Forex Trading Market - Free Training and Support: February 2014

Saturday, 8 February 2014

Japan data – December preliminary machine tool orders +28.0% (vs. prior +15.4%)

A big result for machine tool orders (albeit this is the preliminary release) Up 28% in December (November was +15.4%) Biggest increase since July 2011 This is a positive sign for the administration of PM Abe.
source:http://chicbull.com/japan-data-december-preliminary-machine-tool-orders-28-0-vs-prior-15-4/
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Forex Trading: How to Detect Scammers

Unfortunately, Forex provides a feeding frenzy for the scammer. This is because Forex has a colossal daily turnover of about three trillion dollars which makes many FX novices think that they can readily obtain a slice of the action. In addition, they are further seduced by powerful publicity that convinces them that they will be rich in no time at all.

However, reality quickly crushes their unrealistic expectations once most Forex beginners commence trading. Their resultant despair and frustrations then make them search desperately for any and all quick-fix solutions. As a consequence, an enormous Forex market is generated by this worldwide phenomenon that is a godsend to FX scammers.

A good way to understand the extent of this problem is to imagine the distribution of Forex traders as a very large pyramid with the 5% of successful traders at the top. If you are a novice, then you will form part of the gigantic base of this structure. Forex scammers usually reside between the top 5% and the bottom 10%. As such, the majority of these individuals are just failed Forex traders.

Basically, they have tried to construct their own FX strategies, but were unsuccessful in solving the many complexities inherent in Forex. They may have even achieved some degree of accomplishment by trading profitably albeit for short periods only. They almost certainly would have failed to cope with the problem of optimization, which is created by Forex constantly changing its trading patterns over time. As many Forex scammers produce Forex robots by coding their flawed trading strategies, it is little wonder that most FX bots do not work. How can you protect yourself from the Forex scammer? Here are some ideas that may help you detect their dross:-

1. You can obtain many clues from their advertising literature. For instance, are there any real specifications stated that can actually be verified? If you find yourself reading just a long driveling sales letter supported by a string of autoresponder letters with ludicrous headings, then you are almost certainly dealing with a FX scam.

2. Does their literature state unrealistic performance factors? If you read statements claiming ‘our product can make you 100% return in a matter of days’ or ’we can help you achieve 100% trading success’, then beware. In reality, such specifications are almost impossible to achieve.

3. The Forex scammer will try to attract your attention by using sensationalized advertisements. For instance, they will make great use of words that generate powerful marketing impacts and will deploy them at all possible opportunities. Such a word is ‘secret’. Watch out for titles such as ‘The Five secrets that Expert Traders are not telling you’ and ‘The Shocking Secrets of Forex’. The only secret that FX scammers possess is how they can produce such prolific amounts of gibbering rubbish.

You must always seek sound Forex education in order to provide yourself with realistic Forex objectives and a powerful trading mindset so that you can prevent yourself becoming the Forex scammer’s next victim.

source:http://chicbull.com/forex-trading-how-to-detect-scammers/

Kewords: Forex Currency Trading, Forex Forecast, Forex Learn Trading, Forex Mini, Forex Mini Account, Forex Mini Trading, Forex Trading, Forex Trading Platform, Forex Trading Software, Forex Market, Forex Strategy, Forex Signal, Forex Forum, Forex News, chicbull.com

EUR/USD took a pause before another attack on 1.37

EUR/USD was trying hard to capture the 1.3690/1.37 resistance area, but its attempts to break the round number barrier have failed, and sent the pair to 1.3633 at the moment.

EUR/USD still has the opportunity to come back to 1.37

The pair is confined to narrow 60-pip range from the beginning of the week, not able to find strong another catalyst to break one of the limits. German real GDP growth is the key event of the European session, and it’s widely expected to slow down to 0.5%. Most probably the release will be largely ignored by the market, but there is a little chance of a stronger number, given the high levels of business activity, and industrial output growth in the largest economy of Europe. The recently released euro zone industrial production only supports the idea of gradual recovery – the numbers came out much better than expected (3.0% against expected 1.8%). Thus, the further rise of EUR/USD is not ruled out with initial target at 1.3705 resistance level followed by 1.3728.

What are today’s key EUR/USD levels?

Today’s central pivot point can be found at 1.3676, with support below at 1.3653 (S1), 1.3624 (S2) and 1.3601 (S3), with resistance above at 1.3705 (R1), 1.3728 (R2), and 1.3757 (R3). Hourly Moving Averages are largely bearish, with the 200SMA at 1.3630 and the daily 20EMA flat at 1.3665. Hourly RSI is neutral at 32.

