Tag Archives: strategy

Forex Trading Strategy – Buy The Rumor Sell The Fact In Price Action

Most people who have been involved in trading in the markets for a significant length of time surely have heard about the saying “Buy The Rumor Sell The Fact”. It is an old trading rule, but highly misunderstood, and often quoted by traders that explains price declines that occur after an anticipated positive event has happened.

Read more about Forex Trading Strategy Made Very Simple – Price Action

Many traders stumble on buying the rumors without any in depth analysis, just based on pure emotions. Assessing the direction of the market based on economic news update doesn’t mean it is not good but the veracity of it should be confirmed first before doing any drastic moves. Traders should not let greed overwhelm their judgement because most of the time it doesn’t bring positive outcomes. Sometimes, focusing too much on the news, creates an opposite result from what the news imply.

A good example is the paired currencies EUR and US Dollars during the monthly U.S. Non-Farm Payrolls. Some traders thought that the news being released will place them on an advantageous position based on the implications of the report, however, they were mistaken. Price counters to what one might expect from the report. It knows no advantage.

Read more about Forex Trading Strategy: Price Action Trading Patterns

With this kind of trading strategy of basing one’s decision on rumors, emotions and even luck, will not bring you anywhere. It is no more than guessing your fate by flipping a coin. Also, the market possesses a contrarian nature, where in the price will move in an opposite direction of the majority’s emotional perception. This is one of the reasons why most impulsive traders lose plenty of money. It is important to have a good strategic plan by learning proven Forex Trading Strategies – coming from reputable traders and of course, in this website which offers Free Forex Entry Strategies and Free Forex Tips. There is no specific style in trading but through experience, patience and logic, one could develop a good Forex Trading Strategy especially in the utilization of Price Action.

Read more about Forex Trading Strategy – Price Action For Dummies

Always remember that the price action is an important tool in predicting the market. It contains all the information you need to become an effective trader and it reflects everything that is affecting the market. Always remember “KISS”, keep it simple stupid! By making things simple (freeing oneself from the complex market indicators and trading software), one could save oneself from wasting time and effort. Stop losing your money, start getting yourself a solid education in price action analysis. It is a proven Forex Trading Strategy that I recommend without doubts.

Bottom line is there is nothing more than a simple and solid plan to reach your goal of becoming a successful trader by learning one Forex Trading Strategy at a time, avoiding making decisions based on rumors, emotions, and most importantly greed. Once again, Happy Investing and keep on reading our articles about Forex Trading Strategies for Beginners and Professional Forex Trading Strategies. With our everyday motto, learning should be fun!

Source:

  • Don’t Trade The News – Trade Price Action Instead by Nial Fuller. Retrieved April 13, 2013. http://www.learntotradethemarket.com/forex-trading-strategies/dont-trade-news-trade-price-action
  • Webster’s New World Finance and Investment Dictionary (2010). Wiley Publishing, Inc., Indianapolis, Indiana.

Forex Trading Strategy – Basics Of Support and Resistance

Forex Trading Strategy – Basics Of Support and Resistance

When dealing with technical analysis, the concepts of support and resistance are commonly discussed and studied, and could be regarded as complicated by traders who are still learning to trade. In this article, I would like to point out the basics in order to simplify the complexities that surround these concepts. At the end of this article, you will be able to learn how these concepts are being used by traders to predict the potential market movements. In the picture below is a simple example of a chart that shows resistance and support:

support-resistance-basics

Source: Babypips

True to most financial markets, the price of a stock, future, or currency is ultimately determined by supply and demand. To put simply, if there is an increase demand for supply then price will rise, and if the demand for supply drops then price will fall. Therefore, support and resistance are price levels where the supply and demand equation is expected to fluctuate.

Read more about Forex Trading Strategy Made Very Simple – Price Action

Forex Trading Strategy – Support

Support is the price level of a particular currency in the Forex market where there is enough demand which increments the price and prevents it from declining. In the chart below, it illustrates the strength of the base currency, the Euro, relative to the quote currency, the US Dollar.

SupportSource: Fxstreet

Forex Trading Strategy – Resistance

Resistance is the price level of a particular currency in the Forex Market where there is not enough demand which decrements price and prevents it from rising.

