Multiple Time Frame Analysis

Multiple time frame analysis is a form of technical analysis which requires the traders to look at the different price changes of the same currency pair. Typically the charts are in different time frames and will allow the trader to better understand how the currency options moves with changing market conditions. Through multiple time frame analysis, traders can effectively enter positions.

In most cases, only 3 time frames are used , weekly, daily and 4-hour charts but traders may also decide to utilize shorter time frames (4-hour, 1-hour and 15 minutes). Generally, the longer time framed charts are used to get an overview of how the market is behaving while the shorter time frames are utilized to fine tune the entry and exit points. It is important for the traders to capture the big movements in the market in order to make a huge sum of profit. In this case, the traders will need to know which direction they should take and what kinds of shorter term movement can they take advantage of. Multiple time frame analysis is more than just picking out the tops and bottoms; instead, it is about looking for buying opportunities in an uptrend and selling opportunities in a downtrend which enables the trader to profit more.

Traders in the spot market typically use daily charts to identify the general trend while hourly charts determine the exact entry points. In the AUD/USD currency pair which has been trending up since the early 2002, range traders will find it difficult to trade, and will probably experience losses if they stick to the same strategies they use in normal situations. Even when certain dips in the market, the pair remained strong for the last couple of years, hence presenting very little opportunities even for medium term range traders.

In this case, it is best to adopt a position which follows the trends and to look for buying opportunities when the prices are lowest. In this case, the trader can use a level of the Fibonacci retracement as the main support level then use the daily charts to get a general idea of the direction of the trade and then hourly charts to pinpoint entry points.
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The Benefits of Liquid Investment Trading

The main benefit of investment trading in a liquid market is the flexibility of buying and selling assets.

Investment liquidity is the ability of an asset to be bought or sold without causing price movements of any significance. The most liquid asset is cash as it can be used immediately to carry out economic activities but for trading purposes the really liquid markets are forex, stocks and commodities in that order.

The Benefits of Liquid Investment Trading:

An asset is classed as liquid when it can be sold quickly without any loss in value, at any time during market hours. The crucial characteristic of a market classed as deeply liquid is that there are eager sellers and buyers available at all times and that the price of the next trade is equivalent to the preceding one.

A major benefit of trading in a liquid market is that the most liquid market, foreign exchange, is open 24 hours a day except for weekends. You can decide to trade in your own time frame, after work, before you go to work or even at work.

Liquid markets are so much more efficient in that when there is many sellers and many buyers, the price at which the trade is done is very close if not the same as the last market price. Again the most efficient market is the foreign exchange market as it has a trading volume that is over 50 times larger than the New York Stock Exchange.

Another benefit from trading in liquid markets is volatility. When a price fluctuates as it does in a liquid market more trading opportunities are available. If you buy an asset and its price doesn’t move there is little or no opportunity to make a profit. Volatility is the magnitude of the level of a price’s fluctuation and its frequency of fluctuation. Volatility is measured as the maximum return that can be generated with perfect prescience. For example the average volatility for stock is 70 but the average volatility for a currency is 500. Day traders in particular can exploit this greater volatility in the currency markets.

A further benefit of investing in a liquid market like the currency markets is that there are no commission fees and no transaction fees. The fees are all in the spread and there is hardly any ‘slippage’ cost. Slippage is a cost that a trader incurs when entering the market at a worse price than the price level they wanted. For low volume trades slippage is not such a problem but for high volume trades it could be.

Leverage can be a big benefit for investors who are investing in liquid markets, particularly the currency markets. Using leverage an investor can trade the equivalent of $10,000 and depending on the broker the investor is trading through, the investor only needs between $50 and $200. This makes it possible for an investor in a liquid market to profit from a small trading account.

The benefits of trading and investing in a liquid market are numerous and give the investor greater flexibility to buy or sell investment assets.

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3 Power Strategies in Forex Trading

3 Rules to Make serious earnings

If you want to catch the serious profit in forex dealing you need to trend watch forex trends which are worse term. here we are going to give you a 3 step simple method which if you use it correctly, will help you catch every superior forex trend and lead you to long-term term currency dealing success.

Most beginner traders don't bother trying to trend following forex lengthier term - instead they try forex scalping or day trading. These methods focus the trader on small moves and they hope to catch small profit however as most short term moves are random, this leads to equity eliminate.

The other alternatives are swing trading and long term forex trend following and this article is all about the latter method. If you look at any forex chart, you will see long-term term trends that last for months or years. These moves can and do yield serious profit - present we will outline a simple method to get them.

Breakouts

By far the best way of catching the serious moves is to use a forex dealing strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is broken.

It's a fact that most leading moves start from new highs or lows.

While it might appear that you are not buying or selling at the greatest level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The grounds for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don't buy or sell breakouts and that's exactly why it's such a powerful method.

The only point to keep in mind is a support or resistance which is ruined, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the greater the spacing between the tests the more valid the level is.

Confirmation

Of course not every breakout keeps and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your dealing signal.