EUR/USDJan 15 at 06:31 GMT

1.3636/38 (-0.32%)

H1.3683 L 1.3627

S3	S2	S1	R1	R2	R3
1.3596	1.3630	1.3665	1.3717	1.3751	1.3785

Trend Index	OB/OS Index
Data updated on Jan 15 a 06:15 GMT (15-minute timeframe)
Slightly Bullish	Neutral

source:http://chicbull.com/eurusd-took-a-pause-before-another-attack-on-1-37/

Thursday, 6 February 2014

Nikkei closes on its session highs at 15,808.73

+2.5% +386.33 open 15,649.07 high 15,792.14 low 15,636.57 USDJPY 104.42 Yet another late rally for the index but USDJPY not so keen to go with it suggesting decent resistance at 104.50
source:http://chicbull.com/nikkei-closes-on-its-session-highs-at-15808-73/
Kewords: Forex Currency Trading, Forex Forecast, Forex Learn Trading, Forex Mini, Forex Mini Account, Forex Mini Trading, Forex Trading, Forex Trading Platform, Forex Trading Software, Forex Market, Forex Strategy, Forex Signal, Forex Forum, Forex News, chicbull.com

Self-sustaining recovery has begun in richer economies – World Bank

According to a World Bank report, a ‘self-sustaining recovery’ has begun in richer economies.

In the report it was highlighted that if “taper causes rapid interest rate adjustments, countries with large current account deficits or high debt levels would be most vulnerable.”

As per worries of the QE unwinding, the report sees “likely smooth unwinding from quantitative easing polices in advanced economies.”

The World Bank also announced a cut in the 2014 growth forecast for developing countries to 5.3% (from 5.6 pct in June), while projecting global GDP growth further strengthening to 3.4% in 2015 and 3.5% in 2016.

Lastly, the report has raised 2014 world growth forecast to 3.2% vs 3.0% projected in June, saying, as stated above, that ” a self-sustaining recovery has begun in richer economies.”

source:http://chicbull.com/self-sustaining-recovery-has-begun-in-richer-economies-world-bank/

What is a Hammer?

One of the most important candlestick formations that a trader can learn is without a doubt the “Hammer” or “Shooting Star”. In a nutshell, these candles can show a potential reversal of the trend. They tend to congregate at important inflection points in the markets, and can often predict a sudden move in the other direction.

One of the main reasons they work is that so many people are familiar with them. It is probably the first candlestick a lot of traders learn. While they have different names, they are essentially the same thing: A representation that exhaustion is setting in for the market and it could reverse course soon.

The names are used depending on what direction the market is heading. When the market has been rising, the formation is called a shooting star. When the market has been falling, it is called a hammer, mainly because of the fact that it looks like one. When you see one of these candles, it might be time to get ready to head in the other direction soon. Having said that, let’s take a look at these formations:

As you can see from the “shooting star”, a long wick has formed above a fairly neutral finished. Neither the buyers nor the sellers took control during this candle. However, one important clue has been left behind: the long wick on top. This shows that although the buyers did manage to push prices higher, they failed to hold them up there. This shows what is known as “exhaustion” in the markets, and signifies that buyers are probably going to struggle to continue to move prices higher.

On the “hammer” candle pictured above, you can see very similar facts, except in opposite terms. The sellers did manage to push prices lower, but didn’t hold the market down there. The shows that they may be running out of conviction, and might struggle to take the market lower in the future as well.

The important thing about these candles is that they be positioned at a swing high, in the case of the shooting star, or a swing low, in the case of the hammer. By being at a recent high or low, it shows that the momentum is slowing. This signals a possible change in direction as strength is waning in the recent movement. For example, it price has been climbing for weeks in the market you are trading and a shooting star appears one day, this could be a sign that the strength of the move is failing. (They all do eventually.)

The length of the wick is important as well. It shows just how far the buyers, in the case of the shooting star, actually managed to push prices – only to fail. So not only does it show the attempt, but it also shows exactly how hard the sellers pushed back! (Vice versa for the hammer.) This is an important clue as is shows that the momentum is swinging in the other direction. In fact, the longer the wick, the better.

source:http://chicbull.com/what-is-a-hammer/

Forex Auto Traders: A Scam or A Gold Mine

the rapid speed at which the Forex market is growing has many consequences, some better than others. On the one hand, there are endless resources online for learning and becoming an expert on the largest most lucrative market in the world. There are also many more people around the world who are spending their days and nights testing out the waters of Forex trading.

Other positive outcomes of Forex growth are more Forex brokers and services from which a trader can choose. On the other hand, the growing popularity of Forex brings with it some problems that require caution on the part of the Forex trader. One of the biggest issues in today’s online Forex community, as well as the general Web community, is spam. When it comes to surfing the web and encountering annoying popups or receiving bogus emails, as annoying as these occurrences are, 99% of the time, they are annoying and nothing more. Of course, there is the occasionalsca online m, but with the widespread use of online communication such as email, messenger, and social media, most people know to stay away from those types of things.

When it comes to Forex spam, however, it is a totally different ball game. There is money to be lost as a result of the different types of Forex spam that traders encounter on a daily basis. The most common type of Forex spam is advertisements for Forex robots or auto trading systems. The big question regarding these auto traders is “Are they all bad? Are there some legitimate ones and are they worth trying”? The answer is that they are NOT all spam and that there is a LOT of money to be made by using auto traders, but for that, you need to do your homework.

