10 trading tips you need to know for 2020

Some tips to help your trading going into the new year

EagleFX
No doubt, a quick internet search will yield a plethora of forex trading tips and strategies. The problem with many of these are now dated and are either no longer valid or need to be tweaked so as to be applicable to current lines of thinking.

The tips and forex strategies for 2020 that you see listed below can be put to use immediately and should also prove helpful throughout the coming year.
ForexLive

Tip #1: Embrace Cryptocurrency Trading

If you’ve been bypassing digital assets, now is the time to give them a serious look. Massive profits have been generated by those who traded cryptos throughout 2019, as these assets provided clear, strong price trends to trade upon.

Top brokers such as EagleFX are now offering a wide variety of cryptocurrencies for traders to trade on, thus providing unlimited profit opportunities.

Tip #2: Work Smarter Rather than Harder

Modern platform tools render the analysis process easier and more accurate than ever before. Move past any old, time-consuming analysis processes and embrace these tools in order to save time and boost profits.

Tip #3: Don’t be Fooled – The Trend Is Still Your Friend

Yes, there are plenty of new strategies that require you to trade against the trend, but don’t be fooled. Even in 2020, trend trading is still the way to go. Trading against the trend consistently will only lead to unnecessary losses.

Tip #4: Protect Against Unexpected News

If 2019 has taught us anything, it would be that unexpected news can wreak havoc on the markets. Always set a stop loss. Not because you expect to lose, but instead to protect your account from the potential of a large loss brought about by unexpected news.

Tip #5: Always Use a Demo Account

Even if you’ve been trading for years, always use a demo account to test strategies. Brokers such as EagleFX offer unlimited demo accounts with no obligation and no deposit requirements. Why test a strategy with your hard-earned money when you can test using mock funds?

Tip #6: Never Trade The News

For years we heard about trading just prior to, during, or just after market altering news was released. Today, we know that the best plan of action is to look for opportunities to trade once the dust has settled. In other words, allow the price action tell you whether the news caused the market to be bullish or bearish.

Tip #7: Utilize Using a Mean Reversion Tool

Want to avoid entering into overextended markets? Use EMAs as a means reversion tool. Watch for the bearish or bullish signals that come from seeing an asset price move above or go below your selected levels.

Tip #8: Get to Know Your Broker Better

Your broker is much more than a platform provider and payments processor. Let’s say that your power goes out and you need to close a trade. Is your broker available around the clock? Can they be reached via phone? Brokers such as EagleFX take a “client first” approach and therefore make a good choice for those seeking a full-service firm.

Tip #9: Stop Ignoring Long-Term Trends

There is little to be learned from short-term price analysis. Long-term price action tells so much about what to expect from an asset. Consider ditching the less reliable short-term trades and opt instead for the lessened risk level that comes with being a wise and patient long-term trend trader.

Tip #10: Limit Financial Risk Using Micro Lots

Forex brokers such as the aforementioned EagleFX now allow their clients to trade in micro lots, using trade sizes as small as 0.01 lot. If you’re new to trading or simply are not confident in a trade, but want to trade anyway, consider using these smaller trade sizes as a means to limit financial risk.

As time passes, traders are provided with more education, better strategies, and are given access to incredible brokers such as EagleFX. Clearly, there has never been a better time to trade forex, with 2020 looking to be a year of record-setting profits for those that do.

Consider using the tips and strategies listed here to help ensure that you make the most of the limitless profit opportunities that come your way in the coming year.

This article was submitted by EagleFX.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

Examples of trading with fresh sentiment

A case study in sentiment trading

A few weeks ago I wrote a post here on trading fresh sentiment. From September 23 – October 08 I kept the news flow going for Justin over the European am session, so I thought I would put together a few examples of fresh sentiment trading that there was during that time. I meant to post this article last week, but I made the fatal mistake of downloading Apple’s new OS, Catalina, to my computer. Big mistake! It took me three days to restore my machine to the condition it was before I downloaded Catalina!  All the examples below are trades that I have actually taken and you can see the entries and exits marked on the charts with little arrows, so I have tried to make this as useful and realistic as possible. 

