichimoku chart displays a clearer picture by showing more data points, thus providing a more reliable price action. Once you master this chart and technique, it will certainly become an integral part of your trading toolbox.

Understanding the Ichimoku chart

In the most basic of explanations, the chart consists of three lines that are usually color coded for easier readability and what the developers call a “cloud”. All this lines create multiple tests on the price action and show higher probability trades.

How are these lines and the “cloud” plotted

Conversion line or Tenkan-Sen (apply first color here) – is calculated as follow: highest high plus lowest low divided by 2. Calculate this formula over the past 7 to 8 time periods.
Base line or Kijun-Sen (second color) – Calculated by adding the highest high to the lowest low and dividing it by 2. The difference from the Tenkan-Sen is that the Kijun-Sen uses the past 22 time periods as base of calculation.
Lagging span or Chikou Span (third color)- Calculated by using the most recent closing price and plotting it 22 time periods behind.
Senkou Span A (fourth color)- Is calculated by adding the Tenkan-Sen and the Kijun-Sen and dividing them by 2. Plot the resulting value 26 time periods ahead.
Senkou Span B – (fifth color, although I prefer to use the same color as Senkou Span A for clarity) Calculated by adding the highest high and lowest low and dividing the result by 2 over the past 44 time periods. You should plot this 22 periods ahead.

The space between the Senkou Span A and the Senkou Span B creates what is known as the “cloud” or Kumo. Tip: Although days is the preferred time period measurement, you can modify this to be any time period as long as it is consistent throughout all calculations.

How do you use the resulting 3 lines and “cloud”

1. Look for the Kijun / Tenkan Cross – The crossover of these 2 lines are similar to the more commonly used moving average crossover. This crossover intends to isolate moves in the price action.

2. Use the Chikou to confirm a Down or Uptrend – The Chikou helps confirm that the market sentiment is in agreement with the crossover. This confirmation greatly increases the probability for profits. Look at the Chikou is as if it was a momentum oscillator.

3.Wait for the price action to break through the cloud – When the price makes a clear break through of the cloud which shows your resistance and support levels, the probability of a profitable trade increases dramatically.

As you can see, This technique will help you to determine when to buy and sell, which are the support and resistance levels, where are the trends moving, and how strong is the signal. Although not one single chart is without flaws, this technique is often used by traders worldwide and can prove to be an asset to you.

Always remember to make sure that you follow your money management strategy and you will see success implementing this technique.

How to "Fibo" yourself to amazing results

The Fibonacci strategy should be an integral part of every Forex trader toolbox.

This strategy is based on a number sequence (1,1,2,3,5,8,13 etc) invented in the 13th century by Leonardo of Pisa, also known as Fibonacci. This number sequence creates what is commonly known as the Golden Mean. The Golden Mean is calculated by is using the ratio of every number to the next number which is 0.618. When using every alternate number the resulting ratio is 0.382. The Fibonacci strategy uses these ratios to calculate Retracements and what is commonly known as the Fibonacci Profit targets.
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Now, the question is, how do these retracements and profit targets are applied to a chart? What you want is for these numbers to be plotted between the Swing High and Swing Low. A Swing High is the highest point on your chart for the time-frame you chose/setup. Conversely, the lowest point on your chart for the time-frame you are using is called a Swing Low. Once you know where these points are, you can plot the Fibonacci traces on them. By plotting it this way, you will get the most likely support and resistance levels of a trend. These “plot” results on your chart are called a ‘trace’.

These plot results create the Fibonacci Retracements and Fibonacci Profit Targets. In essence, Fibonacci Profit Targets are mini resistance levels and the Fibonacci Retracements are mini support levels.

To chart the Fibonacci Retracements just choose a Swing High and a Swing Low. your charting software will do the rest showing you the Fibonacci levels or mini support levels if you will. If you are a new trader, the recommended directional move is 25-30 pips or a little more and, in an uptrend, your buy signal is in the 50% or the 61.8% level.
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The Fibonacci Profit Targets are, by default, an extension of the Fibonacci Retracements. The profit targets are most of the time above the retracement levels. Treat these levels as mini resistance levels and get out of the trade when these levels hit. If you are using a 15-minute chart, the trend will stop progressing at the 1.362 level.

Tip: The 1.362 level is not accurate if the trend is really strong. Use oscillators to determine the strength of the trend.