An Introduction to Auto Traders

First, let’s try to understand why one would use an auto traderhttp://chicbull.com/forex-auto-traders-a-scam-or-a-gold-mine/ and what are its advantages? As, we have written before, one of the biggest downfalls of the Forex trader is emotion. While being in touch with your emotion will get you far in life, it will set you back in your Forex trading. It is important to set yourself a trading strategy and stick to it, NO MATTER WHAT. This is harder than it sounds. Just imagine you define your trading technique, and for days, all you see are losses. Are you telling me your emotion would not kick in?

Alternatively, if you are seeing constant profits, would you not be swayed by greed to trade more money? This does not make you a bad trader, this makes you human. For this reason exactly, it is a smart tactic to remove the human factor from your trading. The way to do this is to automate your transactions.

There are many auto traders out there that perform technical analysis and decide when to open or close trades, while its primary “concern” is to keep you on the winning side. Unlike Forex brokers, who occasionally profit from your loss, auto traders work for you and not against you. Another reason to use auto traders is that they can trade 24 hours a day, even when you are not near your computer.

Imagine, you can be at a friend’s party and find out that you just made a huge profit, it’s like the feeling you get when finding money in your pocket multiplied by 100. Let the auto trader do all the work while you sit back and enjoy the fruit.

Finally, auto traders can be a great and effective trading tool for any Forex trader, no matter how experienced they are. However, it offers a huge advantage to new traders. They do not need to know the market, how to read the charts, or what a certain currency will do in the market today. Essentially, you do not need to know anything about the Forex market, and you can become a very successful Forex trader.

Choosing An Auto Trader

Now that we have established that Forex auto traders can be a wonderful thing for traders, how do you choose one? There is no one way to decide which auto trader to use. An important and crucial tip in ensuring your auto trader is legitimate and will bring you profits and not losses, is of course to read reviews. You can read professional reviews as well as user reviews, but make sure these are objective opinions and not written by the people who are behind the system that is being reviewed.

Another way to take precautions before buying a Forex auto trader is to look for a few signs when examining the company at hand. Here are a few questions you should ask yourself when choosing a Forex auto trader:

1: Do they offer a money back guarantee? Most reputable auto traders are so confident that their product works, they will offer a money back guarantee ranging anywhere from 30-60 days after the purchase. This means if you buy the software and realize soon after, it is not for you, you can receive a complete refund. This is

source:http://chicbull.com/forex-auto-traders-a-scam-or-a-gold-mine/

How the Greek Drama Affects Forex Trading

One of the most talked about situations in the Forex world at the moment is the Greek debt crisis. This is because while Greece itself isn’t a large part of European GDP, in fact it is only roughly 3%, the debt could cause massive losses for banks around the world, and more specifically – in the richer European nations.

It should be noted that a lot of the Greek debt that is currently being worrisome for traders is owned by French and German banks. The amount of debt that these banks carry is unknown, but it is known to be massive and very significant. Because of this, the Germans and French are highly exposed to the endgame of the debt crisis and could cause significant losses for those banks. As those banks go, it could have massive repercussions in the countries they are rooted in.

Is Debt Contagious?

The concern of this “contagion” is that few people actually understand where it all ends. The other issue is that if Greece gets a break on the terms of its debt, there is nothing to keep the Irish and Portuguese to ask for the same. The creditors may find that they are forced to “take a haircut”, or take less payment than originally expected – crushing profits for investors. With massive losses piling up in the banks, you could see credit markets seize up in the more prosperous countries of Europe, and this could cause serious damage to the euro as a whole.
The situation in Greece has turned out to be one that almost guarantees a cutting of the Greek debt as they simply cannot pay it off. In fact, the 2 yeaGreekr bonds recently sold for a 26% interest rate – which certainly couldn’t be paid in reality. Because of this, people will feel a bit weary of investing in Europe. This will cut a certain amount of demand for the euro.
One thing that markets hate is uncertainty. The Greek situation pretty much guarantees that there will be a certain amount of it surrounding the European area. Because of this, we may see the euro weaken towards the latter part of the year as investors flee from the continent and look to safer areas to get involved with, such as the United States.

source:http://chicbull.com/how-the-greek-drama-affects-forex-trading/

Don’t Ignore the Minor Pairs

Many retail traders start out either restricting their trading to a few pairs, or trading every instrument they can get their hands on. Why is this?

Taking the first example, there are frequently quoted reasons for a beginner to restrict themselves to just a few major pairs, such as the EUR/USD and GBP/USD. Some of these include:

These pairs are most active during European / North American hours, which might be the preferred hours of trading.
Spreads are low.
These pairs tend to “behave” technically, and most popular trading systems tend to be designed around their characteristics.
Avoiding the confusion and stress that can come from trying to day trade many different instruments at once.
Most material on the internet is based on these currency pairs.