Example 1

When a hawkish Central banker turns dovish

On Friday 27 September, the BoE member, Michael Saunders, made a comment which moved the GBP.He made some dovish comments which the market quickly reacted to. Why? Because Michael Saunders is known as a hawkish board member. Therefore, when a hawk makes a dovish comment it is generally going to be market moving. In the post I asked two questions designed to help us engage with the news:

  • Is it new? Yes, prior to Saunders comments we expected him to maintain a hawkish bias
  • Is it significant? Yes, as a sooner than expected rate cut will bring the GBP down in value

Here was the trade I took, as I was expecting the AUD to remain strong on the session, so a retracement provided the perfect time to short GBPAUD. See entries and exits below for a 40+ point profit.

A case study in sentiment trading

Example 2

US manufacturing plummets and sinks the USD 

On October 01 the US ISM manufacturing index printed a low of 47.8 vs 50.0. This was the worst report since June 2009 and was the catalyst for the recent concerns that the global slowdown is hitting the US’s shores. It also came at a time as the USD was gaining in strength. The shock of the data point was obvious and the weakening dollar, associated with geo-political risk, made Gold longs a perfect choice for this trade. Here are my trade entries and exits below. I closed the long gold position after the NFP data entering at $ 1474 and closing at $ 1503.  

Sentiment
Fresh sentiment
Fundamental analysis
So there you have it. Trading with fresh sentiment and a few real trade case studies. If you are still struggling with this concept go back to this post and read it again. Go over the forexlive thread for the day in question and read the context of the day. (Start with Eamonn’s wrap and move your way through the day and notice how the mood changes with the headlines). Finally, consider getting a coach to help you work out how to recognise these sentiment shifts. It takes a bit of getting used to if this is totally new, but it soon becomes intuitive after a little practise

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

The top seven trading tips from FX analysts

Some tips on how you can improve your trading

IF 1
This article will give you some helpful tips from a professional analyst and full-time trader’s perspective. If you are just starting out on your trading journey, or even if you are some way down the track, read below for seven top tips in FX trading.

Tip #1: Don’t ignore trading psychology

It is easy to see why trading psychology is an area that is often overlooked by traders, especially when they are starting out.

However, seasoned traders, who have spent years in the markets, understand that the traders who are going to keep going for the long haul are those who have mastered their trading psychology.

Trading is an incredibly emotional experience. The cold reality is that either you are going to control your emotions or they are going to control you. How you react and respond to those emotions will determine your long-term market success.

So, tip #1 is to take time now to research and invest in your trading psychology if you have not already done so.

Tip #2: Don’t ignore fundamental analysis

Technical analysis is intuitive and relatively easy to each. However, fundamental analysis is a slightly more involved skill and can seem impenetrable at first. Fundamental analysis is simply the ability to understand why the market is moving in a certain direction.

For some, who see fundamental analysis as irrelevant, it is worth reflecting why nearly every single institutional trading firm invests large sums of money to get economic releases and analysis delivered to their trading desks within seconds.

The Bloomberg terminal, for example, costs around $ 2000 per month. If technical analysis alone was sufficient for profitable trading then these serious trading firms would not invest so heavily in tools that were useless.

Some simple ways to fast track your fundamental analysis skills are to invest in a news squawk, read analysts regularly, and get some 1:1 coaching. It will be an investment that will pay dividends in the long run and avoid costly early mistakes.

Tip #3: Don’t over-leverage

One of the most important aspects of trading to grasp is the proper, and professional use of leverage. The use of leverage is arguably the most important aspect of risk management and proper risk management is the top priority for all professional traders.

Managing risk is going to be the single most important factor in your success or otherwise as a forex trader.