These indicators give you an estimation of the strength and velocity of price and there are many to choose from. We don't have time to discuss them here (simply look up our other articles) but two of the greatest are - the stochastic and Relative Strength Index RSI

Stops and Targets

Stop points are easy with breakouts - Simply behind the breakout point.

If you have a serious trend then you need to be careful you can milk it, so don't move your stop to soon and keep it outside of normal volatility. If it is a huge move, trailing stops should be held a long-term way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don't know when the trend is going to end, so don't predict.

It's ok to give a serious back, as that's the nature of trading forex. Keep in mind if you got 50% of all leading trend you would be very rich. When you are long-term term trend following you have accept giving a bit back and taking dips in open equity as the trend develops - this is noise and does not affect the long term trend.

The above is a simple way to trend watch forex and catch the high odds moves that yield the serious profit. If you are learning forex dealing and want a simple method that is robust and will help you get every major move, then you should base your dealing on the above method.

Source : Forex Article Collection

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What Is Hedging

Hedging denotes safety and security. Hedging is protection of client's funds from unfavorable currency rate fluctuations. Account funds are fixed at their current price through conducting trades on Forex. Thus, hedging helps to ease exposure to currency rate change risks, which helps to achieve result not influenced by fluctuations.

In fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it. More often, the notion ‘hedging’ means insurance from the currency price fluctuations, assets etc. Hedging can also be considered as a type of investment allowing to minimize the price movements risk in the market. The hedging cost should be valued with regard to possible losses in the event of refusal from it.

Hedging types on Forex

The first type is hedging the buyer’s money to lower the risk of possible increase of an instrument price. Another type is hedging the seller’s money in order to lower a price drop risk.

Hedging example

A trader, who imports foreign currency, opens buy trade with a currency on his trading account in advance, and when the real time of currency purchase comes in his bank, he closes the position. And a trader, who exports foreign currency, opens a sell trade with a currency on his trading account beforehand, and at a real moment of this currency purchase in his bank, he closes it.

There is a so-called hedging mechanism, which implies obligations balancing in the currency market (or securities market etc.) and the opposite futures market. To hedge capital losses from a particular instrument, the position is opened with another instrument, which can compensate financial losses.

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What is PAMM account

PAMM account is a mode of investment, whereby the funds are transferred to a trader in trust, and with a successful trade execution the managing trader gets a certain interest from profit.
PAMM Account Work Principle
Investors put money into managing trader’s account. The managing trader makes trades using his own capital, so all operations are proportionally removed to the investors’ accounts. In case of raising profit, it is divided between investors and a managing trader depending on the size of deposits. In addition, the managing trader earns a profit interest.
Risk Degree
PAMM account investment is a high-yield work method in Forex market, especially if a trader has no possibility to devote all his time to trading. Moreover, PAMM accounts can bring a good extra income in case of combining the main job with currency market trading. However, what should be noticed is that investing in PAMM accounts undoubtedly has its risk degree. A trade executed by a managing trader with investor’s funds may bring either profit or loss. That is why it is appropriate to be severe with choosing a managing trader.
As a rule, before investing in PAMM accounts, professional features of candidates are examined first. Primarily, the attention should be focused on the number of completed trades and their results, on the market activity experience and PAMM account management skills. Professional trader is a recipe for deriving profit from investment.
Safety
There are certain rules directed to ensure PAMM accounts safety. Firstly, the managing trader may use investors’ capital for conducting trade operations only. Any other actions with investor accounts are not available for the trader.
As a PAMM account also includes the managing trader funds, a successful trade outcome is for his own benefit too. All managing trader actions are transparent and can be monitored at any moment, as well as own funds can be withdrawn from a PAMM account promptly. Furthermore, the investor determines the risk degree by himself, limiting possible losses.
In order not to lose funds and gain a stable high profit - future PAMM account investors should adhere to a basic safety rule: work with managing trader through a brokerage company only. Otherwise, the investor bears risk of losing all his injections.

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Eur/usd: sell

Eur/usd: sell at 1.2686, tp 1.2645, 1.2600
stop: 1.2732
USD/CHF: buy at 0.9492, tp 0.9530, 0.9568
stop: 0.9455

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Forex Trader

Forex is an international bank-to-bank currency market. Forex trade assumes purchasing or selling the currencies. Due to ever-changing currency rate, buying a currency at lower price and selling it at higher one you can gain profit catching its further movement correctly (for example: correctly determine the news).

Forex market partakers are: banks (central and commercial), pension funds, insurance companies, brokers, dealers and private investors. Because of a great participants number and similar trades volume a lot of transactions are executed in a few seconds.

A huge capital is not required for trading on Forex, as broker gives a loan - leverage. Its size is equal to hundredfold amount of deposit, it means that a trader (participant playing on Forex) enters the market with a sum exceeding the amount for trades execution hundredfold.

