Thread: Knowledge is Power

Welcome!

With Forex, knowledge is power!

Come here to connect us to gain the advantage will provide you much greater opportunity to achievement!

The only means to become a professional trader would be to obtain that blunt edge of a weapon which separates you from the remaining migrating sheep. - Mastering the Trade - John F. Carter


We could go over any currency here and also my purpose is to have this thread focused on learning, sharing and teaching.

The objective of this thread:-
1) To assist each additional;
2) To teach considerable folks how to become a skilled competent FX trader utilizing each the instruments (fundamentally and technically) needed for achievement;
3) A place to share experiences, tales and to find out;
4) A place to share trading fashion egy; and
5) A place of friendship and harmony.

In doubt, please try a Demo/Mock account, especially in analyzing new egies!

PRACTICE great trading habits so that they eventually become 2nd nature which will lead to a success.

No Spammer, please!

We welcome constructive criticism and well established conversation. Inflammatory, impolite, repetitive, offensive, off-topic or otherwise tumultuous messages made intentionally to annoy, stimulate or antagonize the existing members or alter the flow of discussion are NOT welcome and will be reported to the moderator team.

I'll also start a sister-thread as a digest and also to keep all of the cream from this thread and also as storage for all indiors posted for ease of reference.

10 Trading Requirements for Successful Traders
1. Limit your losses.
2. Let your profits run.
3. Keep position sizes in reason.
4. Know your risk-reward ration.
5. Be adequately capitalised.
6. Dont fight the trend.
7. Never add to losing rankings. Dont average out.
8. Know market expectations.
9. Learn from your errors keep a trading diary.
10. Have a maximum reduction or retracement in profits.


For novices, please read this completely free Forex instruction material and find out to become a successful trader: http://www.BabyPips.com

And also you are advised to read these amazing books:
1. Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading) (Hardcover) - by Kathy Lien

2. Technical Analysis of the Currency Market: Classic Techniques for Profiting from Market Swings and Trader Sentiment (Wiley Trading) (Hardcover) From Boris Schlossberg

3. High Probability Trading Setups for your Currency Market By Boris Schlossberg, Kathy Lien


You are able to preview the 1st and 3rd books here:
http://books.google.com.my/books?id=...sec=frontcover

http://books.google.com.my/books?id=...thy lien"psp=1

The Essence of the 3rd book is here:
1. Never allow a winner turn into a loser
2. Logic wins, impulse kills
3. Never risk more than 2% per trade
4. Trigger fundamentally, input and depart technically
5. Always pair powerful with weak
6. Being appropriate but being early simply indie you are incorrect
7. Know the distinction between scaling in and adding into some loser
8. What is mathematically optimal is plogically impossible
9. Risk could be and is fixed but reward is inconsistent
10. No explanations, ever

BEWARE:
Why Currency Trading Is Not For Everyone?
Trading foreign exchange on margin carries a high degree of risk, and might not be acceptable for everybody. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. Rememberthat could sustain a loss of some or all your initial investment, meaning that you should not invest money that you cannot afford to lose. In case you have any questions, it's highly recommended to seek advice from an independent financial adviser.

RISK WARNING: Trading foreign exchange on margin carries a high degree of risk, and might not be acceptable for all investors. Before deciding to trade foreign exchange you should carefully consider your financial objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all your deposited funds and thus you should not speculate with funds which you cannot afford to lose. You might be responsible for losses which exceed the sum of margin which you post. You ought to know about all of the risks associated with foreign exchange trading, and seek advice from an independent adviser if you have any doubts. Past returns are not indiive of future results.

DISCLAIMER
T.A.Y.O.R ==gt; è TRADE AT YOUR OWN RISK!

All tools are for Eduional Purposes Only.

Trading and Investing entails significant financial risk and is not suitable for everybody. Before deciding to invest or trade you need to carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all your initial investment and for that reason you should not invest money that you cannot afford to lose. Investors and Traders need to check a professional financial adviser for the effects of active investing.

Any opinions, news, research, analyses, prices, or other information is provided as general market commentary and doesn't constitute investment advice. No acceptance of liability for any loss or damage, including without limitation to, any loss of profit, which might arise directly or indirectly from use of or reliance upon such advice.

Do Your Due Diligence and take responsibility!


For a REMINDER, here are the Rules of this Forum:
forexforum.co.za Rules These principles are rigorously enforced. You could be banned without warning for breaking these rules, so please read them carefully!