You must pay attention to this lesson, as this may be the one factor that is hindering your progress in the markets, as the improper use of leverage will make long term success almost impossible to achieve in the forex market.

You can’t trade if you have no capital left. In contrast, the proper use of leverage will prevent you from destroying your account, preserve your capital as a trader, and make you an attractive trader for high net worth individuals to invest in once you are successful.

Tip #4: Don’t ignore recent market sentiment

IF 2
Sentiment analysis is simply understanding the current mood of the market. The market, like a person, is subject to different moods. Correctly reading the market’s mood is crucial in making profit.

Now, if you misread a person’s mood you may end up accidentally feeling the effect of a person’s bad mood.  In a similar way, if you are unaware of the market’s mood or sentiment, then you may end up with a losing trade.

The market is an emotional melting pot, prone to wild mood swings which can be overly optimistic or very pessimistic. So how do you correctly read sentiment and keep in step with the market’s present mood?

You simply read up on the last two market wraps to see what the market is focused on. Did a central bank cut interest rates unexpectedly?

Was there some really good or bad data out? Try to trade in step with the market by looking at what the market is focused on. This is a skill that needs to be practiced and you will get better at over time.

Tip #5: Don’t look at technical analysis as the holy grail of trading

When traders begin their trading journey they will often have a fascination with technical analysis. Almost all traders have taken part on the quest to find the holy grail of trading systems. The thinking goes, ‘If I could just find the right system I will have cracked it’. 

Hours are then spent back testing through the charts, switching between systems week to week, all in search of the ultimate technical system. All too often is to little avail because that perfect technical setup fails and you are left wondering why.

Eventually, those traders who persevere, will realize that the market is a fluid movement of price that reflects the economies across the world. Fundamental and sentiment analysis are the guiding lights on price.

Technical analysis is simply the means by which successful traders define and limit their risk in a sensible way once the fundamentals are in place. In short, technical analysis is a great servant, but a terrible master.

Tip #6: Don’t ignore your trading environment

IF 3
It is also important to consider your trading environment. What is the layout of your trading area? If you are working on a trading floor you have a number of advantages. You have the squawk talking and the news terminals are constantly there for you.

Your colleagues will be discussing events and the team will be given a session brief. The environment is conducive for the purpose of trading. Do you have enough screens to trade properly?

Trading from one screen can be very difficult, especially trying to stay on top of multiple news stories, open the charts, and conduct research at the same time. So, having a minimum of three screens would be really helpful in your trading environment. The layout would look something like this:

• One screen for your news feeds and squawk
• One screen for your trading platform
• One screen for your research screen

By being able to react quickly and keeping well informed you will find that mistakes will be less likely to occur. A multi-monitor setup will help you achieve this.  Also, the location of your trading desk is important.

Are you trading in the middle of a room with two dogs, four children and a wife all competing for your attention? Do you have a dedicated space? Is your chair comfortable?

Now, you may not be able to achieve a complete solution straight away, but you should move towards it. Pay attention to your physical environment because it will impact your trading performance.

Tip #7: Always be aware of when high impact events are coming out

You see a great news story and price is in a great technical place. You buy your instrument and then, 20 minutes later you see that you were stopped out on a large spike. You forgot to check the news and some top-tier scheduled data was released.

A school boy and preventable error. You either write the timing of the data down or just know when the news relevant to your instrument is going to be released. Get into the habit of looking forward into the events calendar before placing a trade

By following these seven tips you will save yourself time, money, and wasted energy pursuing the wrong avenues in your trading ventures.

This article was submitted by InstaForex.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

The key to trading fresh sentiment

Sentiment, like food, is best traded fresh.

Sentiment, like food, is best traded fresh.

Firstly, what is sentiment?