When you combine the Fibonacci strategy with oscillators and other indicators, you will be profitable 50-60% of the time. As a rule of thumb, risk 10-15 pips on a Fibonacci trade, and take 40-50 pips as your profit. This simple strategy can generate great profits for you.
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How to use crossovers to make you profits

Indicator crossovers are the most common and effective strategy to spot developing trends. The more used indicators when applying the crossover method are MACD and moving averages. A good signal provider will help you pinpoint the entry and exit points using this method.

How to find the signals

A perfect example would be using the EMA (Exponential Moving Average) and the MACD. When you have an EMA 6 crossing the EMA 23 that would be an indication of a long term trend crossing a short term trend. Under this setup, you buy when the EMA 6 crosses EMA 23 and sell when the EMA 6 crosses the EMA 23. If using the MACD, the most used value is (12, 26, 9). These two indicators will help you identify new trends early and thus maximize the possibility of profits.
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Another indicator that is commonly used is the ADX. When using the ADX, look for crosses at the 17 to 23 level. Either of this crosses most likely indicate that a trend is starting. Before making a trade on the ADX cross, look for the DI+ and DI- lines. The DI+ and DI- lines will indicate which way the trend is moving and you can profit by entering the right side of the trend.

Don’t rely on just one indicator

Many forex indicators are based on identifying trends. Any of these indicators when used by itself could be wrong. If you combine at least a couple of these indicators and they show that a trend is developing, your chances for profits grow exponentially.
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How to use Bollinger bands to make you profits

January 30, 2018

The Bollinger band is one of the oldest and best indicators to apply in 2018

Any kind of proven good Forex indicators requires to include several forms of volatility channel. A Bollinger band uses the theory that if the purchase price moves beyond a moving average plus extra amount, a trend may have started. After 30 years in use, the Bollinger band is still one of the best indicators for Forex.

The Bollinger band indicator uses two guidelines, the first one is the number of days for the moving average and the second one is the number of standard deviations that you would like the band to deviate from the moving average. The most frequent values are 2 or 2.5 standard deviations.
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In statistics, the typical deviation is a way of measuring how to spread aside from the values of a data set in place are. In finance and in forex, the standard deviation functions as a means of gauging volatility.

What is actually the bottom line?

A Bollinger band indicator will adjust to forex market volatility. It widens as volatility rises and narrows as volatility reduces. A long-period trend-following system using Bollinger band indicator might use two standard deviations and a 350-day moving average. You can start an extended position if the prior day’s close is above the channel peak, and have a short if the prior day’s close is lower than the bottom of Bollinger band. The exit point would be when the prior day’s close crosses back again through the moving average.
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Learning how to use this hedge grid system will make you money

January 29, 2018

This no stop, hedged grid trading system uses the principle that one should be able to cash in at a gain no matter which way the market moves. The only way this is logically possible is that one would have a buy and a sell transaction active at the same time. Most traders will say that doing this is trading suicide but let’s investigate this in more detail.

Let’s say that a trader enters the market with a buy (buy 1) and sell (sell 1) active when a currency is at a level of say 1.0100. The price then moves to level 1.0200. The buy will then be positive by 100 pips. The sell will be negative by 100 pips. At this point we would cash in our positive deal and bank 100 pips. The sell is now however carrying a loss of -100 pips. The grid system requires one to make sure that the trader can cash in on any movement in the market. To do this one would again enter into a buy (buy 2) and a sell (sell 2) transaction at this level (level 1.0200).

Now, let’s assume that the price moves back to level 1.0100 (the starting point).

The second sell (sell 2) has now gone positive by 100 pips and the second buy (buy 2) is carrying a loss of -100 pips. According to the rules you would cash the sell (sell 2) in and another 100 pips will be added to your account. That brings the total cashed in at this point to 200 pips (buy 1 and sell 2). Now the first sell that remained active has moved from level 1.0200 where it was -100 to level 1.0100 where it is now breaking even.

The 4 transactions added together now magically show a gain:- 1st buy (buy 1) cashed in +100, 2nd sell (sell 2) cashed in +100, 1st sell (sell 1) now breaking even and the 2nd buy (buy 2) is -100. This gives an overall a gain of 100 pips in total. We can liquidate all the transactions and have some champagne as we have made a gain of 100 pips.

Please make sure you understand the mathematics behind the movements discussed above. You may have to reread and draw the movements on a piece of paper to make sure you understand the concept.

