Interbank FX : Best Forex Broker Again

SALT LAKE CITY, Nov 17, 2008 (BUSINESS WIRE) - For the second consecutive year, Interbank FX (IBFX.com), a worldwide provider of online off-exchange retail foreign currency (Forex/FX) trading, has been crowned Best Foreign Exchange Broker at the 2008 Shares Awards. This recognition marks the second time in two weeks IBFX has been honored as a top Forex brokerage and serves as the culminating event of a record-breaking year for the company. The award was accepted by IBFX Chairman and President Todd Crosland at a gala dinner event at the Grosvenor House Hotel in London on Tuesday, November 11.

"What an amazing honor it is to be recognized by the Shares community in this capacity," said Crosland. "This award is the result of the tireless efforts of the dedicated and hard-working members of the IBFX team who are all committed to making Interbank FX a global leader in Forex trading."

The annual Shares Awards is now established as a top event and followed closely by financial firms around the globe. Winning this award is particularly valued because it is determined entirely by voting readers of Shares magazine -- one of the fastest growing financial titles in the UK. The awards have been designed to find the very best providers across a range of categories including stock broking, derivatives trading, online research, software and fund management.

"I was delighted to see Interbank FX receive the award for Best FX Broker of 2008 at the Shares Awards ceremony," said Russ Mould, editor of Shares magazine. "Our loyal readers determine who receives the awards, and to earn their votes, IBFX has clearly provided its customers with the very best levels of service and support."

Throughout 2008, IBFX has been recognized by a myriad of financial media and has continued to perform well despite prevalent market woes, as illustrated by the following corporate milestones :

• Surpassed 30,000 customers worldwide.
• Record trading volume exceeding $85 billion in October.
• Newly funded accounts exceeding 1,900 in October, representing the second best month in company history.
• Current net capital in excess of $40 million.
• 2008 to post fifth consecutive year of more than 100 percent revenue growth for the company.
  

IBFX Adds J.P. Morgan to Growing List of Liquidity Providers

IBFX announced that J.P. Morgan Securities Inc. has become the newest dealer participant in IBFX’s unique multibank liquidity feed, bringing the total number of contributing major money center banks to seven. This proprietary order routing system provides IBFX customers unparalleled access to liquidity and automatically executes trades with a collection of the world’s largest financial institutions, including Bank of America, Citigroup and Goldman Sachs, among others.

J.P. Morgan proved particularly appealing to IBFX because of its strong reputation as a market leader in the global foreign exchange markets. According to the company’s website, the firm is a market maker in 200 currency pairs in spot, outright forwards, NDFs, option contracts, cross-currency swaps and exotic currencies.

"J.P. Morgan is a major player in the FX realm and we’re thrilled to welcome them as our newest liquidity provider," said IBFX Chairman and President Todd Crosland. "We strongly believe that the firm’s vast expertise in currency products as well as their ability to provide fast, competitive and consistent pricing will greatly enhance our customer’s trading experience, as well as grant them even greater access to increased liquidity and world-class trading technology."

J.P. Morgan’s price stream is available now on IBFX’s trading platform, which enables both retail and institutional customers to trade Forex without the hidden obstacles or potential conflicts of interest of a dealing desk broker.

The advantages of trading with agency-based IBFX as compared to a single market maker platform, or "Dealing Desk," include :

• Competitive spreads.
• Transparent pricing from major money center banks.
• Anonymous order execution.
• Smart routing to leading financial institutions.
  

To see more IBFX accolades or to open a free unlimited Forex practice account, visit www.IBFX.com.

About IBFX
Headquartered in Salt Lake City, Utah, Interbank FX, LLC (IBFX.com) is a leading provider of online foreign exchange trading services, offering individual traders, fund managers and institutional customers proprietary technology and tools to trade spot foreign currency online.
Unlike other retail FX brokers, IBFX has distinguished itself as an industry leader with its unique "no dealing desk" agency model, proprietary tools and services, and focus on customer care. This has led to numerous awards and industry accolades that IBFX has compiled. The recognition includes Best Online FX Provider, Best Foreign Exchange Broker, Best Chairman, Ernst and Young Entrepreneur of the Year, and Inc. 500.

Interbank FX serves over 30,000 clients from more than 140 countries and supports trading volume in excess of US$80 billion per month. The company is a member of the National Futures Association and is also registered with the Commodity Futures Trading Commission as a Futures Commission Merchant.

Trading in the off-exchange retail foreign currency market is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.


Sources :

1. Interbank FX

FX Trading Journal - GBP/USD (2008.11.24 - 16:44 GMT)

Today, 2008.11.24 - 16:44 GMT. I am not take any position of trading because market to volatile and unpredictable. The price has been reach and over 100% fibo, may be the price will continue higher to reach Resistance 3 or will turn down by reversal.

What is Market Cycle?

Written by ForexCycle.com

A cycle is simply a regularly occurring sequence of events. The sun rising every morning and setting in the evening is a cycle. The four seasons are one cycle. In forex market, a cycle is loosely defined as price movement of a market from a local bottom to a local top and back again.

Cycles, just like price trends, can be long, short or intermediate in length. A specific market may have a 20 day, 52 week and 5 year cycle, all acting together to describe price activity. By adding the cycles together, the actual price activity can be forecast.

Market cycle analysis attempts to find recurring major and minor peaks and troughs in price movement for better trade timing. Here are some examples of forex market cycles.

• The 30-day cycles in the EURUSD daily chart
  

• The 25-week cycles in the AUDUSD weekly chart
  

• The 200-hour cycles in the AUDUSD 8H chart

How to use MetaTrader to find market cycle

Price movement is a series of tops and bottoms, the price runs from one bottom/top to another is called a cycle and each cycle has the similar length. MetaTrader has an excellent tool to help you identify the market cycles.

Now we use EURUSD 4 hours chart to explain how to find the market cycle bottom.

• Step 1 : Run MetaTrader, look at the EURUSD chart and mark up the important bottoms.
  

• Step 2 : Press the “cycle line” button on the tool bar to draw a series of vertical line. Make sure every vertical line is near to the import bottoms.
  

Sources :

1. ForexCycle.com : What is Market Cycle?
2. Blog ForexCycle.com : How to use MetaTrader to find market cycle

Relative Strength Index – Best Oscillator for Market

Written by ForexCycle.com

Relative Strength Index (RSI), one of the most popular financial technical analysis oscillators is best adapted to work in markets, which is range-bound. Developed in 1978 by J.Welles Wilder its popularity is mainly due to its easy interpretation.