Are these really good reasons to restrict trading to just the EUR/USD and GBP/USD? I argue that they are not, and that traders should take a more sophisticated approach:

Pretty much every pair has its greatest volume and activity during European/North American hours anyway.
Having to pay a higher spread for minor pairs compared to the majors should not be any obstacle to profitability, provided that trades are held for the medium or long-term.
It is possible to devise perfectly good trading strategies for the pairs that tend to behave less technically.
Confusion can be avoided if you know what you are looking for and manage your desk with discipline.

It is incredible that there is so much material on the internet that presents a trading system and ends with the throwaway line “works with the EUR/USD, GBP/USD, and should be OK with other pairs too”. It’s a little like a surgeon perfecting an operative procedure and grabbing a passerby to operate on!

This is not a good way to manage the transition from trading just a few pairs to looking for trades throughout the entire currency universe. It is much better to make this jump in a more controlled way, so don’t be like those traders that start with EUR/USD, get bored and start trying to trade everything the same way.

Let’s look at some numbers that will demonstrate clearly why it is definitely worth being prepared to trade minor pairs. Here is a table showing the maximum percentage fluctuation in value by currency pair over the last three calendar years, including 2013 to date. The maximum fluctuation is effectively the value of the biggest winning trade you could have made without leverage on that pairs for the year given.

http://chicbull.com/dont-ignore-the-minor-pairs/

The first thing to note from these statistics is that it is most of the major pairs (EUR/USD, GBP/USD, USD/CHF and USD/CAD) that have presented the most limited opportunities. See how EUR/USD, so beloved by new traders, actually offered less during 2013 than anything else, as did GBP/USD during both 2012 and 2011.

The next item of interest is that the big story of the last two years has been the Japanese yen. The best opportunities have been offered by going long against the JPY with just about anything, even the USD, but better results have been achieved with risk currencies such as the GBP and EUR. Even before the Yen was topping the currency headlines, we can see that during 2011 it was still offering better opportunities than anything except the Swiss Franc, which was in a strong uptrend during 2010 and 2011.

Finally, note how AUD/USD had more to offer every year than either EUR/USD or GBP/USD.

This should give plenty of food for thought to traders who think it is best to ignore the Yen because they are asleep during Tokyo hours, or because they don’t like the high spreads and occasionally wild action on the Yen crosses like GBP/JPY.

Of course, these numbers would not mean anything if it was really so much easier to trade pairs like EUR/USD than GBP/JPY. I contend that while it may be 50% more difficult, if there is going to be something like 300% more reward on offer, the extra risk is worth it! One solution could be to risk much less per pip on the Yen pair and crosses, and use much wider stop losses. If you can do this and catch the beginning of a really big move, there is a lot of potential on the table to take advantage of.

It is worth taking a closer look at the claim that the Yen crosses are hard to trade, in spite of their larger directional moves. While they do tend to be more volatile and “behave” less well technically, there is no reason why a trader cannot try to trade them from daily or 4 hour charts using wide stops. If these crosses are hard to day trade, why day trade them? Continue day trading with the major pairs, and try to position/swing/trend trade with the Yen crosses at the same time.

To sum up: try to think of the bigger picture. Each of the previous three years has had a “star” performing currency. It was the CHF in 2011 and the JPY in 2012 and 2013. It should help your results for 2014 if you do not exclude the next “star” from your trading, and make sure that you have some exposure to the Yen and the Australian Dollar. If you are going to stick to the majors, do include USD.

Finally, you do not have to trade the crosses in the same way as you trade the majors. You could stick to the majors and if it feels like long EUR/USD and long USD/JPY, why not just take a position right away long EUR/JPY? You don’t necessarily need to be watching the crosses technically to find the opportunities.

source:http://chicbull.com/dont-ignore-the-minor-pairs/

Is it Time to Quit Indicators and Turn to Forex Price Action?

If a survey was handed out to retail Forex and Futures traders and one of the questions that was asked was “what method or system did they first trade with”, without a doubt the huge majority of traders would say they started with indicators such as moving averages, stochastic, MACD, Bollinger Bands and the list of goes on and on.

I am super lucky that I get to talk and help traders with their trading goals every day, and the list of systems and methods that I come across with indicators is endless. You only have to look in any Forex forum to see how many new traders are clambering all over the “Forex Systems” threads looking for the latest indicators and EA’s because people come up with new indicator systems every chance they get (not necessarily a profitable ones).

The reason indicators are so popular is that they feed into the new trader’s belief that the indicator can help predict where price is going to go. To understand indicators properly traders need to understand how indicators are built and project their information. 99% of all indicators are built using old price information to make a lagging indicator. For example; a moving average is built using old price to make a moving line that traders can use in a number of ways.

The major problem with indicators is that they are always lagging and traders are using previous information to guide them. In other words; they are using lagging information to make live trading calls.

A Dangerous Trading Mindset

The other major worry with indicators is that traders very rarely stop at one indicator and this is often where things begin to go pair shaped in the trader’s mindset. A new trader will often have one or two winners with their first indicator. It does not matter how many losses the trader has or even if they blow their whole account. What the trader will tend to remember is that first indicator helped them make a winning trade and most of all the trader will remember that this first indicator helped them predict correctly where price was going. All the bad thoughts and losses have been completely pushed to the side because the trader has already moved onto what is coming next and they have already worked out EXACTLY how they will make it all back and much more.