Forex Trading Strategy – Support and Resistance in a Range Market

Support and Resistance

Source: Informed Trades

There are plenty of ways to determine support and resistance on the chart however the most basic way is to look for areas where the price has touched multiple times without breaking through that level  (Refer to the above chart). With this Forex Trading Strategy, the more valid it is to determine whether it is a support or a resistance to be able to predict accurately the outcome of the trade.

Forex Trading Strategy – Support and Resistance in a Trend

Support and Resistance

 Source: Informed Trades

In the example above, it shows a trendline of support and resistance. When the market is trending upward, resistance levels are formed as the price action slows and starts to pull back toward the trendline. This is because of selling or profit taking by traders. The resulting price action undergoes a plateau effect in price, creating a short term top.

On the other hand, when the trend of the marketing is declining, you should watch for a series of declining peaks and connect these peaks with a trendline. When the price is consistent with the trendline, most will be pressured to sell. It will therefore continue to decline as demand is decreasing.

Read more about Forex Trading Strategy: Price Action Trading Patterns

With the identified support and resistance levels, it helps in creating a strategic entry or exit points that will be in favor towards the trader’s profitability.

Bottom line is determining support and resistance when reviewing charts will help improve returns of short term investing because it could provide traders an accurate picture of the movements in price. Also, it helps long term investors to foresee possible hindrance to their long term investing by discovering a decline in the trend of a particular investment. It is definitely one of the Forex trading strategies to follow!

Source:

  • The Basics of Support and Resistance in Trading. Retrieved April 08, 2013. http://informedtrades.hubpages.com/hub/The-Basics-of-Support-and-Resistance-in-Trading
  • Support and Resistance Basics. Retrieved April 08, 2013. http://www.investopedia.com/articles/technical/061801.asp
  • Support and Resistance. Retrieved April 08, 2013. http://www.babypips.com/school/support-and-resistance.html

Forex Trading For Beginners – Common Used Forex Terms #3

Forex Trading For Beginners – Common Used Forex Terms #3

In the world of Forex, there are plenty of jargon that you will likely to encounter. It is important that you should be able to familiarize first with the common used Forex terms before delving into deeper level to learn to trade Forex in general and use the many major Forex trading strategy / strategies available.

Read more about Forex Trading Strategy Made Very Simple – Price Action

Common Used Terms:

  • Cross Rate – The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U.S. dollar, regardless of which country the quote is provided in.

For example, if an exchange rate between the Australian Dollar and the Korean Won was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the Australian Dollar or the Korean Won is the standard currency of the U.S. However, if the exchange rate between the Australian Dollar and the U.S. dollar were quoted in that same newspaper, it would not be considered a cross rate because the quote involves the U.S. official currency.

  • Leverage – The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.

For example, if a trader opens an account with a $200,000 position from a $2,000 margin, his leverage accounts for a 1:100 ratio.

  • Margin – The capital required to hold on a certain position in the market. It is either “free” or “used” margin, where in the “free” margin is the available money to be allocated for future positions, while “used” margin is the money already invested in a certain position.
  • Exchange Rate – It is the price of one country’s currency expressed in another country’s currency.
  • Pip – The movement of price that a given currency can make.
  • Spread – The difference between the bid and ask price.
  • Bid Price – The bid is the price that you will quote a broker.
  • Ask Price – The ask price is the price that your broker will quote you.
  • Currency Pair – The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the “base currency”, and the second currency is called the “quote currency”. The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.

Read more about Forex Trading Strategy: Price Action Trading Patterns

The ones mentioned are the most common terms being used but there are more terms that you need to learn as we go along with our journey to learn to trade Forex. I would recommend the site Investopedia for more Forex terminology for a good reference and also Learn What Is the Forex Exchange and Learn How to Trade Currencies. I understand that it is difficult Learning Forex but with great perseverance and determination, nothing is impossible. With this being said, Understanding Forex Trading should be an everyday goal! Don’t worry there are many resources available online to Learn to Trade Forex Free of charge. What are you waiting for? Learn and invest!