RSI helps you measures the strength of all upward movement against the strength of all downward movement in a specific period. Even though the common parameter for RSI period is 14, because, Wilder recommended a smoothing period of 14; users can however choose the period of their choice.

The RSI compares the upward price movement to downward price movement over the specified timeframe, and displays the result as a momentum line oscillating between 0 and 100.


Moreover, relative strength index or RSI can range from zero to hundred, which is a result displayed as a momentum line oscillation. If someone tells you that the RSI is 50, it means that the market is demonstrating an equal strength of upward and downward force. Similarly if RSI is greater than 50 that denotes a strong upward force than the downward force; while, less than 50 denotes a stronger downward force in comparison to the upward force.

To make the process simpler, here is a mathematical representation of RSI:

RSI = 100 - [100/ (1+RS)]
Relative Strength = Average of 'n' day's up closes / Average of 'n' day's down closes

A number of applications use relative strength index like, for detecting the overbought and oversold condition of the market and spot divergence; where, it has been successfully implemented. Just like as considered by Wilder, if RSI is less than 30, the market/security is deemed oversold, an investor should consider buying; similarly, if RSI is greater than 70, the market/security is deemed to be overbought, and an investor should consider selling.


So also is the application of RSI in Spot divergence. Divergences are a universal form of interpretation for the Relative Strength Index. When the relative strength index starts diverging and moving in a different direction along with the value near support/resistance level, it indicates the dwindling of the market trend. This is said to have accomplished a "failure swing" and therefore is confirmed the coming reversal.


The use of relative strength index is the most appropriate as a valuable complement to other stock-picking tools. It is imperative that a trader should understand the technicalities of using RSI. He/She should also be aware that big surges and drops in the asset price would affect the RSI by creating false buy or sell signals.

Moreover, there is a strong connection between relative strength index and momentum. If the specified momentum period is greater than one, then this period definitely becomes the model period for comparing closes to resolve gains and losses.

Supposedly, if seven is the momentum period, then you may compare the current close to the close seven periods ago. In case the relative strength index using a momentum period is greater than one, then you can refer to it as Relative Momentum Index (RMI).


Sources :

1. ForexCycle.com : Relative Strength Index – Your Best Oscillator for Market

Determine Market Trends with MACD

Written by ForexCycle.com

MACD Divergence or Moving Average Convergence/Divergence is a useful indicator for spotting major changes in market trend, indicate trend direction and for giving hints of a possible market reversal. It is one of the strongest signals generated by technical indicators such as crossovers and divergence from price on a daily chart.

This MACD method, developed by Gerald Appel also referred to as a trending indicator, indicates the up-trend or a downtrend of a particular stock. It is essential that you first assess the track of the long-term trend, before you invest in any market.

The MACD method as used by Gerald Appel makes applicable a 26-day and 12-day EMA based on the daily close, and a 9-day EMA for the signal line. If you are a bit confused, let me acquaint you with the simplest version of the MACD indicator. It is composed of two lines: the MACD line and a signal line.

While the MACD line is the difference between two exponential moving averages (EMAs), the signal line is the EMA of the MACD line itself. You can find the signal line plotted on top of the MACD, which indicates buy or sell opportunities in the market. The two main sets of signals generated by the MACD are crossovers and divergence.

• Crossovers : One of the two MACD crossovers is Signal Line Crossovers, which refers to when MACD crosses above or below the signal line. When the MACD rises above the signal line, it is buying time, and when the MACD goes below the signal, it is selling time according to MACD trading rule. It is recommended that the Signal Line Crossovers be used in combination with other technical analysis tools to avoid many false signals.

• On the other hand, when MACD crosses above or below the zero line, it is called Zero Line Crossovers. When you need to buy/sell stocks when the MACD crosses above/below the zero line, this zero line helps in producing a signal.

• Divergence : When the MACD makes a higher low but the market makes a lower low, then it is called positive divergence. On the other hand, when the MACD makes a lower high while the market makes a higher high, it is known as negative divergence. While the former situation gives us a hint of a possible reversal to the upside, the latter gives us a hint of a possible reversal to the downside.

However, market experts believe that the best way to use MACD would be an amalgamation of signals to verify one another. There are also recommendations of the addition of fast MACD lines to enhance the signals generated and to provide early warning of trend changes. It is also noteworthy that MACD can provide premonition of important market turns through divergence.

The MACD also has its own set of weaknesses. Just as being a trend indicator, MACD sometimes fails to capture the move when the trend is short lived, even though it reliable enough to capture the majority of the move, when a substantial trend develops.


Sources :

1. ForexCycle.com : Determine Market Trends with MACD

Support and Resistance Levels

Written by ForexCycle.com

Support and resistance are respective price levels at which prices stop going down or up. Support levels indicate the price at which most traders believe that prices will move higher. Resistance levels indicate the place where the most of traders feel prices will move lower.

Trading ranges are formed by support and resistance levels. A trading range can play an important role in determining support and resistance as turning points or as continuation patterns. In a trading range, price fluctuates in a narrow band with no clear trend. Buyers take long positions when the prices move to the support level, and sellers go short at the resistance level.

Support and resistance does not always hold. A break below support level signals that the sellers have won out over the buyers, and bearish movement can be seen to follow. On the other side, a break above resistance level indicates that the bulls have won out over the bears, and the following uptrend can bring market price to a new high.

Here is an example in the forex market. Resistance for the EURUSD is located at 1.4975. The market bounces around below this level and forms a sideways consolidation for several weeks until both buyers and sellers think that fair rate of EURUSD is higher than 1.4975. The market breaks out of its trading range on 26-Feb-2008 and moves higher until most of the traders agree that fair rate is 1.5700.


Some times we can see the price pulls back to the previous resistance level, and then rally again. Why does such interesting thing happen? If the market trades back down to the previous resistance, buyers who missed the earlier breakout will see their second chance to go long. So the market rebounds up off this level which has now turned to support.


Sources :

1. ForexCycle.com : Support and Resistance Levels

The Basics of Swing Trading

Written by ForexCycle.com

Swing trading is a trade method in the gray area between trend following and day trading. A swing trader holds a stock for a small period of time and then will trade the stock when it's in it intra-week or intra-month oscillation. A experience swing trader will generally choose a large-cap stock because of its broadly defined high and low extremes. The trader will ride the stock wave in one direction for a couple of weeks, only to switch to the opposite side of the trade when their particular stock changes direction. A swing trader is best in position to do this when that market is more on the stable side versus it being a bear or bull market. This is because those markets' momentum generally carry stocks in one direction only (and for a long period of time).