Sentiment is, quite simply, the present mood of the market. The market, like people, has different moods depending on what has just happened. As traders we are always wanting to know what the current sentiment is. Now, trading sentiment is a basic market skill as we try to make sure we are always trading in line with market sentiment (Unless of course we are fading market sentiment, which is a valid pursuit, but the subject of a different article). So, what are the keys to trading fresh sentiment? In this article I will briefly present the case that the two key concepts to trading fresh sentiment are as follows:

  • Picking which sentiment change to focus on and;
  • Trading that sentiment while it is still fresh

Picking which sentiment to focus on

The very best time to trade sentiment is when we notice the sentiment change. Sentiment can change on a number of different issues. It could be a surprise data point, a political development or some other unexpected event that causes a currency to move. The point is, we have our opportunity from changing sentiment.

Not all sentiment is equal

One of the challenges of trading sentiment is that every day there is a plethora of different data points and comments that flow across feeds. Not all of those data points move the market, so the first thing to realise is that sentiment varies in importance. Now, this is obvious in that a central bank interest rate decision holds far more sway over a currency than a retail sales release. However, aside from the stark and self-evident differences, it is important to recognise which sentiment is going to be important ahead of the event. Let’s take a worked example with the CPI data released on Wednesday for Canada.

Canadian CPI this week

The Canadian CPI data release was my key focus for this week as it was widely known, prior to the CPI release, that the Bank of Canada was in a unique position amongst its central bank peers. See here for the full rundown on the BoC I wrote last week where I commented:

“The Bank of Canada remains the only major central bank to not turn explicitly dovish. However, in an increasingly bearish central bank world the pressure is increasing on the Bank of Canada to follow suit”

This means that the market was just waiting for a reason to sell CAD as the expectations were that the BoC will follow their central bank peers. They just need a data reason to nudge them that direction. Also, we know that the BoC are not reluctant in cutting interest rates and surprising the markets, as they did here in 2015.

So, that sets the expectations for the potential of a strong CAD sell off if the CPI print was a negative read. That would be the ammunition to fuel increased expectations of a coming BoC dovish tilt, the sentiment change. This would have resulted in a strong sell off for CAD. In the event, the release was a positive uptick in inflation, so the chances of a September rate cut from the BoC faded into the background. The trade was not there. Move on to the next opportunity.

The key takeaway

The key point is that the market moving event, with the most force behind it,would have been the negative CPI print. In this way, we could be poised and ready to take an immediate CAD short out of the event. It would have been a high conviction trade.So, you need the following elements for a decent sentiment trade:

  • A clear bias going into the event
  • A data release or event that clearly confirms or contradicts that bias. In other words it is clear that the market will respond in a certain way.

Now let’s move onto the next principle, trading sentiment while it is still fresh.

Trade the sentiment while it is still fresh

Let’s say, for the sake of argument, that you took a similar trade like the one outlined above that actually played out. Now, you missed trading out of the event because you were away from your desk, at sleep or at work etc. There is often a second chance to enter a trade on that sentiment in the next 24-48 hours. Now, you don’t want to just chase the price selling or buying at market. So, in these scenarios wait for a retracement to a key level. Then trade back down to those prior lows. Below is an example of a trade I took this the week on the AUD/NZD pair that illustrates this.

AUDNZD: An example of trading sentiment while still fresh

I have been core long on AUDNZD since August 07 and remain so at the time of writing. You can read my reasons for that in the previous links, but the bottom line for the AUDNZD longs was the growing diverging outlook between the RBA and the RBNZ. The RBA minutes out on Tuesday this week further confirmed that divergence and the market chances of a rate cut from the RBA went down to ~12% from ~50% the previous week. So, having missed the release of the minutes overnight I set orders to buy on stop around the 50% Fib level and took profits at the prior’s high. Check out the details below. My entry is the small blue arrow and exit the small red arrow. My order was filled about 12+ hours after the minutes, but I got it while it was still fresh.

Sentiment shifts

So, there you have it. Sentiment is a dish best served fresh.  I like the look of the NZD business confidence data out next week with the RBNZ making it their focus. A weak print will confirm that bearish bias for the NZD and I favour, at time of writing, AUDNZD longs on a weak print.