Originally Posted by ;

* Principle #1: Respect Thy Fellow Trader
* Principle #2: Trading Only
* Rule #3: No Forum Promotion

Rule #1: Respect Thy Fellow Trader
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Additionally, all members have the right to trade in peace - you should not harass, attack, or interrupt another traders ribbon. If you dislike or disagree with someones trading techniques, its fine to say so, but you ought to proceed shortly thereafter.

Rule #2: Trading Only
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*If you service the Forex industry, you are welcome to promote your business by submitting analysis, media releases, and other newsworthy items in the News section. As a news provider, you must take care not to stray into the forum place, as your own avatar, signatureusername or password may be considered promotional.

Lane's stochastics indior is a favorite technical tool used to determine if a market is overbought, meaning prices have advances too far too soon and are due for a downside correction, or oversold, meaning prices have diminished too much too fast and are because of an upside correction.

The concept works off the assumption that, in a bull or uptrending market, prices tend to make higher highs and the payoff price usually tends to be at the top end of that time period's trading range. When the momentum starts to impede, the payoff prices will begin to fade from the top boundaries of the range, and stochastics will show that the bullish momentum is starting to fade. The exact reverse is true for bear or downtrending markets.


Some people today adjust the 30-70 parameters, and there are other techniques associated with using stochastics. One is a trading pattern called bullish conveyance, which can be used in identifying market bottoms. The market price itself makes a lower compared to a previous reduced, but the underlying stochastic pattern makes a higher low, suggesting that the reduced is a false bottom and also may lead to a price change.

Another sign is trading pattern called bearish divergence, which can be used in identifying market tops. The market price itself leaves a higher high compared to a previous high, but the underlying stochastic pattern makes a lower high, suggesting that the next high is feeble high and may lead to a decrease price change.


These patterns are similar to those of the MACD indior. Stochastics may be programmed for trading on a one-minute, daily or monthly basis. Short term professional day traders and long term traders may perform use this indior. Stochastics succeed in volatile or choppy market conditions, unlike moving average studies, which don't. Nonetheless, in trending market states, stochastics may generate false buy or sell signals.

- John Person: A complete Guide to Technical Trading Tactics

Possessing a Toolbox - Use what works for your Current Market Environment

Based on some analysis: although defining trade parameters is important to traders in any market, it is particularly essential in the currency market since over 80 percent of the volume is speculative in character. This usually means that currencies can spend a time in a trading atmosphere. Also, the currency market obeys technical analysis particularly well given its large scale and number of participants.


Too many traders have attempted to pick the top within a trend, only to end up with consistently unprofitable trades.

There are basically two types of trading environments, which means that at any point in time an instrument is either range trading or trending. The 1st thing every trader needs to take is to specify the current trading environment. The shortest time period that traders must use in measure one is daily, even when you're investing on a 5-minute period frame.

How to Trade Trend?
To trade trend the trader needs to answer 3 basic questions:

1. Trend detection - If is a trend set up?
2. Trade entrance is a spot initiated?
3. Trade exit -- What constitutes trend exhaustion?

The use of Bollinger Band is a more accurate approach to glean trend, though it is often employed to get range-bound markets.
What is trend really? The author will postulate that trend is actually a deviance in price. Typically, in most markets prices remain in a range somewhere between 70 and 80 percent of the time. Therefore, when prices decide to trend they in fact deviate from the standard. That is exactly why Bollinger Band (”BB”) becomes one of the best tools to measure deviation in specialized analysis. The BB formula contains the standard deviation (”SD”) calculation inside. BB measures the standard deviation of price from the 20-period moving average. ... Price action is recorded within the 1SD -- 2SD Bollinger bands.

THESE BB rings divide the price action to 3 separate areas. If prices are involving the top 1 standard deviation BB and the top two standard deviation BB, then they're in the buy zone. If a specific currency is trading involving the reduced 1 SD BB and the reduced two SD, then its price is currently in the sell zone. Price candles that is in the area between the 2nd BB rings are in effect in no-man's-territory because markets struggle to find direction.

With the BB bands approach, the trend detection rule is quite straightforward. The author considers the uptrend to have started once the price closes -- not simply penetrates, but closes -- in the buy zone. The theory behind this rule is that buyers must have enough conviction behind their actions to sustain a rally to the top BB channel. If prices merely pierce the station but can't hold their worth, then we don't have enough evidence of a definite up move set up.