The success in swing trading is to be able to identify what type of market is currently being experienced. One of the best ways of doing this is looking at historical data of what was indicative of different markets in the past, particular prime swing markets. If a market is identified as prime for swing trading, but later turns out to be a bear or bull market, a swing trader can find that there are the same up and down oscillations than those that occur in a more stable market. This would ensure that best strategy would be to trade on a long-term directional trend instead of the quicker trends that many of the most experienced swing traders are noted for.

Unlike many stock traders, swing traders are not looking to make it big with one particular trade, but are more concerned with hitting its baseline and confirm its direction. At the profiting level, a swing trader will want to exit the trade as close to the upper or lower channel line without being too close, which can cause a loss in opportunity. In a market where a stock is showing a strong directional trend a swing trader will usually wait for the channel line to be reached before selling, thus when a stock is showing a weaker directional trend, the trader will usually sell before the before it hits the channel line in the event the direction changes and the line does not hit on that particular swing.

Swing trading is a great method for beginning traders, while offering a profit potential to advanced traders. A great trader will be able to know when the stock is ripe and what momentum their particular stock has gained before making a decision. Trend following plays a very important role in swing trading as well knowledge of the physics of the stock market. Like the physics of ocean waves, swings can be unpredictable but when a large wave comes rushing at the shore, then its prime time for swing trading, but remember that swing trading is never as predictable as the swinging of a clock pendulum.


Sources :

1. ForexCycle.com : The Basics of Swing Trading

The Trading Secrets of Fibonacci and the Golden Ratio

Written by ForexCycle.com

We all are familiar with the fact that successful traders use Fibonacci and the Golden ratio. Before, we all get ready to try our luck, it is imperative that we know and understand what they are. While Fibonacci numbers and sequence was first known to appear in a book (Liber Abaci ) written by a famous 13th century mathematician Leonardo Fibonacci da Pisa in 1202 as a solution to a problem. The question quoted "How many pairs of rabbits can be generated from a single pair, if each month each mature pair brings forth a new pair, which, from the second month, becomes productive?"

The Fibonacci numbers were the first introduced in the European countries, which was still using Roman numerals with the decimal system or the Hindu-Arabic numerals as presently used. The Fibonacci sequence: 1,1,2,3,5,8,13,21,34 and so on to infinity, is made by adding the two previous numbers in the sequence, to come up with the next number.

Similarly, Golden ratio is also connected to Fibonacci, as it was recorded that just after the first few numbers in the Fibonacci sequence, the ratio of any number to the next higher number is approximately .618, and the lower number is 1.618. These two numbers are known as the Golden ratio.

Fibonacci numbers like much of its use in spheres of art, music, biology and architecture; finds an ardent follower in traders, who uses Fibonacci numbers to set stop loss orders. Two of the most important Fibonacci percentage retracement levels in trading are 38.2% and 62.8%. While other important retracement percentages include 75%, 50% and 33%. For instance, if a price trend initiates at zero and peaks at 100, to later decline to 50, it would be considered as 50% retracement. Similarly, the same levels can be applied to a market that is in a downward move and then suddenly experiences an upward correction.

There is a great connection between Fibonacci numbers and trading, as it defines stop loss level. A trader can set a stop loss placement just below or above the zone, in case three Fibonacci price levels come together in a relatively tight zone. Moreover, a Fibonacci number can help define stops in eventualities like if the support zone is violated and the price trades below that zone; or a trader trades against a support zone. In such cases, the cause for the trade is annulled and the position closed.

However, using Fibonacci retracements takes away the excitement out of trading and gives a pre-defined exit point. Moreover, Fibonacci numbers gives position sizes depending on the risk you are prepared to take per trade; and also defines profit objectives to bank partial profits or constrict stop loss level, once a pattern is completed against a Fibonacci price zone.

One of the immense advantages of Fibonacci numbers and the Golden ratio in trading is the fact that while taking the excitement out of trading, you can define not only stop losses to exit a market, but also set profit objectives as well.


Sources :

1. ForexCycle.com : The Trading Secrets of Fibonacci and the Golden Ratio

FX Trading Journal - GBP/USD (2008.11.21 - 14:57 GMT)

After looking trading signal, with price action inverted hammer and spinning top in 61.8% fibo area and confirmation with bearish candle, i decided open position GBP/USD SELL : 1.4927 TP : 1.4813 in current day pivot level.


Update Trading Journal
-----------------------------


My position reach TP: 1.4813 at 2008.11.21 15:00 GMT, banked 102+ pips.

FX Trading Journal - GBP/USD (2008.11.20 - 15:00 GMT)

From today i try to begin posting my Fx trading journal, i learn to specialize in GBP/USD.

After taking look trading signal, price action tested and over daily support 2 and price action over fibo 0%, i decided open position GBP/USD SELL : 1.4779 TP : 1.4703 in support 3.

At this time i uploaded the trading journal, the profit was 20 pips. you can close OP or continue to reach the TP.


Update Trading Journal
-----------------------------


I decided close position in the 2008.11.20 22:11 GMT, because the price get reversal signal and MACD show over bought position. This time banked 48+ pips.

Pensioners Hit by Pound Falling

The one million British pensioners who live abroad will be hit hard by the plummeting value of the pound, which is likely to fall even further, one leading investment bank has warned.
------------------------------------------------
By. Harry Wallop, Consumer Affairs Editor
Last Updated: 12:42PM GMT 18 Nov 2008

Pensioners and holidaymakers hit by pound falling to 23-year lows Photo: GETTY

JP Morgan forecasts that sterling (GBP) will drop a further 13 per cent against the dollar (USD) and 8 per cent versus the euro (EUR), as foreign investors shy away from investing in the currency.

The pound will hit a low of $1.28, a level not seen since 1985, and sink to a record low of 92p per euro in early 2009, the bank forecast.

If the pound, which has already fallen strongly this year, slides further it will hit millions of holidaymakers who will see the price of foreign trips increase.

It will also hit one million expatriate pensioners in Europe, who receive their pensions in sterling, but have to pay their living costs in foreign currency.


Sources :
Telegraph.co.uk : Pensioners and holidaymakers hit by pound falling to 23-year lows

How to Use Support and Resistance for Big Profits

By. Monica Hendrix


An essential element of your forex trading education is using valid support and resistance to time your trading signal.

Support & Resistance is very valid because there have been so many tests. Resistance or Support gain validity.

- The more times they are tested and hold.
- The more different time frames and the wider apart they are.
- The traders who trade the market and the news sees the level as significant,

1. Watch the level then confirm the Trade
The way to trade it is to wait for the rise but DON'T sell until you see momentum turn down and two great indicators for timing your trade are the stochastic and the Relative Strength Index. Simply wait for the level to be tested and wait for them to turn down.