Source:

  • Forex Trading Terminology by Nial Fuller. Retrieved April 08, 2013. http://www.learntotradethemarket.com/forex-university/forex-trading-terminology
  • Forex Trading Terms. Retrieved April 08, 2013. http://www.investopedia.com/categories/forex.asp

FOREX TRADING FOR BEGINNERS:

  1. Introduction to Forex Market
  2. History of Forex Market
  3. Common Used Forex Terms

The Mother of Forex Trading Strategies – Trade from the Daily Charts

Forex-trading-strategies-gbpjpy-daily-chart

Forex trading Strategies: Sometimes choosing the right Forex trading strategies in your Forex trading can be very overwhelming. There seems to be 1,000,001 traders out there telling you that they have the best Forex trading strategies for beginners and pros alike. So the question is this…”Josh, if I want to improve my Forex trading today, what are the best Forex trading strategies that I can implement..TODAY! I am going to show you one of the best Forex day trading strategies you can use.

Most Forex traders change Forex trading strategies like they change their underwear. They always seem to be search for the “holy grail” of Forex trading strategies. And of course I personally believe that the “holy grail” of Forex trading strategies is developing a proper money management plan. But once a trader has their equity management plan and they learn how to trade simple support and resistance from key levels, most of the problems that I see with traders who are struggling with their Forex trading come down to the chart time frame they are trading.

For some reason I see newbie traders trying to trade from the 5 minute charts, trying to scalp the market, and are getting slaughtered. Though trading from the 5 minute charts works well if you are scalping the market, the lower time frame charts can also cause a lot of stress because of the quick movements it can make. So whether you are a complete Forex beginner or you are a seasoned trader who may be struggling with your Forex strategies. I am going to give you my Forex strategy secrets. I am going to suggest that you scrap the lower time frame charts and adopt one of the best Forex trading strategies…start trading from the daily charts.

The reality is the lower the time frame of your chart the more “noise” you are going to see. Let’s take a look at a 5 minute chart on the GBP/JPY. If you look at the chart below, though it is not impossible to trade most of the potential trade opportunities are going to be quick, aggressive, and will offer a unfavorable risk/reward. And unless you are a very skill as a Forex scalper, trading from the 5 minute charts is NOT one of the greatest Forex trading strategies you can implement. Price action can be very bouncy on these lower time frame charts. You can see that price is jumping around without much of a definitive direction.

forex trading stragies - 5 Minute chart

Forex Trading Strategies : The Daily Chart

Now let’s take a look at the same currency pair on a daily chart. Each one of these candles represents an entire day. Now, if you are trading from the 5 minute charts you need to be in front of our charts constantly in order to find a solid trade. But when you trade from the daily charts you can plan way in advance what your trade will be because you are going to be taking your trades from key levels. Trading from the daily charts allows you to clearly see when you would find potential trade setups and plan your trades accordingly. We will get more detailed on other Forex trading strategies such as trading from key support and resistance levels and price action on how and where to enter these trades from the daily charts. But for now, I just want to drill into your head to start trading from the daily charts.

Forex-trading-strategies-gbpjpy-daily-chart

 

Forex Trading Strategies: Using Heiken Ashi Candlesticks

Now, I am not going to get too detailed on one of my favorite Forex trading strategies when trading from the daily charts. And that is the use of Heiken Ashi Candlesticks. In a nutshell, Heiken Ashi candlesticks help to clear out some of the “noise” from the charts. If you look at the chart above you will see standard Japanese candlesticks. Red candles mean price went down for the day and green means price went up for the day. You can see that the color of the candlesticks can sometimes change from day to day. Now look at the chart below. This is the exact same chart as the chart above but I changed the candlesticks to Heiken Ashi. Do you see how much smoother the chart looks? I will be writing another article on using Heiken Ashi candlesticks shortly.

Forex trading strategies gbpjpy daily heiken ashi andlesticks

So in a nutshell folks, if you are struggling with your Forex trading, trying utilizing one of the simplest of Forex trading strategies..start trading from the daily charts. For more Forex trading strategies visit our YouTube Channel. You can also register for free to receive Free Forex training., Forex trading strategies and Free Forex Entry Strategies here.

 

Forex Trading Strategies: Forex Swing Trading with Heiken Ashi Candlesticks