Forex Trading – Using Fibonacci Levels
June 9, 2010 by Forex Guide
Filed under Forex Trading
Leonardo Fibonacci was an Italian mathematician who lived in thirteenth century Italy. He was not the first to observe repeating patterns and ratios in nature however his studies led to our understanding and the application of Fibonacci in Forex as it is today.
From his studies he discovered a particular number series that was applicable to the natural proportions of matter it in both nature and the universe. forex broker
The Fibonacci number series is a series of numbers starting with 1. Each subsequent number is created by adding together the two previous numbers. Therefore the second number would be 1+1, the third number 1+2, the forth number 2+3 and so on. From this sequence (1,1,2,3,5,8,13,21…) he identified what is known as the Golden ratio. If you divide any number in the series after 3 by the next highest number the resultant answer is 62.5. The higher up the number sequence you carry out the calculations the closer the ratio comes to 61.8%, which is considered the ‘Golden Number.’ forex broker
The ratios applied in Forex trading make use of this Golden Number and also set out additional incremental stages of this ratio. These are 23.2%, 38.2%, 50.0 % and 61.8%. The low of the move is referred to as 0.0% and the end of the move is referred to as 100.0%
These levels are used in Forex trading to project both price contractions and price extensions within the market.
1. Fibonacci retracement levels
Retracement levels are defined areas, based on the Fibonacci ratio, which aim to identify where the market is likely to pull back to after a move. In an up trending market these are also referred to as a Fibonacci support level. In a down trending market these will be referred to as a Fibonacci resistance level. These provide the opportunity for traders to position themselves to enter the preceding trend after a retracement has competed.
2. Fibonacci price extension levels
While Fibonacci retracements can be used to profit following a market move, Fibonacci price extensions are used to predict how far a move is likely to travel. Again the Fibonacci ratios are applied but in this instance they are used as price targets for the trader to take profits.
Fibonacci levels tend to work due to the expectation of many traders watching and entering the market at these points. Therefore it can be argued that to some degree these levels become a self-fulfilling prophecy.
You can calculate Fibonacci levels by entering the high and the low of a move into a Fibonacci Calculator and apply them to your own charts.
Fibonacci levels make a useful addition to the traders’ toolbox. As with all technical methods it is best to seek confirmation by the use of additional indicators rather than simply relying on Fibonacci methods alone.
Find out pragmatic knowledge about the topic of forex investment – please make sure to study the web page. The times have come when proper information is truly at your fingertips, use this opportunity.
Automated Currency Trading – 4 Benefits
June 9, 2010 by Forex Guide
Filed under Forex Trading
In the world of Forex trade, the concept of automating foreign exchange trading is becoming a new trend that a lot of people are looking into. Exchange-traded futures are the first group to seriously consider automated transactions. Also the Interbank spot FX market has decided to use the automated method as well. Why exactly are these groups looking to it? Let’s take a closer look at automatic forex and see if we can figure out why. forex broker
1) Real-time Transactions: One of the reasons it has begun to become successful is because transactions can be conducted in real time. With manual systems it is very difficult to achieve this advantage that is offered by automated Forex systems. A lot of trades happen within milliseconds and this can be a huge push for auto transactions versus manual. A few other problems that can be greatly helped or avoided with auto Forex trading include when a trader is away from their desk or if they have had several losses in a row that hinders them from making new trades for a while. Both of these can be greatly helped by using auto trade as opposed to manual. forex broker
2) Greater Diversification: Having better options in regards to diversification can be an advantage when it comes to automatic transactions. This means that a single trader can trade in different markets in different time zones at once. This also allows them the option of multiple exchange models. Another great advantage when it comes to this advanced trading system is having models to analyze short-term data. An option that is not available in any other way. This therefore can help give those using this system a bigger advantage over other traders. This means they can then predict in as short a period of times as fifteen minutes to half an hour. This once again helps you out in trading in different markets at different times.