2. Never just assume a level will hold, wait for confirmation via momentum indicators
Once this occurs you can be short and you know when you're wrong - if prices close above resistance. This simple method of trading into valid resistance or support works and providing you time your entry correctly with momentum indicators, it can make a lot of money.

We have used this simple strategy to clear thousands of pips profits, this year and we have kept it simple, nothing complicated about it but it doesn't mean it simple strategies can't make money they can.

While resistance holds you keep doing it sell into the level and take profits when the dollar becomes oversold, then wait for the next test.

3. Follow Reality of Price Change
If the price breaks up and closes strongly above resistance, the odds will favour further strength in the dollar.

4.Simple and Effective
Sure it's simple but it can be very profitable and the above is a good example of a low risk, high reward way of trading into valid resistance.

You don't need to do anything else, than trade the reality of price change on the charts and if you do and you confirm your moves this simple forex trading strategy can make a lot of money.


Related Post :

1. How To Use Fibonacci Retracements In Your Trading
2. Using Fibonacci Retracements with Support & Resistance
   

Source :

1. Forex Trading Education - How to Use Support and Resistance for Big Profits

Using Fibonacci Retracements with Support & Resistance

By. Andrew Shiveley


One of the essential principles of applying technical analysis to forex trading in a profitable manner is that you want to see multiple confirmations for an entry point before you actually enter the market.

If you are making trading decisions based upon prominent candlestick formations on a long term chart, it would also be wise to check with a number of other indicators when you get a buy signal in order to make sure that there are no contradictions. In this article we are going to focus on how Fibonacci retracement levels coincide with support and resistance levels, and how you can use these two different technical indicators in conjunction with each other in order to yield accurate market entry signals.

Fibonacci retracements are based on the number 1.618 (also called the Golden Ratio) that is found in all natural orderly systems from flowers to the human body to the financial markets. Over the years it has been proven that when the price of a currency pair has a large move and then retraces back in the direction of the previous value, it is statistically more likely to rebound at the levels of 38.2%, 50%, and 61.8% of the original price move.

The way that many traders use Fibonacci retracement levels is to determine when to enter and when to exit the forex market. A Fib retracement can give a buy signal when the price hits one of the three Fib values and then rebounds, or it can show that the market is 'running out of steam' and it is time to exit when the price approaches one of the three Fib values and then falls. While Fib levels can be excellent indicators, it is never wise to enter into a trade based on these values alone.

Support and resistance levels are pretty much exactly what they sound like: Support levels are the price values below the current price data that the market will tend to rebound off of, and resistance levels are exactly the same except they are above the current price data. Support and resistance levels can offer strong forex entry signals when the price breaks through an established level, as when this happens the price has a tendency to continue moving in that direction.

S&R levels and Fib retracements are both powerful trading tools individually, but when you combine them together the trading signals become much stronger and more reliable. As mentioned above, a Fib retracement can give a strong market entry system when the price retraces a given movement and then switches direction around one of the three main Fib values.

As a general rule of thumb when trading the forex market, the longer time frame of a chart, the more reliable the trading signals that are generated. So if you happened to be looking at a 4-hour or 8-hour chart and you saw a strong Fib retracement signal, the way that you could confirm this signal using support and resistance levels is to see whether the Fib value is also a predominant S&R level.

If the price bounces off the S&R level, this is not as strong an indication for market entry as when the price passes through an established level, because once the price crosses an established support or resistance level then it has a tendency to continue moving in that direction.


Related Post :

1. How To Use Fibonacci Retracements In Your Trading

Source :

1. Using Fibonacci Retracements with Support & Resistance Levels in Forex

How To Use Fibonacci Retracements In Your Trading

Written by Wayne McDonell, Chief Currency Coach FxBootcamp

Leonardo Fibonacci studied ratios. He should have been a forex trader. We use his ratios to study pull-backs on all time frames; from 1 min to monthly charts and everything in between.

What’s a pull-back? It’s a retracement of price from the direction of your fundamental bias. Let’s say you are bullish on a particular currency pair. In this case, your fundamental bias is up. The definition of an up trend is a series of higher highs and higher lows. Therefore, by definition, price WILL fall in a rising market. How far price falls is important.


I use Fibonacci studies to measure these pull-backs. My ideal pull-back only retraces 38.2-61.4%. If red candles turn green in this zone, I become bullish again and look for opportunities to buy.

Below are some examples from today.

Figure 2 is the CAD/JPY 4 hour chart. After rising back to the 200 EMA, the long term lagging indicator I use to judge “fair market value”, price begins to drop. If I were bullish on this pair, I’m happy to see it drop. I like to buy when price is low.


How to enter a Fibonacci Trade

Step 1: Measure the distance between the swing high and low.
Step 2: Wait for price to fall. You can trade while it falls, but I prefer to only trade in the
direction of my fundamental bias.
Step 3: If price falls into the “fib zone” of 38.2% - 61.8%, get ready.
Step 4: If price turns green, you may consider going long again. Use of moving averages and
oscillators are further levels of confirmation.


Figure 3 offers a great example. There are two large bullish engulfing candles that formed on the psychological level of 1.4600. This represents a nice reversal. However, the “long opportunity” is not created at that bounce.

If an uptrend is a series of higher highs and higher lows, we don’t have all the pieces in order yet. All we have is a new higher high. The conservative tactic is to not go long after you see big green candles. The tactic is to buy the pair after a high low has been created. This is especially attractive to see that higher low for exactly 61.8% from the swing high.


The next example from today was on this EUR/JPY 1 min chart. I have illustrated a 50% fib retracement. It’s a normal occurrence and happens dozens of times per day. However, can you see any other Fibonacci retracements in this example? Look at all the little swing highs and lows. I bet you can find plenty of reasonable setups.

In the video, you will see how I set up Fibonacci retracements for trade opportunities in the live market. Remember, if you are going to practice this methodology, do so on a demo account and do not trade real money until you have a track record of success.

Source :

1. How To Use Fibonacci Retracements In Your Trading. Friday, 14 November 2008 15:11:53 GMT.

ECB Expect to Cut as Price Pressures Alleviate

Written by David Song, Currency Analyst
Friday, 14 November 2008 11:00:14 GMT

(www.dailyfx.com - click image to enlarge)

Fundamental Headlines

1. Citi to Cut More Jobs, Raise Rates on Its Plastic – Wall Street Journal
2. Chances Are Slim for Stimulus, Auto Aid Till '09 – Wall Street Journal
3. New wave of CDOs at risk of default – Financial Times
4. Nomura Said to Plan Job Cuts Among Ex-Lehman Staff – Bloomberg
5. Shareholders Pay Price as Barclays, UniCredit Raise Capital Like "Casinos" – Bloomberg
6. Sun Microsystems Plan To Cut Jobs - RTTNews
   

EURUSD – The Euro-Zone is facing its first recession in 15 years as the advanced GDP reading for the third quarter showed that the economy contracted another 0.2% from the previous quarter.