The trader will often think “if one indicator helped me make a winning trade, then two indicators is sure to help me predict where price is going even better”, and then when two doesn’t help, three has to be even better etc, but the problem is that like so many things in trading it simply just doesn’t work this way as I explain below. Humans in everyday life are programmed to think that anything worthwhile cannot be simple and new traders often spend a lot of their time trying to make trading complicated adding fancy indicators to their trading thinking that the more indicators they add, the more they will be able to predict where price will go, but this is the COMPLETE opposite of what traders need to do.

This mindset is a trap that is very easy to fall into because the trader can quickly find themselves adding more and more indicators as they start having more and more losses with the incorrect mindset that indicators will help them predict where price is going. What ends up happening is the trader go’s from the start of their trading journey being in the best mindset to play trades, to having so many indicators on their charts and being in a complete mess and state of analysis paralysis. The trader ends up having so many indicators on their charts that they all end up contradicting each other and the trader can no longer make a trade because they are so confused at what they should do. So what does the trader need to do?

Time to Move to Price Action

The most simple and uncomplicated trading method in the world is price action. All that is needed for trading price action is a blank raw price action chart and your trading method. The major difference between indicators and price action is; with indicators you are using old lagging price action information to try to predict the future, but with price action you are continually reading the raw and live price as it is being printed on the chart.

There are no indicators or outside influences at all used to trade price action. Basically price action trading is the skill of being able to read the price and make trades on any chart, in any market, in any time frame and without the use of any indicators at all. Below are two charts side by side with the price action chart on the left with just raw price action and the chart full of indicators on the right hand side.

Education and commitment are needed to be successful with price action trading just like any other trading methods or systems that are worthwhile, but the reason price action trading is so successful and so many professional traders use it is because it simplifies the trading process and the mindset required to be profitable.

Safe trading and all the success,

Johnathon Fox

source:http://chicbull.com/is-it-time-to-quit-indicators-and-turn-to-forex-price-action/

Bull Markets vs. Bear Markets – An Explanation

When trading the financial markets, you will quite often hear the expression “bull market”, or sometimes “bear market”. While the exact origin of these two expressions is up for debate, the meaning is quite simple. The “bull market” is when a financial instrument is trending in an upward manner. In other words, people are buying it. Conversely, the “bear market” is when a financial instrument is trending in a downward manner, as people are selling it.

Of course, these are the most basic definitions for these two types of markets. There are other ways of discerning which type of market you are in, rather than these generalized terms. Traders will use several different types of indicators or conditions on the chart to determine whether or not to officially call a market a “bull market” or “bear market”.

One of the most common ways is to use moving averages as a representation of the overall trend. Generally, when traders do this for trend direction they will use a slower moving or higher period moving average to determine the direction. For example, you may use a 200 day moving average to determine if the overall trend is up or down. The thinking behind this is that a slower moving average like the 200 will change direction much slower than a faster one. The trend is determined by the overall slope of the moving average. The other words, if it is going from lower left to upper right, we are in an uptrend. Of course, it works in the opposite direction as well.

Another common way to determine whether we are in a bowl market or their market is to use weekly trend lines. The support and resistance areas will move along the chart in a diagonal fashion showing which direction the market once the go overall. The higher timeframe the chart, the more reliable these trend lines become. One of the most reliable trend lines to use is one that shows up on a weekly chart. This is because it takes much more information as far as trades in order to push the price around, be it up or down.

While it doesn’t really matter if you call a market a “bull market” or trending upward, you should know that these are phrases that are used by a majority of traders. It is simply a function of jargon. Much like the rest of the professional world, the Forex world has its own language that all traders speak in order to convey information to one another. Now that you know what a bull market and bear market are, you have an understanding of some of the most basic lingo that is spoken.

source:http://chicbull.com/bull-markets-vs-bear-markets-an-explanation/

Using FIBS to Set Stops

Most traders are familiar with the use of Fibonacci ratios as entry and take profit points, but few have considered placing stops with FIBS. Using unconventional methods for setting stop loss levels can have a surprisingly uplifting effect on profitability, and when a method can be found that is both unconventional and reliable, a serious edge can be uncovered. Placing stops with FIBS can be such a method.

The point of a stop loss is to limit risk. Most traders tend to take the view that a stop loss should be placed at the point where the trade becomes “wrong”, i.e. an adverse point which if reached means the trade is likely to continue going in the wrong direction. Traders also tend to set stop losses very conservatively, telling themselves that the trade needs “room to breathe” as they place the stop one pip above or below the trigger candle or swing high or low. Is this the correct attitude to take? That depends very much upon the individual trader’s risk to reward profile and trading style.