 Yesterday provided another excellent opportunity for a fresh sentiment trade to take AUDJPY shorts. With risk clearly off as China retaliated against US tariffs the JPY stood to gain in safe haven flows. The AUD stood to lose due to its close relationship to CHina’s economy.  An AUDJPY  short made obvious sense and it was reasonable to expect sellers. Here was the post I made to HYCM’s telegram channel just before the large AUDJPY drop (where I work as the Chief Currency Analyst). 

AUDJPY

So, trading fresh sentiment is a good source of profitable trades and I am pleased that I closed out Friday with such a clear example. Not to mention that it was very nice to come back to 70/80+ points on a AUDJPY trade, and I know forexlive readers will all appreciate that warm glow;-). 

What sentiment trades are you looking at for the coming week? Please post in the comments section below and help reinforce this concept.

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

The forex trading strategy basics

The forex basics

The forex basics

Exchange of a nation’s currency for that of another is Foreign Exchange (FOREX). The foreign exchange market is a largest non-stop financial market in the world where currencies of different nations are traded.

This Forex market is bigger than three times the aggregate amount of the US Equity and Treasury markets combined. This is not the traditional market as there is no physical location or central trading location.

It is operated on a global network of banks, corporations and individuals trading one currency for another. Foreign exchange market conditions can change at any time in response to real-time events.

The purpose of investing in Forex trading is to earn profits from foreign currency movements. Forex trading is always done in currency pairs. Two currencies that make up an exchange rate are called currency pair. Investors who trade currency pairs need very fast buy and sell Forex signals.

Without these Forex trading signals, it is difficult to decide market conditions in terms of entry or exit in the market. These Forex signals and trade alerts will indicate you for going out or coming into the market.

Many Forex companies, who have been involved in this kind of business, have developed forex sms signal services. Several Forex signal providers got a “free test” also that is really beneficial. 

Initial investors don’t go for in details; they often rely upon one or two technical signals to decide when to buy and when to sell a currency pair. When they get a good understanding of Forex market, they start to use Forex signal software to decide when to pick up a forex entry point and forex exit point.

It is not very difficult to find a automatic Forex signal indicating when to buy and when to sell a currency. An investor should compare his investment to alternative options. It is wise to buy currency you expect an increase in value relative to the currency you are selling.

In an open trade, a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.

To gain high profits in a Forex trading, you should use a Multi-Target Exit Strategy. This strategy is based on providing the customers with multiple acquiring profit and stopping losses.  This Forex trading strategy allows you to enter multiple Take Profit and Stop Loss levels. 

This Forex strategy also requires that the trader follows the trade in real time. A Forex trading strategy with a high profit percentage rewards you mentally also as it will boost you up for further trade and will make it enjoyable. A string of profits will increase your morale.

In Forex trading system, it’s not obligatory to buy some currency to sell it later. There are situations for buying and selling any currency without actually having it.

Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF).

All of them are traded against the US dollar (USD). A technical analysis is also made that presumes all the information about the market and further fluctuations in prices. They too consider factors, economic, political or psychological

This article was submitted by LegacyFX.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

Key events and releases for next week’s trading

Fed Chair Powell speaks at Jackson Hole Economic Policy Symposium on Friday

The key event next week her until Friday at 10 AM ET/1400 GMT, when Fed Chair Powell is scheduled to speak at the Jackson Hole Economic Policy Symposium.  The title of his speech is “Challenges for Monetary Policy”.  

Chairman Jerome Powell will speak at the Jackson Hole economic policy symposium

The meeting minutes from the last FOMC meeting will be released on Wednesday at 2 PM ET/1800 GMT.   The market is very sensitive to what the Fed might do at their next policy meeting in September. There is a 100% chance for a rate cut, with the market currently pricing in a 32% chance for 50 bps.  