3) Greater Liquidity: Auto foreign exchange can also give traders more liquidity. This was discovered when futures exchanges had a huge rise in trades after they started using the programmed system. With all the advantages to this modern system, are there are any problems we need to look at? In fact there are. One of these problem areas is that some people are worried that the orders will increase too much if everyone adopts this automatic system. This can cause problems with lack of bandwidth or engine capacity trying to process all these trades in real time, though there are already people looking into how to avoid this problem before it happens.
4) Risk management: Another problem area for the auto system is risk management. There is always the consideration of checks having to be made when trades are being made. These checks need to happen in an environment where everything is properly synchronized. This is a technical problem and can be resolved when technology improves. Besides these two problems, there seems to be a lot more advantages, than disadvantages. This makes auto transactions the best option for most if not all Forex traders.
Gain vital advice about managed forex account – please study this web page. The times have come when concise info is truly at your fingertips, use this chance.
Forex Trading Software – How To Choose A Winning System
June 9, 2010 by Forex Guide
Filed under Forex Trading
Every week I see a new Forex trading software package claiming I can make huge gains with no effort and all for a hundred dollars or so – But which of these systems REALLY work? Let’s find out… forex broker
In a moment I will give you some free systems that have made hundreds of millions of dollars but first let’s get rid of all the systems that don’t work. If you want to spot them look for these key points:
- Claims of hundreds of percent or more in annual gains and under 5% in drawdown
- Claims of 95% or more in terms of accuracy
- Claims that they can predict the future with scientific algorithms
forex broker
You can spot these Forex robots easily, they will normally have a catchy name and retail for around a hundred dollars. Of course if you really could make money with little or no drawdown, with no effort and for the cost of a good night out, 95% of traders wouldn’t lose and they do. These systems don’t have a real track record, just simulations over past data but that’s easy! We could all be billionaires, if we knew tomorrow’s closing price today but we don’t.
If you want to cross a Forex trading software package off your list, look for a simulated track record or one the vendor tells you is true but has no audit of figures from an outside source.
Systems that Make Money and two that Have Made Hundreds of Millions in Profit for FREE!
If you want a system that makes money, you will normally see 50 – 100% annual gains with some drawdown, normally around 20 – 30% will occur even on the best systems and they will also produce an independent track record. These systems have periods of losses ( all good systems do) but stick with them and you could make huge profits.
To get you started, check out two free systems which are by trading legends which have made hundreds of millions in REAL dollars.
The Turtle Trading Rules by Richard Dennis
These rules were given to a group of newbie traders who piled up 400 million in profits with them. Dennis gave them the system to prove anyone could win with the right system and mindset and he was proved right.
The 4 Week Rule by Richard Donchian
A favourite of mine a one rule system you can learn in 10 minutes yet, it’s been piling up huge profits for nearly 30 years and its by another true trading legend Richard Donchian – the grandfather of modern trend following and one of the most respected traders of all time.
Want More? Visit http://www.forex-enterprises.net/ to learn more about forex trading. You can also sign up for their newsletter to keep yourself up-to-date on the latest market news. http://www.forex-enterprises.net/
Fetch practical things to know in the sphere of forex trading – please read this page. The time has come when concise information is really only one click of your mouse, use this opportunity.
Technical Analysis – Don’t Start Trading Until You Know It
June 4, 2010 by Forex Guide
Filed under Forex Trading
Quoted from one of the FOREX well-established website, http://www.Forex.com, Technical analysis is “a method of forecasting price movements by looking at purely market-generated data.” (Well, at most of the time, this market-generated data means the price of the currency) The analysis is done base on the concept of ‘history repeats itself’ and thru comparing present situation with the past, technical analysis is quite effective in drafting out the entry/exit price indicator. forex broker
Price charts are often the only item a pure technical trader concerns in. Through patterns of charts, various indicators will be generated and used for planning the investment tactic. A few well-known indicators for FOREX traders are strength indicator, momentum indicator, and volatility indicator. Technicians strongly believe currency price (or any other market numeric data) moves in trend and it will always follow a pattern similar to the past.