1. Germany, the largest economy in Europe, fell into a recession for the first time since 1996.
2. Italy, the third largest economy in the Euro-Zone, is facing the worst recession since 1992.
3. Fears of a deep and prolong recession may lead the European Central Bank to lower the benchmark interest further as growth prospects deteriorate, and may continue to ease policy well into the next year as price pressures alleviate.
4. The headline inflation reading for the Euro-Zone fell to 3.2% from 3.6% in September as food and energy costs continue to pullback from their record highs.
5. Prices pressures in Germany cooled for the third consecutive month in October as the final CPI reading showed that the headline reading slipped to 2.5% from 3.0% in September.
6. Falling commodity prices paired with the drastic slowdown in the economy has certainly helped to lower inflation, which should allow the European Central Bank to hold a dovish outlook over the near-term. As price pressures weaken further, the ECB may cut borrowing costs well into the next year in order to avoid a severe recession.
7. Meanwhile, Credit Suisse overnight index swaps are showing that investors expect the central bank to the interest rate by at least 100bp over the next 12 months, which could drag on the euro going forward.

(www.dailyfx.com - click image to enlarge)

Source :
1.ECB Expect to Cut as Price Pressures Alleviate, Friday, 14 November 2008 11:00:14 GMT.

Weekly Jobless Claims Jump To Seven-Year High

First-time claims for unemployment benefits showed a substantial increase in the week ended November 8th, according to a report released by the Labor Department on Thursday, with the increase lifting jobless claims to their highest level in over seven years.

The report showed that jobless claims rose to 516,000 from the previous week's revised figure of 484,000. Economists had expected jobless claims to come in nearly unchanged compared to the 481,000 originally reported for the previous week.

With the increase, jobless claims rose to their highest level since the weeks following the September 11th attacks. In the week ended September 29, 2001 jobless claims totaled 517,000.

The Labor Department also said that the less volatile four-week moving average rose to 491,000 from the previous week's revised average of 477,750. The increase lifted the four-week moving average to its highest level in over seventeen years.

Last Friday, the Labor Department released a separate report showing that employment fell for the tenth consecutive month in October, driving the unemployment rate up to its highest level in over fourteen years.

The report showed that non-farm payroll employment fell by 240,000 jobs in October following a revised decrease of 284,000 jobs in September. Economists had expected a drop of about 200,000 jobs compared to the decrease of 159,000 jobs originally reported for the previous month.

Continued job losses in manufacturing, construction, and several service-providing industries contributed to the bigger than expected decrease in employment.

The Labor Department also said that the unemployment rate jumped to 6.5 percent in October from an unrevised 6.1 percent in the previous month. With the increase, the unemployment rate came in above estimates of 6.3 percent and rose to its highest level since March of 1994.

With October marking the first month of the fourth quarter, the steep drop in jobs is likely to add to expectations a continued contraction in GDP during the quarter following a modest 0.3 percent contraction in the third quarter.

A recession is technically defined as two consecutive quarters of negative growth.


Related Post :
1. Worried About Your Job, What Sector a Risk?

Source :
1. RTTNews : Weekly Jobless Claims Jump To Seven-Year High, 11/13/2008 9:12 AM ET.

U.S. Trade Deficit To $56.5 Bln In Sept 08

Thursday morning, the Department of Commerce released its report on U.S. international trade in goods and services in the month of September, showing that the U.S. trade deficit narrowed by a little more than economists had been expecting.

The report showed that the trade deficit narrowed to $56.5 billion in September from $59.1 billion in August. Economists had been expecting the trade deficit to narrow to $57.0 billion.


Source :
1. U.S. Trade Deficit Narrows To $56.5 Bln In September, 11/13/2008 8:44 AM ET.

Dollar Rockets To New 6-Year High Versus Sterling

The dollar hit a fresh 6-year high versus the sterling and held its ground against other major currencies Wednesday morning in New York.

Traders reacted to indications that the Bank of England will further cut interest rates in a desperate effort to stem the tide of economic weakness.

On November 6, the UK central bank reduced the bank rate by a bigger-than-expected 1.5 percentage points to 3% in a bid to alleviate the mounting pressures on economy.

Wednesday, the Bank of England Governor Mervyn King said the Monetary Policy Committee is certainly prepared to cut interest rates gain if necessary. The BOE issued a the downward
revision to the inflation outlook in its quarterly report on inflation, cementing expectations for more rate cuts.

The dollar surged to 1.5200 versus the sterling, reaching its highest level since 2002. The buck has been rising steadily against the sterling for the past few months as traders flocked to the safety of the lower-yielding currencies.

Against the euro, the dollar was steady near 1.2500, hanging around yesterday's 2-week high of 1.2475. Back on October 27, the buck hit a 2 1/2-year peak of 1.2328.

The dollar continued to see very little movement versus the yen, staying near 97 Wednesday morning. The buck has stabilized since hitting a 13-year low of 90.88 a few weeks ago.

Demand concerns have kept the price of oil below $59 a barrel in electronic dealing, giving the buck a bit of a boost versus its petro-linked Canadian counterpart. The dollar hit a 12 -day high of 1.2125 versus the loonie, extending last week's modest gains.

Treasury Secretary Henry Paulson will speak Wednesday morning on the $700 billion financial bailout program. Democrats in Congress are ratcheting up the pressure on the Bush Administration to provide emergency assistance to the ailing American auto industry.

Related Post :
1. BOE Prepared to Cut Rate

Source :
1. Dollar Rockets To New 6-Year High Versus Sterling Wednesday morning,11/12/2008 8:02 AM ET.

Oil Prices Surge Above $64

Crude oil surged on Monday morning as the Chinese bailout plan may help struggling energy demand. Light sweet crude for December delivery moved to $64.13, up $3.09 for the session. Oil reached as high as $65.56 in electronic trading.

In an effort to battle the global economic crisis, China has unveiled ten major steps, the Beijing-based State Council said Sunday. The fourth-largest economy said it would relax its credit conditions, reduce taxes and plans a stimulus package amounting to about 4 trillion yuan or nearly $570 billion.

The dollar also saw modest weakness against other major currencies, which added to oil's hedge appeal. The dollar traded near 1.2900 against the euro, compared to a 2-year high of 1.2328 reached late last month.