Other key events and releases for the week include: 

Tuesday:

  • RBA monetary policy meeting minutes. 9:30 PM ET (Monday/0130 GMT
  • Canada manufacturing sales.  8:30 AM ET/1230 GMT
  • FOMC member Quarles speaks. 6 PM ET/2200 GMT

Wednesday

  • Canada CPI. 8:30 AM ET/1230 GMT
  • US FOMC meeting minutes.  2 PM ET/1800 GMT

Thursday

  • France flash manufacturing/service PMI.  3:15 AM ET/0715 GMT
  • German flash manufacturing/service PMI.  3:30 AM ET/0730 GMT
  • EU flash manufacturing/service PMI.  4 AM ET/0800 GMT
  • US flash manufacturing PMI. 9:45 AM ET/1345 GMT
  • Jackson Hole economic policy symposium begins. Day 1 

Friday:

  • New Zealand retail sales.  6:45 PM ET/2245 GMT
  • Canada retail sales. 8:30 AM ET/1230 GMT
  • Fed chair Jerome Powell speak. 10 AM ET/1400 GMT
  • Jackson Hole economic policy symposium. Day 2

Saturday:

  • Jackson Hole economic policy symposium. Day 3

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

8 things that worsen your trading performance

What are some of the biggest traps you can fall into as a trader?

FBS 1

Trading is a process that is different for every participant: a great deal of success depends on personal qualities and strengths. And yet, a number of things are universal – the similar challenges everyone goes through and the common traps that at some point await all traders.

In this article, we have gathered the potential killers of trading success as well as the recommendations on how to eliminate them or turn the situation around in case you are already suffering.

#1: Being too lazy to test things

It can be tempting to just start using a new trading strategy right away to bear monetary fruits as soon as possible. However, launching into the unknown is not the best idea. Practice makes perfect and it’s always better to test things first.

As a result, use the potential provided by demo accounts to its most: test the services provided by your broker, test a new strategy, work on your risk management and position sizing.

#2: Extreme emphasis on the result

A lot of traders expect to see the mind-blowing amounts of profit literally in no time. Others get fixated on the idea that every trade should be profitable.

We won’t argue that trading should be to your benefit, that goes without saying. However, obsession with rewards alone won’t do you any good. After all, the rewards won’t achieve themselves.

All important things – analysis, strategy, risk management – are the elements of the trading process. So, while it’s absolutely necessary to have a goal (a reasonable one, for sure), once the goal is set, you should throw all your strengths and attention to the process of trading.

Learn from each trade you make – your own experience of observing and dealing with the market is your most precious asset. Focus on the key elements of trading mentioned above and try to improve your skills in each of them.

#3: Lack of proper money and risk management

The reasons for this misstep may be different: laziness that we have already mentioned before, ignorance, the lack of patience. Bear in mind that professional trading is not a game and that every time you put your money at stake, not just some abstract numbers you see on the screen.

In addition, be always aware that by nature people are inclined to underestimate probabilities of bad events. Accept the idea that there will be losses and your job is to make sure that they don’t put devour your deposit. Be prepared: don’t risk too much and use Stop Loss orders.

#4: Forgetting bigger timeframes

Some intraday traders – beginners – perceive timeframes from daily and bigger as something remote and unrelated to what they are doing. Yet, bigger timeframes show the bigger picture.

Although fractals we see on the smaller timeframes are the first to show a change in the market, they may always be just ripples that don’t mean a new trend.

As a result, make sure that you consult large timeframes on a regular basis to ensure that your short-term trades don’t clash with some important long-term support/resistance levels.

#5: Constant hurry

Ask yourself a question: are you a patient person? Do you have this urge to open a trading order, no matter buy or sell, right after you have turned on your trading software just for the sake of doing something?

Such a hurry to start trading is quite common these days when the process of setting up a trade is swift and easy. Another form of the illness is when a person sees a rapid movement of the price and has a sudden panic attack, seized by the fear of missing out (FOMO) a trade of a lifetime.