Although the methodology looks secure with proven tracks in the olden times, it would be relative unsafe to trade FOREX purely base on technical analysis. The future does not equal with the past. There are a lot of unexpected variables that technical analysis does not reflect on: change of country leaders, change of government, natural disasters, change of bank policies, investor’s mood, war– all these factors affect currency value directly and might not have happened before in the past. A combined of two approaches (fundamental and technical) is always encourage to get the optimum plots on your investment plan. forex broker
FOREX can be extraordinarily beneficial to a variety of people. It gives huge leverage rates, it gives incompatible liquidity to your money, it gives convenience to trade on the Internet, and it can definitely give you a lot of money if you trade smartly. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your ‘wings’. Seminars, eBooks, Internet, papers, video courses – all these are handy to get yourself ready. You can also try out your skill on the demo account provided free. After all, FOREX trades 24hours a day and there is always money to make in the market, so why not be patience until you are fully ready for it?
In FOREX market, it would be difficult to trade solely based on technical analysis as numeric data and graphs merely give a more accurate estimation on the market movement. You still need an overall view on the market condition. This will lead our discussions to the second type of analysis method – the Fundamental.
To learn more about Forex Trading, more specifically, fundamental analysis, please visit the blog at http://www.forex-enterprises.net/ where you can complete your Forex Trading education and even sign up for a newsletter to stay on top of the market.
Find realistic recommendations about forex investment – please study this site. The time has come when concise information is truly within one click, use this possibility.
How To Make Your Own Forex Trading System
June 4, 2010 by Forex Guide
Filed under Forex Trading
You can buy a Forex robot and most claim big gains but most are junk and will lose you all your cash and while people think its hard to build their own Forex trading system it’s simple, if you follow the steps in this article.
Here we will give you a simple step by step guide to building your own Forex trading system which can make triple digit gains. forex broker
Don’t Make this Common Error!
Many traders and robot vendors engage in curve fitting which is bending the rules of the system to fit the data. They test the system on back data and keep adding more variables in until it works but this is just like shooting at a barn door and then, drawing a chalk circle around every shot afterwards to make every shot look like a bullseye! A Forex trading system should be simple and trade ALL currencies and markets conditions in the same way.
Building a Simple System
A system can be very simple and win – if you want an example of this here is a one rule system that works:
Buy a new 4 week high in a currency pair and hold it until a new 4 week low is hit and then reverse and go short thereafter, simply reverse on new 4 week highs and lows.
Does that sound simple? It is and does it work? Yes it does, the above was devised by trading legend Richard Donchian and it has worked for over 30 years, so don’t make your system complex keep it simple.
You should use chart patterns i.e. support and resistance and a few momentum indicators to confirm your trades – two or three is the MAXIMUM you should use and my favourites are – the stochastic, the RSI, MACD, ADX Line and Bollinger bands – try a few of these and you can do very well. forex broker
The Rules
should be objective in terms of buying or selling and the system should be based on cutting losses quickly and running profits. Money management is the key to as systems success and your exit strategy should be placed as soon as you enter the trade.
The Percentage of Traders You Win Doesn’t Matter!
What does matter is the size of your profits to your losses. I work with long term trend following systems and these lose 70 – 80% of the time but the winners may not be many but there so big in comparison to the losing trades these systems make triple digit gains.
Your Forex System
Most traders think building an objective Forex trading system is hard but it’s not – anyone can do it; just remember to keep it simple and robust, employ strict money management and you will have a Forex trading strategy which can make you triple digit gains in 30 minutes a day or less.
Access realistic info about the topic of forex trading online – please read the page. The times have come when proper information is truly within one click, use this opportunity.