Oil closed slightly higher on Friday but still lost more than 10% on the week. Oil hit as low as $59.97 late Thursday night, its lowest mark in 19 months.

Crude has lost more than 40% over the last 1 1/2 months amid ongoing demand worries caused by the global financial crisis. Oil has lost more than 55% from its record $147.27 reached in July.

At the pump, prices have continued to head lower. According to AAA's daily fuel gauge report, a regular gallon of gasoline fell to $2.24, down from $2.259 on Friday. A month ago, prices were at $3.291 and a year-ago gasoline averaged $3.10.

In other energy trading, natural gas added 48.3 cents to $7.24 per million British thermal units. Heating oil climbed to $2.0656, up 8.7 cents and RBOB gasoline added 5.66 cents to $1.4061.

In metals, gold surged $20.50 to $754.70 an ounce. Silver climbed 39.7 cents to $10.36 an ounce while copper added 13.75 cents to $1.8345 per pound.


Source :
1. Oil Prices Surge Above $64 11/10/2008 10:07 AM ET

5 Tricks of Trend Trading

by Rob Booker (www.robbooker.com)

Guiding Principles of this eBook.

1. I can teach you, in one hour of chatting together here, to identify trends.
2. You can find ways, when you identify trends, to earn consistent trading profits.

Definition of a Trend.

A trend is the general, dominant direction of a market or an asset. If we say that the trend on the EUR/USD is up on the daily chart, then we are saying that the EUR/USD has been moving upward and is more likely than not to continue to do so.

Richard Dennis, the guy I mentioned above, is not the inventor of trend-trading, but he certainly made it famous. A famous trader named John Henry became so rich he was able to buy his favorite baseball team, the Boston Red Sox. I traded the 5/13/62 rules for 18 months very profitably.

Do the all these trend rules work? Sure they do. People have made hundreds of millions of dollars following the rules. But are there other ways to trade with the trend besides the turtles, or my EMA crossover system? Of course!

The Tricks Aren’t Secret at All.

Everything you’ll read in this eBook is probably available elsewhere. For free. But I’m going to try to incorporate the most important elements of a profitable trend trading system. I am not going to talk about entry and exit rules – you can find those in the forum to share more ideas with each other in the forex factory that has been created.

But what I do share – the information below – is truly what has made the difference for me and hundreds of other traders around the world.

Trick #1: Verify First, Then Trade.

Most people totally ignore me when I talk about testing. When I train people to trade, I focus most of the training on helping them do their testing. I have developed spreadsheets, methodologies, statistical models – all designed to help traders realize that they must verify that a system works before they commit to trading the system with real money.

Don’t ever trade anything you’ve not tested first.

What does it mean to test? It means that you propose some simple rules for trading. Then you go back in time, manually or mechanically, and you find out how those proposed rules would operate over the course of hundreds of trades. That’s right: hundreds of trades.

Think about it for a moment: if you are not confident about your trading, it’s most likely because you have doubts about the outcome of the trades you are taking. And if you are doubtful about the outcome, then you need to do more testing until you have a better sense for what’s going to happen when you open a trade.

Trick #2: Become Obsessed with One Area of Focus.

Discipline yourself to focus. Diversification is good for your portfolio. It is not good for your career.

Let’s look at some examples. Think of the very best attorney or doctor that you know.

Does that person specialize in one area, or does she practice law or medicine across a huge subject area? My guess is that she is known for one type of legal specialty, or as a doctor, she is a cardiologist (hearts), radiologist (treating cancer), or something else.

The highest paid professionals are specialists. Why should that be any different for you?

You are wise to diversify the investments that you can’t watch closely. You don’t want to commit your entire life savings to forex. You might have money saved in the equity in your home, some in a retirement account, some money in a bank savings account, and then some in a forex trading account.

But if you are going to be a forex trader for a living, then it makes sense – with respect to your currency trading, to focus on a currency pair, a system for trading that pair, and a time frame for watching that pair. If you focus on one currency pair to start, you can become as much of an expert as possible in that one area. How does this relate to trend trading? It is the heart of the issue, it is the foundation for you to become successful as a trend trader.

Let’s say that you read my 5/13/62 eBook and you decide that you’re going to focus on that system. Becoming obsessed with one area of focus means that you set aside time every day to test 50 historical trades. And that you only watch one currency pair to start. And that you only watch one time frame. And you become an expert in that system, on that one currency pair, in that one time frame. If you look at 1,000 trades with those parameters, you are going to become an expert. If you become an expert, you are going to trade profitably.

Trick #3: Different Trends on Different Time Frames.

The EUR/USD can be trending upwards on the daily chart, but on the 5 minute, it can be trending downward.

Really? Is that possible? Absolutely!

Think about it for a moment – if you have a long term, daily, dominant move upwards on the EUR/USD, it’s possible that in the shorter term we could see a movement in the opposite direction. So remember, if you want to be a trend trader, you can choose to follow the trend on a variety of different time frames.

If you have a full time job, you might look at trends on the daily and weekly charts. These trends take much longer to start and finish – but they are worth a lot of pips – even more than 1,000 pips.

If you are able to trade during the day, you might look at the very short term charts. I have been testing a new trend following system that works even on the 1 minute charts. I don’t trade from the 1 minute charts (at least right now) but I would be willing to follow a trend on just about any time frame. The point is that each time frame can have its own trend.

Trick #4: Trend Trading Requires Courage & Money Smarts

If you want to become a trend-trader, you are going for the big moves. You are NOT going to be trying to get 10 pips on each trade (I talk about that here: Strategy10.pdf. You’re going to want to get 50 to 500, and maybe even many more pips, when you are trend trading.

To do this you are going to have to commit yourself to a patient process of waiting for a trend to develop, and then to stay in your trades. Most currency traders are focused on the short term – and there are lots of jumps up and down in the short term. Have you ever noticed that after a major economic release, a currency pair will initially move in the direction you expect it to go, but then all of the sudden it will move the opposite way?

Take, for instance, a Non Farm Payroll report where the number is low, or in other words, “bad” for the US Dollar. And then, all of the sudden, the US Dollar grows stronger anyway! This infuriates traders. I get at least 50 emails every time a major economic report comes out, with questions just like this. It’s a great question. And the answer is often that the trend was more dominant than the news.

Let’s take the example of a recent downtrend in the GBP/USD on the 1 hour chart. Move on to the next page and let’s see the example:

Figure 4.1. The GBP/USD, on the 1 hour chart, temporarily spiked upwards after a Non Farm Payroll report.


But soon after, the major trend continued.