The best trades often spend little time in negative territory. This is not always true, but if one looks at a large sample of historical trades produced by most types of strategies, especially breakout strategies, a positive correlation of approximately 0.25 is usually found between the trades that take off immediately and the trades that ultimately are winners. This has serious implications for the traditional approach of setting stops so that trades have room to breathe, as a disproportionate number of winning trades don’t need any room to breathe!

This means that many strategies, especially shorter-term breakout strategies, produce a higher positive expectancy if stops are placed more tightly than the other side of the candle or swing. There will be more losers, but the winners will be larger overall. How to tighten these stops? One approach is to look within a shorter time frame for obvious micro support or resistance levels. This can work extremely well, however often such a level is not clearly identifiable, and it is not practical under seriously pressured entry conditions to spend much time looking for one. This is where FIBS can come in. Calculate the pips risk mentally from your entry to where you would traditionally place your stop, and apply that number to a FIB calculator. You can select any of the common FIB ratios as they all have some power, but the 50% level does tend to be the strongest. Placing your stop two or three pips beyond the 50% retrace level can almost double the size of your winning trades while being surprisingly protective of many of the best ones. It is recommended to review your past trades and see how your results would have been different using type of stop loss strategy.

There is an alternative approach that can be taken in placing stops with FIBS that is especially appropriate for longer-term strategies that utilize wider, larger stop losses. We can take it for granted that there is stop loss hunting especially during periods of low liquidity. These hunts can and will take the price to those areas one pip above or beyond the swing high, where the herd tends to place its stops. Consider trying to place your stops more out of harm’s way by finding a widely used FIB retracement or extension ratio that can be applied to a larger swing that is placed not too much further away than there traditional stop loss placement area. Place your stop loss a few pips the other side of that level and you might find better protection from the hunters, at a small extra premium. If your trade is for a large target, it can be worth it.

sourc:http://chicbull.com/using-fibs-to-set-stops/

Fixed Spreads versus Variable Spreads

When you shop for a Forex broker, you will see a couple of different types of spreads available. One will be the standard “fixed” spread, which means that the spread will remain the same no matter what. The other is a “variable” spread as determined by the marketplace. This can rise or fall depending on what the best bid and offer prices are at the time.

With a fixed spread, the broker guarantees that the spread will always remain the same. This helps the trader plan their trading costs more effectively as they already know how much the bid and offer prices will differ when they place a trade. The spreads will remain the same, even when news announcements are happening, which are a time of extreme volatility. The broker might promise a 3 pip spread on the USD/JPY as an example. This can be useful when you are trading the shorter time frames as the amount you have to overcome in spreads is constant. This allows you to know ahead of time that you need at least 4 pips gained to make a profit against the above example as you trade.

Variable Spreads

A variable spread simply will pass long the best bid and offer prices that the broker can find for you at any given moment. In times of high liquidity, the spread on these brokers tends to be lower. This makes trading through them cheaper on the whole, but also comes with the risk of market conditions at times. For example, during Asian trading the above mentioned USD/JPY pair might be lower than the 3 pips, perhaps something like 1.8 pips. This makes for cheaper trading costs, which is always a plus. However, during a market announcement the spread might widen as the amount of orders shrink in the marketplace. For example, during the Non-Farm Payroll announcement out of the USA, this pair could very easily have a 20 pip spread. Variable spread brokers are extremely difficult to trade with during times of important news announcements through because of this.

The difference between the two won’t matter as much to longer-term traders though. This is because a higher timeframe trader will place less trades, so a handful of pips lost of gained due to trading costs will be miniscule in the big picture as far as trading results. The spread difference is simply a concern of the shorter-term trader that isn’t aiming for hundreds of pips on every trade. Because of this, some traders will hardly notice the difference. However, if you are trying to scalp the markets – it can make all the difference in the world.

source:http://chicbull.com/fixed-spreads-versus-variable-spreads/

5 Critical Features for Any Forex Broker

hen trading the Forex market, there are certain features that you will want to be aware of when it comes to your broker. Below is a short list of some of the most important criteria when choosing a Forex broker:

Regulation

While this seems like a no-brainer, many new traders do not know about the various regulatory bodies that are out there. If you are using a Forex broker, it needs to be regulated. Also, you should be aware of where it is regulated. This is one of the things most people overlook. As a general rule, you will want to see a country that is known for being business-friendly (at least in terms of the rule of law) as being the country of registration.

One of the most popular places to regulate is Cyprus. This is because the Cypriot authority is a little more lax on its Forex trading laws. By regulating there, you can claim that you are “regulated in an EU country”, which is technically true. But having said that, you could claim to be “regulated in North America” by being registered in Mexico. This implies the same stringent protections you get in the US or Canada. Common sense sees the folly in that argument.

Charting

Believe it or not, not all Forex brokers offer charting. This is becoming less and less of a problem, but there are some that don’t. They generally will offer an ECN, or Electronic Communication Network, and sell an add-on for charting such as NinjaTrader. Provision of proper charting is a sign of a broker’s integrity – failure to provide this is a sign that they may be less-than-honest.