The problem is that if you are in a hurry, you will probably cut yourself a lot of slack in market analysis and get into something you shouldn’t have got into. The odds are that by doing so you will forgo risk management.

In order to avoid such situations, try to consciously monitor your psychological condition during every trade. Make it a routine checkup: every time you feel that you are moving too fast, slam on the brakes, take a deep breath and think some more.

#6: Not understanding the essence and logic of the market

Often enough traders look at a chart but don’t really see it. Remember that the price action is a result of the activity of all market participants or that a pullback comes after every big move. It’s also worth noting that a lower high in an uptrend is a worrying sign for bulls or that breakouts of important levels may be false.

Furthermore, candlesticks and their patterns can tell you stories about what happened with the price; that technical indicators don’t bring new information but are derived from the price; that fundamental economic disparities shape the longer-term trends and the market is driven by expectations in a greater deal than by events themselves, etc.

To become better at reading the market, make your forecasts for the instruments you do not trade and see how the situation turns out. Watch the price’s reaction to economic releases. Apply every bit of the knowledge you get to practice.

#7: Overanalzying

Regrettably, there may just be too much of a good thing. You should always be able to see the price chart below all the lines you have drawn and all the indicators you have applied – no jokes!

To be honest, it’s hard to see how you may need more than 3-4 indicators: there is little point in applying indicators that have similar functions. In addition, a bigger number of indicators will simply make a trading strategy bulky and dysfunctional.

As a result, cut the excessive things and use the remaining ones efficiently.

#8: Poor planning and organization

In some endeavors, it pays off to be spontaneous. However, trading is rarely one of them. It doesn’t mean that trading is not creative, but that it requires disciplined execution on many levels.

Here we stress not only the necessity of a trading plan with the technical details of your trades but also the need to have a daily routine in place. Make sure you organize your activity carefully. Assign defined periods of time to trading and make sure you stick to them.

Conclusion

Our most sincere advice is for you to try and actually apply the recommended solutions. As it often happens in trading, things listed above may seem like banality and easy stuff.

Still, many traders put off amending the situation and forget about the simple steps that can make their trading life much better. What if a time to become a mindful trader has finally come?

This article was submitted by FBS.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

Inside bar: Your new friend in trading

A technical signpost to watch for

A technical signpost to watch for

There are a lot of candlestick patterns. Some are more distinctive, some are less. It’s easy to be on the lookout for pin bars – candlesticks with long upper or lower wicks that indicate a reversal.

However, such candlesticks, though quite common, do not appear all the time. Plus, there are other patterns worth paying attention to, for example, ‘inside bars’. Monitoring inside bars is much less intuitive.

Yet, inside bars can be no less helpful and provide traders with trade ideas that have a big probability of success. In this article, we have gathered some useful tips about inside bars.

What is an inside bar?

As you can deduct from the name of this pattern, an inside bar is a 2-candlestick pattern, in which the second candlestick is completely engulfed by the first one. The first candlestick is called ‘mother bar’, while the second one bears the name of the pattern itself.

The color of the inside bar is not important. The difference between an inside bar and harami is that with an inside bar, the highs and lows are considered while the real body is ignored.

An inside bar forms after a large move in the market and represents a period of consolidation. It indicates that the market is seized by indecision: neither bulls nor bears can swing the price in their favor.

The idea is that after consolidation the price tends to make a strong directional move. As a result, if a trader spots a moment of calm (i.e. an inside bar), he/she will be able to trade on the breakout of the consolidation range.

If an inside bar formed within a strong trend, the odds are that the breakout will occur in the direction of this trend.

Insider bar 2 education

A string of inside bars during an uptrend

All in all, the smaller the inside bar relative to the mother bar, the greater the possibility of a profitable trade setup. Plus, the best case is when an inside bar forms within the upper or lower half of the mother bar.

All of this shows that the preceding trend is still strong and hence likely to continue, so an entry in its direction will pay off nicely. Stop loss orders are usually placed at the opposite end of the mother bar or around its middle if the mother bar is bigger than average.