The next part of the transaction is perhaps the trickiest. Rather than just entering the commerce at market we will look for a chance to buy on any small dip to the no-man's-land zone. IF the penetration of the buy zone is so strong that prices reach the top 2 SD BB, then we will wait for prices to retrace to the center of the rings or to the 1 SD ring. Why hesitation? Shouldn't we jump in the moment the trend becomes apparent? No. Not if you want trade FX just like a professional.
When it comes to trend trading in FX, the distinction between professionals and amateurs is that while the pros are trend followers, the amateurs are trend chasers. The distinction may seem like nothing more than semantics, but the truth is it's often what separates those who make money through trading from individuals who lose it.

Where would the trader depart his position? At what point on the chart will be shown most likely wrong? If prices retreat all of the way back to the reduced 1 SD BB, then the trader must stop out. The likelihood that trend is over is very high. Notice the difference in egy. In order for us to consider the trend legitimate, prices must not only touch but close through the top 1 SD BB. In terms of our exit, a mere tag of the reduced 1 SD BB will take us from the transaction. Why be so slow to enter and so quick to depart? Because, as I noted before, trend is not the frequent condition of price, so price has to really prove to the trader that it is creating a directional move. Once price can not hold trend, there's zero reason for the trend t trader to remain around. His risks far outweigh possible rewards because he faces 3 possible situations -- consolidation, trend reversal, or trend continuation. 2 from the 3 outcomes are unfavorable to his position and the last option, which can be advantageous, is generally the least likely under these conditions.

Employing the reduced 1 SD BB offers ample room for the trend trader not to be falsely shaken from the transaction although the price meanders through the no-man's-land zone before it determines whether it needs to continue its initial impulse higher.

Recognizing the exits -- the 3rd rule of the transaction -- may now be handy to appreciating the 2nd rule of buying only when price retraces. Everything has to do with risk and benefit. Remember that in real life prices often fake out the transaction. Just because price enters to the trend channel is no guarantee that it will remain there. If mark were highly predicable most traders would make money rather than losing it. The key to positioning in an trend-based setup will be to minimize the number of losses for the countless times you will undoubtedly be wrong, rather than to maximize the profits for the few times that you will be proper. In trading, trends are the exception, not the rule, and in order to avoid being pumped out, traders will need to try to always enter the market under the most favorable of situation no matter what the market environment holds. Novice traders have a tendency to succumb to the lure of the crowd and not restrain themselves from buying on top or selling in the bottom. The individual trader, however, who would wait for a retracement down to the top 1 SDBB, would endure only a smaller reduction.

- Boris Schlosseberg, Technical Analysis of the Currency Market

RELATIVE STRENGTH INDEX

Invented by master technician J. Welles Wilder, the RSI, such as stochastics, compares the strength of the currency pair into its price history. As an indior it places more importance on recent price data and consequently is very popular with currency traders using it in a variety of ways. Due to its built-in smoothing purposes, the RSI filters out the noise generated by spikes in price and can be even used by some traders as a proxy for volume because volume reporting does not exist in FX.


Among the most common methods of trading the RSI is by discovering divergence patterns. If price is always creating new highs but the RSI does not, then a trend change or trend consolidation is extremely likely.

The RSI is among the strongest oscillator instruments in technical analysis. Its price-smoothing function frequently offers better clues to direction compared to price action itself. By applying trendline analysis right on the RSI itself, traders may generate accurate entry signs on both shorts and longs. Although the indior generates overbought and oversold signals, such as all oscillators its actual worth is in spotting divergence between momentum and price.

- Boris Schlosseberg, Technical Analysis of the Currency Market

It seems we read the very same resources - Ebooks from Kathy and Boris, Babypips, dailyfx.
Good Luck with your new Thread!

STOCHASTICS Oscillator is invented by Dr. George C. Lane. It's one of the earliest, one of the very powerful, specialized oscillators.


This instrument is developed on the standard technical assumption that as process rise within an uptrend, the closing of each phase will process the high as bulls elevator every offer, whereas at an downtrend the near will ordinarily happen near the low since bears strike each bid.


Dr. Lane was quite clear that a stochastic of 80 does not mean that the trader needs to instantly short, nor does a reading of 20 imply that bids should be put. Rather, the proper way to use stochastic would be to watch the indior once it's entered the overbought or oversold zone. Just when the indior slides back under 80 or moves upward over 20 does the trader follow the signal. Stochastics basically measure momentum, and a fracture of the 80 line or a rally through the 20 line will indie that buying or selling momentum has stopped and the trader can be obtained a high-probability directional trade.