As you can see in the chart, a small spike upward really didn’t mean anything. It was a temporary moment of market chaos after the U.S. Non Farm Payroll report was released.

Do you see how short term news does not necessarily have a major impact on the trend? I say “necessarily” because I want you to know that it’s possible that the Non Farm Payroll could have started a reversal of the trend. But it did not. Once we saw that the previous trend was going to continue, then we could confidently trade in the direction of the dominant trend.

In the case of the chart above, the smart money stayed with the trend.
The other element, besides courage, is what I like to call “money smarts.” This means that as a trend trader, you’re going to keep your trade size small. To ride out a trend, as in the example in Figure 4.1, you have to be able to take a big temporary loss in the GBP/USD before it starts trending in the downward direction again.

Does that make sense? As a trend trader, you’re going to have to watch a currency pair move against you, and you are going to not only require the courage to stay in the trade, but an account balance that can withstand the loss.

Have you ever made a great trade, but you couldn’t stay in it long enough because you took a big loss? Meaning, you made the right call on the direction, but you got stopped out before the big move? The answer to this is that you traded too large. Scale back your position size if you’re going to ride the trend.

Trick #5: TV People are Wrong

Watch out for the news. Be wary of commentators on CNBC or Bloomberg that say things like “the trend on the USD is certainly up,” or “traders would be wise to scale back their long dollar positions because the trend is going to be down.” These people don’t trade your account. They have no idea what chart time frame you are watching or what trading system you follow.

In the past 4 years, I have worked with approximately 1,060 traders from around the world (as of October 31, 2006). Most of them, at one time or another, were scared out of a really good trade because they heard something on television, received an email, or were influenced by a friend.

If you watch TV and you see some windbag get fanatical about one trade or another, then run away from your television as fast as you can. It is better to smash your television than it is to base your trade ideas on what you learn there. Keep in mind that I didn’t say that you should NOT watch business news. I just said that we need to be careful about what we allow ourselves to listen to.

Conclusion

You can get rules for entering and exiting trend trades from all over the Web. They’re easy to find. What makes the difference in trend trading is doing the little things right – the stuff that most traders overlook. For me, it’s all about discipline in your testing, in your trading, in your money management.


Related Post : Trend Trade

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I hope this article give us inspiration.
Thanks (Roz).

Is It Wise To Trade The Economic Data Releases?

If you trade the forex markets you will know that there are important market-moving economic data releases almost every day.

There will often be US-related data releases between 8.30 and 10.00 (US time) which can have a major effect on the dollar pairs and if you trade other currencies, then you also need to pay attention to specific news from that country. For example, you need to keep an eye out for UK-related news if trading one of the pound pairs.

When trading forex you always need to be aware of what news releases are scheduled for each day, but is it possible to actually make consistent profits trading off the back of the news itself?

Well in my opinion it is not possible to make sustainable profits trading these economic data releases simply because any subsequent movements after the announcements are often highly volatile and highly unpredictable.

They are basically open to interpretation, and any subsequent movements are based on traders' initial reactions to the news, which in itself can be unpredictable.

Sometimes you will find that straight after a news announcement, the market will move strongly in one direction or the other. This can either continue, or completely retrace and head in the opposite direction, making it impossible to trade.

This is because there is often a knee-jerk reaction to the news, and then a subsequent move a few minutes later once traders have fully digested the figures.

You will sometimes find that seemingly good news for the dollar, for example, will see a surprise sell-off and vice versa. It's all about trader's perception of the news and is basically too unpredictable to trade with any confidence so my advice would be to stay away from the economic data releases, because there are plenty of easier ways to profit from the forex markets.

This site (forexfactory) provide forex economic news all of time, i usually look at this site to monitored every forex economic news.


Source :
1. Forex Factory
2. Is It Wise To Trade The Economic Data Releases?

How To Earn Serious Money With Forex

The currency trading (Forex) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover.

Markets are places to trade goods. The same goes with Forex. The Forex goods (or
merchandise) are the currencies of various countries. You buy Euro, paying with
US dollars, or you sell Japanese Yens for Canadian dollars. That's all.

How does one profit in Forex?

Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.

The nice thing about the Forex market, is that regular daily fluctuations, say -
around 1%, are multiplied by 100! (in general Forex companies offer trading
ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of
currencies increased by 0.6% in the last 4 hours, your profit will be 60% on
your investment! Such can happen in one business day, or in a few hours, even
minutes.

You can implement your choice (the pair of currencies, the volume amount) under
any direction to which the market is moving, and yet make profit. It does not
matter whether the exchange rate is going up or down: you can always decide to
buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't
have to physically possess certain currencies in order to perform "buy" or
"sell" with them.

How do I trade Forex?

You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).

Before you finally activate the deal, you can still "freeze" it for a few
seconds. That enables you to either change the terms, or accept it as is, or
altogether regret the whole idea. The "freeze" feature is a unique service.

When your Forex deal is running (you hold an "open position"), you can monitor
its status and check scenarios online, whenever you wish. You may change some
terms in the deal, or close it (and cash the profit, if any, or minimize the
loss, if any). Moreover, some companies let you determine a "take-profit" rate,
with which the deal will close automatically for you, when and if such rate
occurs in the market. Meaning: you do not have to stay near your computer when
you hold open positions.


Source : By Various Sources

How to Avoid Fail as A Forex Trader?

"Define first the level of risk you dare assume. Start with a small position, and then build it up if it works" – George Soros

"Give me a stock clerk with a goal and I’ll give you a man who will make history. Give me a man with no goals and I’ll give you a stock clerk" – J.C. Penny

"If you go to work on your goals, your goals will go to work on you. If you go to work on your plan, your plan will go to work on you. Whatever good things we build end up building us." – Jim Rohn


It is a sad fact that 90% of forex traders fail, and many very quickly give up. Why? When we went through a phase of losing trades we treated it as a temporary setback and went back to the drawing board. We analysed the reasons of our failure and we sought the guidance of Top forex traders, Mentors and Coaches to put us back on the path of success and profitability.

In our opinion the high rate of failure for a new forex trader can be related to the six major obstacles that a forex trader faces, which are summarised as follows :

1. Poor Skills
2. Lack of adequate capital
3. Setting unrealistic targets and goals
4. Lack of Patience
5. Lack of discipline
6. High risk aversion.
   

If we look at the list, it becomes apparent that the failure is as a result of forex trading without having in place a proper forex trading System and a forex trading Plan– One that includes mind training, quality Forex education and strategies and sound money management rules.

So what are the Characteristics of a Successful forex trader? All we have to do is to reframe the liabilities listed above.

