Forex trading is attracting more and more people because of one simple reason – it offers people the potential to make a lot of money. However you can’t just open a forex account, start trading the markets and expect to make money. It’s a lot harder than that unfortunately. You need a plan of attack, and an important part of that process is determining your trading style.
The fact is that everyone is different and there is no single way to make money from the currency markets. For instance you can became an expert in economic matters and focus on taking long-term positions which take months (or years) to unwind, or you could go the opposite way and trade the short-term charts such as the 1 and 5 minute charts.
I personally fall somewhere in the middle because I like to trade the 4 hour and daily charts, but you have to find which time frame is best suited for you. If you are an impatient person, then long-term trading probably isn’t for you, but if you have a full-time job for example, and therefore have limited time to trade during the day, then you may find that long-term trading is much more appealing.
There are also other factors you have to consider. The main one is of course the trading strategy you intend to use. If you already have access to a profitable trading strategy or have developed your own, then you are extremely fortunate because this is something that most traders never manage to do. It’s worth noting that the longer the time frame you use, the easier it is to generate a winning strategy in general.
I personally would always recommend that you stay away from the shorter time frames because these are very difficult to trade. This is because there are a lot of random price movements on these short-term charts, and the trends are often quite small when they do occur.
So it’s always worth bearing in mind how your personality will affect your trading, and then to try and come up with a strategy that suits your overall personality. You will often find out what kind of trading personality you have by trading with a practice account first of all.
It’s worth testing to see how you perform trading the various different time frames. Some people are ideally suited to the quick thinking and quick responses that you need to scalp the markets, whilst others are very analytical and are better at finding high probability set-ups on the longer term charts. There are lots of ways to tackle the markets, but determining your style of trading will certainly help you to achieve your long-term profit goals.
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Article Source:http://www.articlesbase.com/currency-trading-articles/forex-trading-determining-your-own-trading-style-1730788.html
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The Forex market is widely known by its high liquidity and high volume of transactions occurring during most of its long trading week. These characteristics highly contribute to make the Forex market a very trendy market with few trend-less periods during the whole trading period.
But what does this mean to the Forex trader? Mainly this trendy characteristic of the currency markets means that there will be plenty of opportunities for the trader to find profitable trades during the day.
As you start analyzing forex charts you will realize that the market often display’s some very familiar patterns of price movement, this is; trends; and you will notice that once a pattern is established, it becomes the most probable course of future price action until the market changes. Giving you a good forecast of what comes next with the currency prices.
There are two types of markets which will become very important for you to identify and understand; these are: trending and, the less frequent, trend-less markets. Each market type has two specific patterns which you will also notice over time.
A Trending market is defined as a steady, elongated price movements with less than a 45 degree angle with occasional pauses, profit taking, or resting periods.
In a Trending market, you will notice two main and quite evident patterns:
Uptrends – A pattern of higher highs and higher lows.
Downtrends – A pattern of lower lows and lower highs.
There is also the less frequent kind of market, this is a Trend-less market with erratic price movements which are often steep (greater than 45 -degree angle) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they are constantly and rapidly oscillating with the consequence that they often result in very little net price movement over time.
In a Trend-less market, you will find these main patterns:
Choppy – An erratic pattern of higher highs and lower lows.
Sideways – A narrow pattern of lower highs and higher lows.
While up-trend and down-trend periods will offer excellent trading results most of the time, choppy markets often create stop outs, this is they activate your stops by constantly overshooting your projected resistance level but without never really crossing too far from this level; while sideways markets produce for little in either direction making them hard to trade and to make any profit during these periods.
As always in Forex, your main trading objective is to get into profitable trades most of the time and a trending market is the perfect situation to find this profitable trades by riding the trends until you make your target profit objective of the day.
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Article Source:http://www.articlesbase.com/currency-trading-articles/forex-a-trending-market-1702372.html
Do you find it hard to analyse your financial charts in a technical way? Would you like to use a more intuitive, simple method? Read on and find out about Candlestick Charts.
Candlestick charts are said to have been originated in Japan by a rice trader, Homma Munehisa. The charts gave Homma an overview of the rice market. It is said that he once made profit on 100 consecutive trades! Candlestick charts were noticed by Charles Dow in around 1900 and are used very widely today. The charts are now applied to currency markets to predict future movement and to document the open, close, high and low prices for a given period.
Candlesticks are normally made up from either a solid or hollow rectangular body and an upper and lower shadow (which would be wicks on a wax candle). The shadows show the highest and lowest price that the security (currency in this case) was traded for in a period of time. The body shows the opening and closing trades. If the security closed higher than it opened, the body is hollow, with the opening price at the bottom of the body and the closing price at the top. If the security closed lower than it opened, the body is solid, with the opening price at the top and the closing price at the bottom. A candlestick doesn’t have to have either a body or a wick. In most charts now, the body is coloured depending wheather the price closed higher or lower than when it opened. Red and green candlesticks are commonplace.
Prices are driven by trade and the emotions that govern the people making those trades. Candlestick charts are very good for tracking this in a minute by minute fashion but trading in the short term is known to be risky. Luckily, candlestick charts are equally valid for longer periods. Most modern software enables you to choose a period from seconds to months or even years. This is far safer since long term trends tend to be more stable in nature.
Depending on the pattern of candlesticks, they can show bullish or bearish behavior and therefore indicate where a market is headed. Different patterns mean different things of course and need to be interpreted very carefully. There are many patterns to learn but they are visual which can aid the your learning. A course in candlestick charts is essential be it either a book or videos. A good system is recommended below.
In this article I have just given a very basic introduction but there is a wealth on information available online. Candlestick charts have been used for centuries and for good reason. They are visual, the patterns are easy to learn and they are a reliable source of indicators. Get the advantage by learning all you can about them.