DIVERGENCE
Dr. Lane contended that one of the most useful approaches to use stochastics is by spotting divergence between the price action as well as the indiors readings. Specifically, he discovered the setup where the % line could make lower highs while the price made greater highs a very useful short setup, also on the other hand once the lively flipped itself with %D making higher lows while the price continued to make lower lows, this installment represented a powerful long trade. He discovered that these types of transactions were most reliable when divergence occurred as % was between 10 and 15 on the downside and 85 and 90 on the upside.

Stochastics are one of the first oscillator indiors and for that reason they have been abused by traders that misinterpret their signs. In highly range-bound markets, this instrument can accurately call ends in price simply by flashing 80 or even 20, but when the environment changes such simplistic trading will wreak havoc with your trading account, as price will continue to climb relentlessly against your shorts and collapse against your longs. Stochastics are employed as a gauge of fashion strength. Once fad weakens, stochastics will weaken as well, Even if price then resumes its prior leadership, and even sets new highs within an uptrend or new lows in a downtrend however stochastics do not confirm that the price action, that bit of data could be tremendous value to the trader. This type of setup could signal the possible beginning of consolidation and range trading or a full size countertrend move. In either case, it's at this point that stochastics can give the greatest value and the indior can prove its mettle among the earliest albeit valuable technical tools.

- Boris Schlosseberg, Technical Analysis of the Currency Market

Conclusion

Oscillators will be the primary tools of technical analysis as most specialized analysis relies on the idea of divergence between momentum and price.

The basic of technical analysis is that momentum precedes price. That means failure in a momentum will occur before collapse in price.

06:54 USD/JPY: Testing 104.00 on General USD Profits London, May 27. Early buying of the USD across the board, obtained USD/JPY by its 103.60 Asian large in ancient London. The pair trading new weekly highs since - testing the 104.00 degree, although provides are touted only above the figure. The favorable Nikkei close also playing its part, together with all the 203pt gain lending service on the carry trade situation. EUR/JPY marginally extended Asias 163.78 large, but met resistance at the higher 163.80s, where it failed to more than one event late last week. - ThomsonReuters.com.

T R A N S L A T I O N
#32654;#20803;#20817;#26085;#20803;#65306;#27979;# 35797;104.00


#27431;#27954;#26089;#30424;#32654;#20803;#20840;# 30424;#36208;#39640;#65292;#32654;#20803;/#26085;#20803;#31361;#30772;#20122;#24066;#39640;# 28857;103.60#24182;#27979;#35797;1.04.00#65292;#21 019;#19979;#21608;#20869;#26032;#39640;#65292;#236 13;#31649;#20256;#38395;#21334;#30424;#20301;#2011 0;#25972;#25968;#20301;#19978;#26041;#12290;#26085 ;#32463;#25910;#39640;203#65292;#26159;#32654;#208 03;#19978; #28072;#30340;#37096;#20998;#21407;#22240;#65292;# 21516;#26102;#20063;#25903;#25345;#22871;#24687;#2 0132;#26131;#12290;#27431;#20803;/#26085;#20803;#31361;#30772;#20122;#24066;#39640;# 28857;163.78#65292;#20294;#36973;#21463;163.80#267 23;#38459;#21147;#65292;#19978;#21608;#20132;#2144 9;#30424;#26366;#22810;#27425;#22312;#21518;#32773 ;#19979;#26041;#30772;#36133;#12290;

08:07 EUR/USD: ECB Rumours Maintaining Euro Pressured London. Speculators are maintaining the Euro pressured with the EUR/USD bounce to 1.5760 only attracting fresh sellers. The names in question have latched on to the market speculation that a bank drew down greatly from the ECB yesterday and the ECB facility was completely used. However, given the UK holiday it is not wholly unsurprising that liquidity was an issue. As a consequence of the speculation more rumors of banking woes could come back in the near-term.

EUR/USD struck 1.5728 amid the most recent form of selling with more drawback stops triggered at the transfer under 1.5735.

In other news; record drops in oil prices, the stronger Euro and financial market turbulence might damage the German economy in coming weeks. The most recent remarks from the German Economy Minister, Michael Glos, note that although the start to this year was extraordinarily good, partially as a result of weather conditions, current risks like financial market turbulence, the gain in the oil price and the weakening of the USD shouldn't be underestimated under any circumstances. - ThomsonReuters.com

Oil seems to be the factor

#12288;#12288;#20294;#19968;#22823;#22411;#26085;# 31995;#38134;#34892;#20132;#26131;#21830;#34920;#3 1034;#

Originally Posted by ;

Oil seems to be the factor

The Week Ahead [From Forex.com]