Pairs

Not all brokers offer the same currency pairs. Some will offer over 100, while others will only offer the 20 most common pairs as an example. One of the pairs that surprises people the most in this regard is CAD/JPY. Since the Canadian dollar and Japanese yen are both major currencies, most traders assume that the cross pair would be offered. All brokers are going to be different, and a diligent review of available trading pairs is essential. The last thing you want to do is turn around and close out an account right away because of an errant mistake.

Leverage

Depending on what part of the world you live in, leverage can vary. Leverage gives you the ability to trade large amounts of currency with a small deposit. Some broker out there now offer as much as 700-1 leverage, and depending on your trading style, leverage can be good or bad.

By 700-1, this means that you can control $700 for every $1 you deposit. Because of this, it can supercharge your returns, as well as losses. Leverage is something that should be used sparingly.

It should also be noted that the United States regulatory authorities recently cut the amount of leverage that Americans can use down to 50-1 for major pairs, and 20-1 for crosses.

Analysis

When you are learning to trade, it is always helpful to have a technical analyst available to read. Some brokers are very generous with their offerings when it comes to this kind of thing, and many are now employing professional technical analysts that post newsletters every day. This can be very helpful for the new trader.

When you are looking to do business with a broker, don’t forget that they are there to serve the customer, and it pays to shop around – just like any other purchase. Forex brokers tend to be very competitive on various features and with a little bit of research you can get a lot more than you realize.

source:http://chicbull.com/5-critical-features-for-any-forex-broker/

How to Approach News Trading

These days, technical analysis is all the rage for day traders, but this trend does not mean trading news events should be avoided entirely. Instead, traders should wait for these events to occur so that the rest of the market has time to respond to these events in a clearly defined fashion. In fact, there are many traders who are very successful and base most of their trades on news information and economic data releases. These “fundamental” traders are successful in many cases because this type of trading information can give a very clear indication of where currency prices are heading during the session. But the difference between successful and unsuccessful trading in these cases can be seen in the ways traders react and position themselves before or after the market information is made public.

“The most successful cases can be seen when traders are well aware of which types of data will be moving the market during the respective trading session” said Haris Constantinou, currency analyst at TeleTrade. “This can be done using the economic calendars that are made freely available by forex trading brokers.” Traders need to be watching the market movements as these releases are unveiled to see if the general reactions match the direction of the data. The next step in trading these events comes with identifying which currency pairs will be most heavily affected by the released data. Generally, data out of the US will have a large effect on the US Dollar, European data will have a large impact on the direction of the Euro, and so on.

Setting Trade Parameters

Once the initial reaction has been seen and the relevant currency pairs are selected, traders need to watch to the actual movement of prices to determine whether or not a clear trend is in place for that currency pair. If an uptrend or downtrend is clearly defined, all of the important and relevant pieces are in place and a trade can be initiated. The reason this process should be honored is because this is when all of the evidence is tilted in one direction – both the fundamental and technical aspects of the equation point to a single direction. When this is the case, trades can be executed because the odds point to a highly-probability outcome. This is essentially the “perfect storm” for forex trading as all relevant aspects are suggestive of a more certain result.

There are some key advantages that can be seen when approaching markets from this perspective. When we are able to successfully combine all of these factors, our trades are able to attain higher probability levels when we compare the approaches taken by technical analysts or this with a purely fundamental perspective.

source:http://chicbull.com/how-to-approach-news-trading/

Forex Market Analysis in Simple Terms

There is a well-known ongoing debate in the financial markets that is also very common among Forex experts. I am referring to the various tools one can use to analyze the market and ultimately predict future trends.

Before we get into which analysis is more effective, let’s first discuss why analyzing the market is crucial for your Forex success. There is a widespread and common misconception that compares Forex trading to casino gambling. This is a false comparison on so many levels. First and foremost is that by utilizing some of the many resources available to a Forex trader, the luck element of the trading all but disappears.

Using Different Types of Analysis

When putting market analysis at the forefront of your trading, you are transforming the entire trading experience from a guessing game to a legitimate and profitable experience.
Now that we have established the need for Forex market analysis, the question arises, which one should a trader use? There are two primary schools of thought surrounding the issue of Forex market analysis. There is the technical analysis paradigm that swears by the phrase “The trend is your friend”. The basic concept is that Forex trends have no reason to reverse themselves, unless they do. What that means is that if there is a certain trend on the market, it is the safest bet to jump on that trend. Chances are, according to the technical analysts that the trend will continue.

On the flip side, experts who believe in fundamental analysis will tell you not to focus on reading the charts but rather to watch and read the news. The fundamental analysis concept is based on the idea that news and current affairs is what drives the market and ultimately contributes to its volatility.

Finding What Works

So, as a new trader, who should you listen to? The answer, I believe, is that it really does not matter. While technical and fundamental analysis seem to be mutually exclusive since a person only has two eyes and cannot watch both the charts and the news simultaneously, the truth is somewhere in the middle.