Insider bar 3 candlestick

An inside bar followed by a strong breakout. Check the place where the inside bar formed: is there a strong resistance? This may explain why the price reversed down

Another tip: keep track of inside bars on the daily chart and bigger timeframes. Lower timeframes contain huge amounts of “noise” and thus may give false signals.

In addition, there may be several inside bars within the mother bar (i.e. 2, 3 or even 4). This simply means that consolidation will take longer, and the odds are that a resulting breakout will be stronger. 

Inside bar and fakey

So, trading inside bars is all about breakouts. However, it’s common knowledge that breakout may turn out to be false. A “fakey” pattern represents a false breakout of an inside bar.

In other words, it’s when the price breaks out an inside bar but is unable to continue moving in that direction and quickly gets back. A fakey is a strong reversal signal.

Fakey may consist of one candlestick (in this case it will be a pin bar) or two candlesticks (the second candlestick will erase the progress of the first one). The most important characteristic is that a false break of the pin bar should be obvious and clearly visible at the chart.

Insider bar 4 fakey

An example of a 2-candlestick fakey

Insider bar technical analysis

An example of a pin bar fakey

It’s wise to pick up a trade signal provided by a fakey if it forms near an important support/resistance level.

Conclusion

A thing to like about inside bar trading strategy is that it revolves entirely around the price action. Inside bar is not the most popular type of pattern but it can enhance your understanding of the market several-fold.

Don’t forget to monitor trends and support/resistance levels to distinguish the continuation inside bars from potential reversal ones/fakeys. Finally, once a fakey is identified, it’s a great hint of a new price swing and may be used as an entry cue as well.  

This article was submitted by FBS.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

Automated trading using forex signals

A look into the use of forex trading signals

UBCFX 24-06
ForexLive

Many forex brokers and independent companies have developed trading systems that offer forex signals telling the user when to buy and sell. The execution of a trade could be as simple as pressing a button or making a telephone call.

Forex trading signals usually operate on a mathematical formula and when parameters are met, a signal is sent out via e-mail or phone. Once the signal is received, it’s up to the user to decide whether or not to take the signal.

There are a lot of mixed reviews on forex signal service providers. To be truthful most signal services work, it’s the individual that fails to follow the system.

Even though you are not deciding when it’s a good time to buy or sell, your emotions can still get in the way if you are coming off of a losing streak. It is however possible to weed out a lot of the losing signals if you are able to identify the overall trend.

Some companies claim to make 20% per month using automated trading systems. I’ll be the first to say that these systems do exist; it’s just a matter of testing the different trading software’s out there to see which ones work and which ones do not.

When seeking out a reliable source of forex signals be sure that their data is back tested and the company has a proven track record. Most systems will offer a trail period that enables you to test the system before committing to their service completely. 

Prices for these systems can range anywhere from $ 15 to $ 500 per month depending on the quality of the signals.

If a novice trader is lucky enough to find a personal forex trader that manages a small group of people and their money this can sometimes be even more profitable then the large forex signal service providers. 

However, finding reliable forex traders and trusting them with your funds are hard to come by.

In our opinion, there is nothing wrong with using forex signal providers given you do not have time to trade for yourself. However, taking a bit of time to learn how the forex market reacts to news and events will greatly enhance you trading profits.

This article was submitted by UBCFX.

Let’s block ads! (Why?)

Forexlive RSS Breaking education feed

NZD trading higher

NZ news has been the trade balance that came out earlier.

It showed a bigger surplus than expected, which is a positive but I am reluctant to ascribe this move to that. Which leaves me empty handed. Other currencies (and gold) are up against the USD in early Asia also.

There was an OECD report on the NZ economy issue earlier, some of the usual concerns from the group and again no smoking gun.

Of course, there is the RBNZ still to come this week – non hold expected:

NZ news has been the trade balance that came out earlier.

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed