Forecasting Forex Trading

Real Source: http://www.earnforex.com/articles/forecasting-forex-trading

What is Forex or Foreign Exchange: It is the largest financial market in the world, with a volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

What about Forecasting: Predicting current and future market trends using existing data and facts. Analysts rely on technical and fundamental statistics to predict the directions of the economy, stock market and individual securities.

For those who trade using the Forex, or foreign currency exchange, knowing how to forecast the Forex can make the difference between trading successfully and losing money. When you begin learning about Forex trading, it is vital that you understand how to forecast the Forex trading market.

There are a few methods that are used when forecasting the Forex. Each system is used to understand how the Forex works and how the fluctuations in the market can affect traders and currency rates. The two methods that are most often used are called technical analysis and fundamental analysis. Both methods differ in their own ways, but each one can help the Forex trader understand how the rates are affecting the currency trade. Most of the time, experienced traders and brokers know each method and use a mixture of the two to trade on the Forex.

One method used in forecasting foreign currency exchange is called technical analysis. This method uses predictions by looking at trends in charts and graphs from past Forex market happenings. This system is based on solid events that have actually taken place in the Forex in the past. Many experience Forex traders and brokers rely on this system because it follows actual trends and can be quite reliable.

When looking at the technical analysis in the Forex, there are three basic principles that are used to make projections. These principles are based on the market action in relation to current events, trends in price movements and past Forex history. When the market action is looked at, everything from supply and demand, current politics and the current state of the market are taken into consideration. It is usually agreed that the actual price of the Forex is a direct reflection of current events.

The trends in price movement are another factor when using technical analysis. This means that there are patterns in the market behavior that have been known to be a contributing factor in the Forex. These patterns are usually repeating over time and can often be a consistent factor when forecasting the Forex market. Another factor that is taken into consideration when forecasting the Forex is history. There are definite patterns in the market and these are usually reliable factors. There are several charts that are taken into consideration when forecasting the Forex market using technical analysis. The five categories that are look at include indicators, number theory, waves, gaps and trends.

Most of these can be quite complicated for those who are inexperienced using the Forex. Most professional Forex brokers understand these charts and have the ability to offer their clients well-informed advice about Forex trading.

Another way that experienced brokers and traders in the Forex use to forecast the trends is called fundamental analysis. This method is used to forecast the future of price movements based on events that have not taken place yet. This can range from political changes, environmental factors and even natural disasters. Important factors and statistics are used to predict how it will affect supply and demand and the rates of the Forex. Most of the time, this method is not a reliable factor on its own, but is used in conjunction with technical analysis to form opinion about the changes in the Forex market.

For those interesting in being involved with Forex trading, a basic understanding of how the system works is essential. Understanding both forecasting systems and how they can predict the market trends will help Forex traders be successful with their trading. Most experienced traders and brokers involved with the Forex use a system of both technical and fundamental information when making decisions about the Forex market. When used together, they can provide the trader with invaluable information about where the currency trends are headed.

Always leave the forecasting to the pros unless you are playing the Forex as a hobby and don't have a lot of money invested...Or like most people you will learn the hard way.

by David Mclauchlan

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Bollinger Bands

Real Source: http://www.earnforex.com/articles/bollinger-bands

Contracting bands warn that the market is about to trend: the bands first converge into a narrow neck, followed by a sharp price movement. The first breakout is often a false move, preceding a strong trend in the opposite direction.

A move that starts at one band normally carries through to the other, in a ranging market.

A move outside the band indicates that the trend is strong and likely to continue — unless price quickly reverses.

A trend that hugs one band signals that the trend is strong and likely to continue. Wait for divergence (when the price is flat or rising or falling, but the MACD is going in the opposite direction...the price will break out in the direction of the MACD) or a Momentum Indicator to signal the end of a trend.

I use the BB's for indication of when a breakout or breakdown is imminent. When the outside bands get very narrow, it means the price is consolidating and is getting ready for a breakout, either up or down.

At this point, it's dangerous to have a position because you don't know if it's going to break up or down. When the bands get very narrow, it's almost better to close out your old positions, even at a loss, until you see a clear direction. If you don't want to close out an old position at a loss, at least hedge it. See more about hedging later in the Advanced Day Trade Forex course.

The BB's can't tell you which direction the breakout will be, the Chaos Oscillator (MACD) and Momentum will do that, and I always trade in the direction the Momentum and Chaos (MACD) are going.

Sometimes when using the slower timeframes, I use the outer BB's as targets for my limit sell price. If the bands are really wide after a big move, I use the middle band as my limit target price.

Bollinger Bands are designed to capture the majority of price movement. When prices move beyond the upper or lower band, they are considered high (overbought) or low (oversold) on a relative basis.

More On Using Bollinger Bands:

First, the BB's can be used as I mentioned before, as price targets. If the bands are narrow, the price will be jumping up & down within the two outer bands. As mentioned before, this is not the best time to be putting on a trade, as the trading range is too narrow, unless you can make a decent quick profit in a 1 or 5 minute chart.

If the range isn't too narrow, you can ride it up and down and book pips. I only attempt this in a 1 or 5 minute timeframe using the 5/9/18/50 EMA's. Don't do it if you can't make at least 5-10 pips up and down. The danger is in whipsaws.

Most of the time, unless the bands are too narrow, you can make trades by literally bouncing off the outer bands.

This is called "The Bollinger Bounce".

When placing a trade, just set your stop at the outer BB and your price target limit sell order where the other outer band is.

If your trade rapidly approaches the limit price and all your indicators say that the price movement is just getting started & not likely to quickly reverse on you, then you should first either remove your limit price & let the price run, or, raise your limit price another 5-10 pips. Then raise your stop to either your entry point or past it, to lock in either breakeven or some profit in case the price suddenly reverses on you.

This is definitely what you should do in a price breakout. If the price keeps going up in an extended breakout, you just keep adjusting your stop upwards to lock in more profit (this is called a trailing stop, more later on this subject) and keep raising your limit also.

A Super Advanced method of using BB's is to use two sets of BB's, both with the middle band set at 18. Set one BB to a standard deviation of 3 and leave the other standard deviation at 1. This gives you 6 short term support/resistance lines to work with. Your initial stop and target are the outer bands, and your inner bands are used for your trailing stop and short term resistance and support. You can also trade off the two inner bands.

This method is very similar to using Fibonacci OR Average True Range (ATR), but is much easier to use and understand.

by Cynthia Macy

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The Best Forex Broker: One for Everyone

Real Source: http://www.earnforex.com/articles/the-best-forex-broker-one-for-everyone

Dishonest and illegitimate brokers who defraud their customers are a disgrace to the online Forex brokerage business. Many traders are rightfully scornful of those who lack the basic decency to allow them to withdraw their funds, even after losses. And sometimes traders can't help but feel that if they could just locate that best Forex broker hidden somewhere in the far reaches of the cyber-jungle, trading and profiting would give the taste of fine French wines, instead of the usual vinegar. But are Forex brokers really such a wicked lot that even the Evil One himself is put to shame by his incompetence in comparison? Is the oversight of multiple government agencies, newspapers and the trader community insufficient to convince them to behave like normal people? Most importantly, since retail Forex is like a shower of gold and silver for online brokers, do they really need to kill their Golden Goose by defrauding traders and destroying their Forex strategies through misquotes and stop-running?

The fact of the matter is that the number of fraudsters in the Forex market is a lot smaller than what many disgruntled traders believe. If you have the misfortune of being a victim of one of them, no doubt, our words will not do much to help you trust the brokers. But we invite you to recall the fact that there are a significant number of firms which have been in operation for many years in nations where regulation and oversight is strictest. Surely, a broker with a long history in Switzerland does not prove much about the reliability of Forex brokers, but others headquartered in New York, and monitored and authorized by the authorities for years cannot have had the skills to keep everyone blind for so many years. Forex is risky, and requires patient study, but it is no longer a shady corner of the internet world: it is regulated and monitored, and more and more a part of the mainstream of financial business.

And while we'd love to send you to the best broker in this article, the good news is that we don't even need to. There are a large number of firms operating online today which cater to different kinds of investors with different expectations and skills. If you're a professional, you will not be equally satisfied by the offer of a decent, legitimate broker which caters to beginners and average traders for the most part. As a beginner, you're unlikely to have all your needs expectations fulfilled by a well-established firm with excellent services and yet a significant minimum deposit requirement. It is this diversity of offers that makes online Forex the field of pioneers, and such an exciting place to be for traders. If you're one of those brave people who want to explore this brave new world, go check your Forex broker ratings now, and who knows, maybe you'll grow to become the next Martin Schwartz of the century. Anything is possible in Forex.

By Carl Hayes

This article was brought to you by forextraders.com, the premiere destination for Forex strategies, analysis, news and commentary. Run by traders for traders, forextraders.com offers you an extensive online library, along with a comprehensive Forex school where you can grow from a Forex rookie to a formidable trader in the course of a week. In-depth reviews with clear-cut Forex broker ratings complete the picture for the most powerful online resource on Forex trading. Pump up your career, go and visit forextraders.com now!



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Choosing Your Forex Broker... Important Facts

Real Source: http://www.earnforex.com/articles/choosing-your-forex-broker-important-facts

The best advice I can give to you is to conduct yourself like a boss interviewing a potential employee. This employee will be making major decision on your financial future (or lack there of) and therefore it is of most importance that you ask the right questions. This decision cannot be taken lightly as must be well thought out. I would interview (more like grill) at least 5 potential Brokers before picking the final two.

When choosing a forex broker there are many factors to take into account.

— Trust

— Experience

— References from past clients

— Level of success

— Amount of advice to be given

— Convenience

— Amount of margin offered

— Speed

All of the above are of course important. In any financial transaction it is important to trust the broker you work with. This trust is garnered by the experience level the broker has. Of course there are some new brokers starting out who are quite trustworthy, but most people would rather work with an experienced broker. For that reason most new brokers attach themselves to a firm where they can be mentored and gain experience.

References from past clients are important. If your broker has helped someone else is successful in the past and that person is willing to speak up for him that says a lot. You can gage the level of success your broker has had by speaking with past clients and seeing how well they did working with this broker. Next, take a look at the amount of advice your broker is willing to give you. Of course, you make your own decisions and will never take another person's word for everything, but it is good to have knowledge to work with, and advice from an experienced broker is key information to factor in. Convenience is also impotent. If you live in California then an Ohio broker might not be the best choice. But in the age of the internet that factor has become less relevant. With fax and email where you and your broker live has become less important.

The amount of margin offered is important. Margin is used to leverage your money. A broker who gives you a 50 to one margin is more valuable than one who gives you 20 to one. And of course speed. Is your broker quick? Does he return phone calls and emails promptly? If so, perhaps you can work with him.

Your broker will b a trusted advisor and someone that you may be working with for years to come so choose the relationship carefully. Ask friends and acquaintances who are active in forex trading what broker they use and how they met. It is quite possible that you can get a referral from a friend or acquaintance you trust and acquire a good forex broker that way.

Another good way to find a forex broker is to go online. There are message forums, chat rooms, and email groups through portals like Yahoo, Google and MSN that contain a wealth of information. Getting onto one of these online communities and asking other people for advice is the way that many people found their broker. If a broker has several clients in an online community who are happy with what he has accomplished for them, then that is a good indication that you might be happy with him as well. Take advantage of the number of people who are on the internet and join some of these online communities. Ask question and you'll probably learn a great deal from the experiences that other people have had. Also find trade journals, magazines and ezines to subscribe to. Read as much as you can about the subject of forex trading before going into it. Become a smart shopper and smarter trader.

Finding a good forex broker is a job in itself. When you visit with a forex broker you are in essence conducting an employment interview to determine if this is the broker you wish to handle your financial affairs, so be thorough. Ask plenty of questions. Ask for references. Don't be shy. Also check with other people in the office of the broker and see if you would trust them to fill in for your broker if he were not available. And, see if the broker is willing to offer you a demo account to use to get in some practice before you actually make an investment. If the broker is able to do so and encourages you then it means that the broker wants educated clients and is not just out for the quick buck. See what kind of training and tutoring the broker is willing to offer. A good broker will offer to answer your questions and help you through the learning process.

by David Mclauchlan

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How To Spot Forex Fraud

Real Source: http://www.earnforex.com/articles/how-to-spot-forex-fraud

As the popularity of Forex increases so do the number of scam artists attempting to cash in on the Forex gravy train. Since Forex involves trading money internationally, often over the Internet, a whole new breed of scams have come about. Ironically many of these scam artists are finding their marks through newspaper, television or other print media advertisements.

While these scams are generally easily spotted by experienced traders, new speculators may have problems knowing the difference between what is real and what isn't. It is absolutely essential to thoroughly research Forex trading, and any potential companies you may trade with before making an initial investment. The last thing you need is to find out that the company you have invested with is under investigation by the SEC for fraud. In this type of circumstance it can often be impossible to retrieve your money as the claims from all fraud of participants will be higher than the total payouts the government can guarantee.

One way to spot a scam on Forex is when someone promoting a Forex system guarantees no risk. It is a fact that there is risk with Forx trading, and generally anyone who claims otherwise is a liar, or more likely a criminal. Trading in Forex successfully requires knowledge, discipline, and a trading strategy. But there is no magic software or no risk way to assure that you will make money.

Another red flag indicating a sure sign of a Forex scam is a web site that guarantees profits. Nobody can guarantee profits and Forex trading. It is up to you as an investor to perform. If it were possible to guarantee profits in Forex trading then nobody would need to start a business showing others how to make guaranteed profits. The profit potential for anyone who could guarantee profits would be so enormous in Forex trading, that they would quickly become a billionaire by trades. So why would they waste time teaching others?

Another common tactic of Forex scam artists is to promise employment opportunities for people using their system. This is usually a trick to get you to spend your money with them. They are fishing for people with capital who can fund their enterprise. They typically promise to offer firm money to people using their system. But why would they do this? Instead what happens is they lure people into their training systems and convince people that they have done so well in the training session that they should start using their real money in order to make a fortune.

All reputable Forex trading web sites will be a member of the CFTC or the NFA. Make sure to check the company's claims out and assure that they are members of one of these organizations before dealing with them.

Keep in mind that Forex is a relatively unregulated system of exchanging money. In many cases Forex scams can become highly technical, involving brokers manipulating prices in ways that cannot be tracked by the average trader. Because of this is essential that you not become a mark for such brokers.

In the United States the CFTC is the federal agency responsible for regulating the trade of Forex currency. If you suspect that you have been a victim of some type of fraud contact the CFTC. They have jurisdiction for investigating and enforcing the laws.

by Willie Reynolds

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Forex Signal Services

Real Source: http://www.earnforex.com/articles/forex-signal-services

What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or even SMS and pager alerts.

Forex signal services analyze several factors when preparing their data. They do a technical analysis of market conditions and use a combination of indicators to identify trends and isolate profitable entry and exit points. They then send you the results via the venue of your choice and you can choose to use the signal in your own trading, or pass on it.

Most forex signal services offer signals for only a handful of the most popular currency pairs, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF. Occasionally, you can find specialty services that offer signals for other lesser traded pairs. Forex signals can be costly, even upwards of $100 / mth. The benefit of subscribing to such a service is that they analyze and crunch the data for you, saving you time. It should be noted, however that using a signal service is no substitute for a proper education in the Forex markets. Signal services give you data, you still need to know what to do with it.

When shopping for a signal service, make sure that they provide you with historical data so that you can see their track record for yourself. Remember, that like any trader, Forex signal services also have loosing trades. You shouldn't expect a signal service to be a sure ticket to instant Forex wealth, but rather look at them as another tool in your trading toolbox.

by Amber Lowery

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Trade Idea Wrap-up: USD/CHF – Buy at 1.0050

USD/CHF - 1.0132

Most recent candlesticks pattern : N/A
Trend : Down

Tenkan-Sen level :1.0086
Kijun-Sen level :1.0085
Ichimoku cloud top :1.0045
Ichimoku cloud bottom :1.0009

Original strategy :

Buy at 1.0075, Target: 1.0200, Stop: 1.0025

New strategy :

Buy at 1.0050, Target: 1.0190, Stop: 0.9995

As dollar has retreated after intra-day rally to 1.0171, suggesting minor consolidation would be seen, however, as temporary low has been formed at 0.9933 earlier this week, downside should be limited to 1.0045-49 (previous resistance turned support and current level of the Ichimoku cloud top) and renewed buying interest should emerge there and bring another rise. Above said resistance would bring retracement of recent decline to 1.0210 minor resistance, however, near term overbought condition should limit upside to 1.0250/55 (61.8% Fibonacci retracement of 1.0451 to 0.9933) and price should falter well below resistance at 1.0278.

In view of this, we are looking to buy dollar on pullback, only below intra-day support at 0.9997 would abort and signal the correction from 0.9933 has ended, bring resumption of decline for retest of 0.9933.

No update on 17 Sept and next update on Monday 20 Sept.

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