Monday, May 26, 2008 - Friday, May 30, 2008


Oil continues to climb, weighing on USD
Oil prices remain in the spotlight because they continue their seemingly inexorable increase to who knows how large. Indiions of a price stall last week were quickly overwhelmed by a surprisingly big crude oil stock drawdown, based on weekly US figures, even as indiors of gas and oil demand have started to decline. The spillover effects to the broader consumer-led market are just starting to be felt, but announcements by airlines of further fare increases and other charges to offset higher fuel costs suggest petroleum oil prices are starting to affect corporate profitability and will continue to reverberate through major savings. At this point, oil prices will need to see back below $130 trendline service to indie a possible top, and losses below 127.90 to indie the start of a pullback. The USD is still affected by oil price increases, but not to the same extent as previously this year. Still, on the margins, greater oil adds to pressure on the USD, while a stronger USD will cap oil price increases.

The USD has reached numerous critical levels and is looking vulnerable as we venture to the extended Memorial Day weekend in the States. On Thursday, EUR/USD exhibited signs of a rejection reduced after testing briefly over 1.5800 and neglecting, but was back up knocking on the ceiling on Friday. The USD index tested the bottom of this Ichimoku #8216;cloud,#8217; a zone of important support, and has managed to remain inside the cloud since the week shuts out. A daily close in EUR/USD over 1.5810/20 is likely sufficient to push the USD index out of this cloud and also signal a new stage of USD weakness ahead, while a move below 1.5650 is needed to end the EUR#8217;s ascent.

The fundamental backdrop has not changed significantly and one can argue that with the bad news out there, and worse anticipated to come, the USD is actually holding up fairly well. In the context of a range-trading environment, this is because it should be8212;prices test the outer bounds of their ranges, occasionally exceeding them, only to neglect and reverse back into the range. We watched this happen a few weeks ago with the failed effort to crack below EUR/USD 1.5300/40, and this week has witnessed the upper end of this range tested and briefly surpassed at 1.5800. This week saw yet another coincident flow of data highlighting ostensible Eurozone resilience (stronger ZEW and IFO) contrasted with weaker US data (greater PPI, gloomy FOMC minutes(poorer existing home sales), providing a neat explanation for EUR/USD strength beyond oil.

Taking a second glance at this week8217;s info, but I will see the seeds of a change#8212;Eurozone May flash PMI#8217;s on Friday declined more than anticipated (PMI composite (services and manufacturing) dropped from 51.9 to 51.1 vs. anticipated 51.5) and US data wasn't as weak as feared (LEI actually climbed 0.1 percent for the second month in a row; initial jobless claims declined slightly). Additionally, EU officials (Noyer, Juncker, Almunia) spoke out against renewed FX volatility, code-speak for resistance to further EUR strength. Above all, the FOMC minutes and comments from Fed speakers Kohn and Kroszner affirmed the market8217;s opinion that the Fed is on hold for the next few months, eliminating lower US interest rates as a source of immediate USD weakness. In the big picture, the EUR has to significantly adjust to the unfolding economic downturn, leaving it ripe for a drawback. But looking ahead to next week#8217;s info, there are a number of reports that may expose the USD to new weakness, namely housing prices, new home sales and durable goods orders. In short, we8217;re on the brink of this USD entering a new and largely unanticipated period of weakness, or we#8217;re being put up for a reversion back to recent ranges. The outlook is clouded by possible volatility surrounding the US holiday on Monday and the end of the month, an interval of reduced liquidity when risky gamers like to test sensitive price areas. Remain alert for technical fractures (that will need to be sustained on a daily basis) and observe commodities (gold oil) for signs of a change to observe where the USD will be going.


Stocks finally respond to gloomy reality
Whether its greater inflation eating into corporate profitability, slower growth eroding consumer demand, or higher energy and commodity prices squeezing margins, the outlook for stocks is to the ropes. The FOMC minutes provided that a gloomy prognosis for the US market and suggested that interest rate cuts will probably not be accessible even if the US economy softens further. Stocks got the message along with the selling began in earnest post-FOMC minutes. On the way, key trendline service that guided stocks greater since mid-March was broken, bringing shares back in line with other markets#8217; downbeat expectations. Recently, downdrafts in stocks have usually led to sharp declines in USD/JPY along with also the JPY-crosses, but that has not materialized this time round, or at least not yet. USD/JPY remains vulnerable to further stock weakness, and a drop through the 102.20/50 area suggests new weakness in that pair. EUR/JPY seems set to give it up if below 161.70-162.00.

[Emphasis added]