This formation is the 100% retracement formation where the price moves up to a grid level and then returns back to the starting grid level and results in a nice gain for the forex trader. There are many other market movements that turn this strange “buy and sell at the same time” activity into gains.

If you have missed any of the previous articles on no stop, hedged, forex trading using the grid system please contact the authors Mary McArthur at expert4x com For a free course showing you how to double your trading account in 3 trades go to forextrading-alerts com We look forward to any feedback, questions or comments on this article.

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Do you know how to use candlesticks to make profits?

January 26, 2018

This candlestick pattern can make you very profitable trades.

Engulfing Candlesticks

The engulfing candlestick pattern is one of the most dependable patterns. There are two types: “Bullish Engulfing” and Bearish Engulfing”. Both of these are reversal patterns and are considered to be some of the most profitable candlestick patterns to trade. When the candle body engulfs the previous candles body, this is called an “engulfing” pattern. Bullish engulfing patterns are found at price bottoms and bearish engulfing patterns are found at price tops.

In my experience, the 30 minute charts are the best ones to use when trading candlestick patterns. You must always wait for the candles to complete to make sure the candlestick pattern is achieved. Do not guess where the candle will close and try to get into a trade early.
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How to Trade Engulfing Candles

To trade engulfing candle stick patterns, we’re looking for an end of an uptrend or downtrend. This does not have to be a strong trend but it does need to have some momentum that appears to be coming to an end. A good indication of a trend coming to an end is when the bodies of the candles are getting smaller in size. That means the momentum may be running out and this is when you should be looking for a reversal in price action. This could also be the beginning of a consolidation period, so we need to be aware of that.

In an uptrend, we look for an “up” candle immediately followed by a “down” candle, where the body of the “down” candle engulfs the previous “up”‘ candle. This is the setup we want to see so we take the short trade immediately following the close of this candlestick. Next, we count how many pips away the top of the highest last 2 candles are, including the wick, and add 5 pips. This is our Stop Loss. Our Take Profit target should be set to twice this value. For example, if our stop loss is 40 pips away, then our take profit should be at least 80 pips. Money management/risk to reward ratio, are key in this business. A long trade would be similar to a short trade except we’re looking for a downtrend reversal to get into a trade.
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You can search around the web for forex candlestick patterns and learn all you need to know about them, but remember there are so many of them, you need to just focus on a few. As I mentioned, the engulfing patterns are some of the best ones to trade so if you stick with those, you’ll do very well.

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About the author

Andrew Daigle is the owner and creator of many successful websites including ForexBoost, a free Forex educational site for learning Forex trading strategies and partners with Forex Confidential for live trading sessions and very profitable forex trading signals service.
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How to master the MACD to more successful trades

January 11, 2018

In technical analysis, MACD is used to generate signals as well as to confirm a trend.

One of the most used settings for MACD is 12 for EMA1 (fast moving average), 26 for EMA2 (slow moving average) and 9 for signal line. The signal line is used to smooth MACD and generate signals on its crossovers with MACD. Still this setting is not always fit to trading needs of all traders; therefore, the setting could vary depending on a trader’s personal trading style. The difference between the MACD and signal line forms the Histogram.

There are three basic ways of using this indicator.
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1. Look for MACD crossovers with zero line

Positive MACD confirms an up-trend and negative MACD confirms down-trend. Thus, when this indicator drops below zero line it could be considered as a signal to sell short and when it raises above zero line it could be considered as a signal to buy long.

2. Trade MACD and Signal Line crossovers

This is the same as to look for MACD Histogram and zero line crossovers. The technical analysis says that when MACD crosses signal line on its way down it signals selling and when it crosses signal line on its way up it signals buying.

3. Define moments of divergence between price and MACD

In particular, a buy signal could be generated when price makes new low, yet MACD stays above its previous lowest point. Controversially, a sell signal could be generated when price makes new high, yet MACD stays below its previously hit high level.
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Despite the fact that MACD is one of the oldest studies in technical analysis, as many other studies it generates fake signals. Furthermore, it is recommended to use it in junction with other indicators. Since MACD is price based indicator it could be a good choice to use volume based indicators to complete a trading system that uses MACD analysis.

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Find out more about Viktor Ka technical analysis of different indicators applied to the S&P 500, NASDAQ 100 and DJI to create trading systems for stocks and options trading.
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