The way the cycle works is that yes, there are trends, and yes, these trends can serve as an indication of what the future will bring, but the reality is that those trends are ultimately driven by the fundamentals.

So, as a new trader, it is crucial that you keep your options open and to put that into practical terms, trade with a few screens open. The first screen should be your trading platform. Another screen should have the charts in real time that will show you what the latest trends are. Finally, you should have an additional screen open for the latest political and economic global developments.

Obviously you cannot focus on all three screens at the same second, but it is important not to ignore any of the three and to balance them effectively. This will ensure a well-rounded trading environment that will ultimately lead to a more balanced trading experience that will translate into eventual dollars and cents.

source:http://chicbull.com/forex-market-analysis-in-simple-terms/

http://www.dailyforex.com/forex-articles/2013/11/Is-Switching-Brokers-Ever-a-Good-Idea/26325

The best reason you will ever have for switching brokers will occur if you ever find that you have a good reason to fear for the safety of your deposit. If you ever ask your broker to withdraw some funds in your account, and they are unreasonably slow or unresponsive, then this is an excellent reason for switching brokers right away. Of course, if you hear any reliable information about the financial or ethical health of your broker, it is something to look into. Consider testing your broker after you have some good results, by asking to withdraw some of your recent winnings. If there is any undue delay, it is advisable to shut the account down right away and, if necessary, threaten to contact the appropriate regulator.

Moving from crisis mode to some more commonplace reasons, one of the most common factors prompting client to switch brokers is the average level of the spreads being charged. For example, there are still brokers out there charging a 3 pip spread on the EUR/USD. While this was the norm a few years ago, it is rapidly becoming considered to be outrageously expensive. Switching brokers to one offering EUR/USD at 1.5 pips or lower makes sense as the spread is a “cost of doing business”, and over time can really add up to lost revenue for the trader, especially if they are trading frequently using shorter timeframes.

Another good reason to switch brokers is if the broker has an unstable platform. If you find that the trading platform disconnects quite frequently or that it takes a long time to execute a trade, and it keeps happening, then this is prima facie evidence of incompetence or downright dishonesty. Dishonesty is more likely if these disconnections or freezes happen every time you are trying to enter a trade that would have gone on to be a fast winner. Of course, it is important not to be paranoid and blame your broker for all your bad or losing trades. Nevertheless, as Forex has no centralized marketplace, brokers do have a commercial incentive to “shade” their spread just over levels where a lot of their clients have stop losses set on open trades. You should bear in mind though that during periods of low liquidity, the market often naturally tends to hunt common stop loss levels. The best way to determine whether your broker is acting shady is to see whether these price moves are not matched by other broker’s price feeds. Keep an eye on two or three. If your broker tends to produce sudden unexplained spikes in the price that are not followed by other brokers, it is time to think about getting away from them.

A good way to get a better understanding of whether a particular broker is best for you is to think about what the brokers are actually doing, and looking at things from their point of view. In order to do this, it is helpful to start with a few facts about the Forex industry:

1. Most Forex brokers are not actually exchanging any currency on the market. They are simply providing a price feed, the movements of which their clients are allowed to bet on in exchange for two effective fees: the spread or commission, and a small overnight charge that is incurred every night any position is left open. These brokers are in adversarial relationships with their clients: they make money when their clients lose, and lose money when their clients win.

2. The remaining Forex brokers tend to monitor the trades of their clients that have records of trading profitably, and cover the aggregate positions of these traders with a bank. These brokers have a less adversarial relationship with their clients, but still can face problems in adequately covering themselves in fast-moving markets.

3. The real Forex market is dominated by four large banks that together make up about 85% of the market’s volume. These banks provide liquidity to smaller banks, which then do the same to smaller banks, who then provide liquidity to brokers, and so on down the chain in size and importance. This tends to mean that the smaller your broker, the worse the price and spread they are probably going to be able or willing to give you, as they themselves will not be able to get first-rate prices and spreads. The trade-off here is that these smaller brokers tend to offer very low minimum deposit and trade sizes. The more money you have to deposit, the better the service that will be available to you. Of course, this does not mean that you have to go higher up the chain than is appropriate for your account size. Generally speaking, it is a good idea to fit your Forex broker to your account size.

4. Much of the Forex industry has a bad reputation and is poorly regulated. When these facts are combined with the natural human tendency to allow better judgment to be clouded by greed, it creates a profitable vacuum for unscrupulous brokerages that have no reputation to protect. That is not to say that small Forex brokers are all crooked, but do not assume that your deposit will be safe and segregated just because you sent it to a Forex broker. However if that broker has a public reputation and is subject to strong regulation and supervision, you should be able to rest easier.

There are other good specific reasons that can play a role in determining choice of broker, such as the availability of a specific pair that you want to trade, platform, quality of customer service and other “concrete” things. Now that you’ve covered all of the critical aspects to consider when choosing a broker or switching brokers, iV]N

source:http://chicbull.com/httpwww-dailyforex-comforex-articles201311is-switching-brokers-ever-a-good-idea26325/