1. Adequate forex trading knowledge and understanding. You should seek services of good quality mentors and a forex trading coach.
2. Adequate capitalisation – Don’t be fooled that you can earn thousands every week from a starting capital of $500.
3. Realistic Goals – don’t expect 100% profit each month, it simply is not possible.
4. Have patience – don’t trade if you don’t have to. You should wait for a set-up according to your forex trading plan and system.
5. Have Discipline to follow your rules.
6. Understanding and Managing Risk.
7. And lastly the most important is having a forex trading System and a forex trading Plan.
   

If you look at the advice from the world’s most successful people or forex traders today, you will notice that they follow the guidelines as identified above.

High Probability Forex Trading

High probability forex trading is all about taking positions where the odds of you making a profit are massively in your favour. So whether you are a short-term or long-term trader you always want to be looking for positions where you are more likely to win than lose.

This sounds obvious but most traders don't take probabilities into account when trading, which is a shame because it's quite easy to do, and could result in them being far more selective about their trading, and therefore more profitable.

All you need to do is to rate each potential trade out of 10 regarding the probability of the trade being a winning one, before you enter a position. So for example if you are thinking about entering a short position, and the technical indicators heavily back you up, for example MACD and TRIX have crossed down, RSI and Stochastics are in overbought territory, and EMA's have turned downwards, then you may rate your chances of winning as good and may give this set-up an 8, 9 or even 10 out of 10.

Therefore this trade would clearly be worth entering because the odds of you winning are high. If however, the technical indicators are conflicting with each other, for example, then you may only rate this trade as a 5 or 6 out of 10, which means it probably wouldn't be worth trading.

So next time you trade the forex markets, you may like to try giving each of your potential trades a rating out of 10, based on the probability of it being a winning one, and only trade those coming in at 8 or higher. This way your win ratio will probably be a lot higher and your profits should hopefully increase because you are not trading those borderline trades that you shouldn't have traded in the first place.


Source :
High Probability Forex Trading

Short-Term Forex Trading

Forex traders trade over a number of different time frames, but today I'm going to discuss short-term trading and look at whether or not you can really make consistent profits trading over such a short time frame.

It's a very difficult way to make consistent profits. This is because when you screen down to the 1 and 5-minute charts, for example, you're basically just looking at noise. Sure there will be times when the price lends itself beautifully to technical analysis, but there will also be times when it's just drifting, seemingly at random.

Also, if you're constantly scalping all day you are likely to get a lot of small wins, but also a lot of times when your stop loss is hit, often immediately if trading short term charts.

Over time this can be quite stressful and not a particularly enjoyable method of trading. Yes there are traders who trade this way and make very good profits, but I myself prefer to look at 30-minutes, 1-hour, 4-hour and daily charts to find high probability trades which can play out over a few days.

After all you can often make just as many pips from one or two good longer term trades a week, than lots of smaller positions, and it's unquestionably a lot less stressful. You don't even need to be at your computer all day either because you can just set your stop loss and limit orders and just walk away.

So overall my own opinion from my trading is that short-term trading is a difficult and stressful way of trading, but that's not to say that's it can't be profitable, it most definitely can, but it's just not for me.

Successful Forex Trading Is All About Probabilities

When you first start to trade forex, it's very easy to test out a technical indicator or two and then apply it to your first few trades, or even just trade based on your gut feelings, but if you are serious about becoming a long-term successful trader then you need a well-thought out strategy.

A good forex trading strategy is one where the probabilities are in your favour for every single trade you make.

For example, I don't believe in entering a position where one single technical indicator provides a good signal, but instead rely on several indicators to all indicate either a buy signal or a sell signal in order to enter a trade with confidence.

I also use different time frames as well to show the overall trend. For example, if I'm analyzing a 5-minute chart and all my indicators indicate a buy signal, then I will check the 30-minute chart as well to make sure that we're not in an overbought position or that we are in a strong downwards trend.

So always try and create a trading system that will provide you with high probability trading positions as this is the key to making long-term profits from forex trading.

Slow Stochastics Key to Dollars Forex Indicator

Correlate Multiple Indicators for Maximum Profit

Slow Stochastics for the technical trader can be most effectively used in conjunction with another oscillator such as the RSI (Relative Strength Index). These two indicator by themselves do not become the "holy grail" for the budding forex trader. However, they can be used to observe momentum shifts within charting patterns.

Trading Tip:
Multiple indicators correlating within multiple time frames leads to the perfect moment to enter the trade. Time frame overlays with correlating indicators are the sign posts for entry into your forex trade.

The original stochastic indicator, developed by Dr. George Lane, is plotted as two lines, %K line, a fast line, and %D line, a slow line.

The %K is far more sensitive than the %D line. The % D line is the moving average of the %K line. And the %D line triggers the trading signals. "Trigger lines" are drawn are typically drawn at the 80% and 20% levels. A signal may be generated when these lines cross.

The 80% value is often used as an overbought warning signal and the 20% value as an oversold signal.

Signals are generated in three main ways:
1.When the 80% or 20% lines are crossed.
2.Crossovers between the %D and the %K lines.
3.Divergence between the stochastic and the underlying price.

A Simple Way To Increase Your Forex Trading Profits

Many people spend years looking for a trading system that will make them consistent profits but the fact is that most people ultimately fail to do so. However the truth is that even the most basic of trading systems can be made into a money-making machine if you follow this one simple strategy.

Successful forex trading is all about probabilities, and finding high probability set-ups is the key to making winning trades on a consistent basis. Indeed this is why technical analysis is so popular because it's basically a tool that enables you to find instances where several key indicators correspond to give a clear buy or sell signal.

So how do you increase your overall profits?

Well assuming you are currently using some kind of trading system, take a few minutes to look through some of the positions you've taken in recent weeks. You should find some trades that you took that turned out to be winners and you remember being extremely confident about when you opened the trade. You should also find some losing trades which you didn't really have any confidence in before placing the trade.

Now to increase your profits you should only be trading these high probability set-ups that you are extremely confident in, based on past performance and experience. Therefore before each trade what you want to do is to give each potential trade a ranking out of 10 based on how confident you are that a position will turn out to be a winning one.

It's unlikely that you will ever give a trade a 10 rating because no-one can be 100% sure about a trade, but you should get plenty of 8s and 9s. Now you should concentrate on only trading these high ranking positions, ie 8 and above, and ignore the rest.

This simple strategy can potentially have a dramatic effect on your overall profitability and can even turn an unprofitable trading system into a profitable one so it's well worth doing if you want to increase your success rate.

Related Post :
Is there Any Forex Trading System Holy Grail?

Source :
Here's A Simple Way To Increase Your Forex Trading Profits