Trade execution on Forex consists of 2 parts. First: trader opens position with a certain currency pair. Second: he closes position with this pair. Trades on Forex are closed automatically during several seconds. However, even such a big trades quantity accomplished by traders cannot put a substantial effect on price.

Position opening in Forex trading is a process of requesting one currency from a broker for a certain quantity of another. The cost of a base currency in the first pair is called quote displayed in the quoted currency unit. It has 2 figures: Bid - the cost of base currency sold for quoted one and Ask - the price at which it is bought. A difference between them is called spread (it is the main income source for a broker), and point is the minimal price movement which can be accepted. Currency rate information is always available for those who operate on Forex market.

Forex trading is carried out in three ways. These methods involve several trading strategies. Traders with big trading experience on Forex develop their own strategies for several years, but there are some approved and really beneficial strategies:

- Day trading (intraday short term trading) is opening of short term trades by a trader for 1 or 2 minute period up to a couple of hours. Such trades are usually closed in the same trading day and almost never carried over night.

- News trading. Traders using this kind of trading can always have a stable profit, making the right analysis of published news. At the same time, wrong news analysis and position setup can result in serious losses.

- Midterm trading. With this kind of trading, trader opens long period trades (from 1-2 days up to 1-2 months). Getting a huge profit following this strategy is possible in case a trade remains opened for a few days at least. A good capital is needed for backing up such trades.

- Technical analysis in Forex trade implies an option to estimate and make right analysis of different chart types (bars, Japanese candlesticks, lines) with currency pairs and figures displayed on them that allows to forecast rate fluctuations of the currency pairs.

- Carry trade is gain acquisition from difference betweeen the interest rates of currency pairs.

Using this type of trade, trader's positions remain open for a long period of time (from 2-3 months to 1 year and more). Such trading requires a big capital. It is used for waiting when a trade becomes profitable not to bear losses until the price changes to the right direction.

Also one of the advantages of Forex trade is that the work does not stop 24 hours 7 days a week (from Monday to Friday), therefore, regardless of difference between the time zones and location you can continue taking part in trading. Such opportunity of trading on Forex is provided by the world financial centers managed by the national banks together with international banks where different countries capital is kept.

Major of them are located in: New York, London, Tokyo, Paris, Luxembourg, Singapore and Austria. They allow supporting the liquidity for trading on Forex during the whole day and night.

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The Features of Weekday Trading on Forex Market

Movement of currency pairs on Forex market has a direction, so called trend, which can be seen well in the end, but for more efficient work traders should know its direction at the beginning of trading week.

There are several factors forming a trend on Forex market:

1. Movement of currency pairs on Friday on the American stock exchange.
2. Opening of Gap (price gap by the end of the previous day and at beginning of the next one) at midnight on Monday (Asian trading session). The result is that the hit resistance levels of pairs very often become the support levels, and the pairs, having made a start from these levels, move in the given direction during the week.

Between the American trading session on Monday and the Asian one on Friday the channel of peak resistance levels (on fractals and zigzags) determines the start point for currency pairs, which break the resistance upwards or downwards and, as a rule, move in the given direction of a trend.

The first and the basic feature of currency pairs' behavior on Forex market is their movement on the American stock exchange on Friday. This is an original testing of trend force and direction through the weekend news.

If a negative news release does not influence the bounces of currency pairs on Friday, this means that brokers and banks were not ready for such surges and the movement should start on Monday.

If a currency has made a sharp trend leap, there are two possible scenarios:

1. A new wave of trend, for example 400 points, which the currency pairs had passed for the last week, will become a first wave, and the third wave in the same direction, which is equal at least 640 points, is by 60% longer.
2. Being at the start of mid-term trend from 4-hour to daily and weekly charts, the rollbacks reach from 23% to 62%. Movement follows the trend, a new week - a new trend jump.

If at the Friday American session the currency did not start its movement on the market, this means that brokers cannot determine the trend or moving direction for the next week, and this direction will be known only on Monday.

From everything mentioned above we can make a conclusion: depending on behavior of the Elliot Waves, Friday session determines the currency behavior for the next week beginning.

1. If potential force of a trend is very strong and there was a trend jump on Friday, then on Monday or Tuesday a correction or reversal can be expected, or a new trend wave.
2. If on Friday the currency went against the trend, then Friday movement will turn into correction or into the first wave of an opposite trend.
3. If the currency did not start its movement on Friday, then a movement formation can be expected on Monday or Tuesday.

One more important feature of the currency market Forex is the analysis of Forex economic calendar for next week. For this purpose it is necessary to mark the events, which can forecast a trend direction and all updates to it.

Besides, there is one more peculiarity, it is necessary to pay attention to the Gap, which appears at midnight on Monday, whether currency pairs of the allies are opened upwards or downwards and which direction the currency pair is to move in after this at the Asian trading session, as a rule, the currency moves in this direction next week.

In order to earn on market, it is necessary to understand that intraday trend does not exist by itself.

Every trader should come to the main conclusion: currency makes the most part of its movement until the news release and only a minor movement is observed when the news was officially confirmed.

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