Forex Scalping Strategies

Forex Enigma

Forex Enigma is a new forex trading indicator that is created by Karl Dittmann that works only on M1 and M5. It works for all currency pairs, but the best results can be expected on Usd/Jpy, Eur/Usd, Gbp/Usd, Usd/Cad and Eur/Jpy. It is designed for MT4 platforms and it is Not an EA or Robot, but a powerful buy/sell signal arrows. scalping indicator software. Buy/Sell Arrow Scalper is based on a complex multi-indicator systems and special trading secrets that are programmed to work along and confirm each other for pulling safe and fast trigger right before the price explodes. All you need to start trading with Buy/Sell Arrow Scalper is to enter and exit trades according to the simple automatically generated arrow signals. No thinking or analyzing. It lets you take full advantage of expert market analysis that's working for you behind the code of this great indicator tool. If you were looking for something powerful and easy-to-use, whether you're a beginner or a highly experienced trader, then this is the right choice for you. This Indicator does not only tell you when to place your positions with pinpoint accuracy; it also protects you from any unnecessary risks, guaranteeing that you will win more than you lose every single time. More here...

Forex Enigma Overview

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4.7 stars out of 15 votes

Contents: Forex Software
Creator: Karl Dittmann
Official Website: www.fxenigma.net
Price: $87.00

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Buy/Sell Arrow Scalper Review

Highly Recommended

Forex Enigma offers lots of key features that the power users are usually interested in, wrapped up in a friendly and likable interface, at the same time benefiting from great online support & tutorials, which makes Forex Enigma an easy to use program even for the inexperienced users.

This is an amazing piece of software at a bargain price, you can not lose. If you have any information about the cons of this software, please share with us.

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Using Pmo Macd Indicators

Of all the momentum indicators out there, I like PMO, developed by Carl Swenlin. This proprietary indicator is based on a rate-of-change calculation, which is exponentially smoothed. PMO behaves similar to the MACD momentum oscillator developed by Gerald Appel. We use the weekly PMO and MACD on the indexes to pick trends that usually last from three to six months. Figure 6.13 shows the topping process in the S& P 500 in January to March 2004, as discussed previously. Notice here that both the PMO and MACD indicators had bearish crossovers and triggered sell signals in early March 2004, which predicted a decline that would last several months. The next bullish weekly crossover on the PMO and MACD did not come until mid-October 2004 therefore, the decline from the March high lasted seven months. During this time frame, traders would have been out of the market or short. Also notice a bullish weekly crossover of PMO and MACD came in March 2003, and both PMO and MACD trended higher...

Scalp Trading the 1min Charts System

Scalp trading is when you use the 1 to 5 min charts to 'scalp' small profits. These trades usually only last a few minutes to an hour. You can use the FPS to scalp trade Forex on the 1 min charts. Here is how Often it is best to scalp trade at the London Open (3 00 AM EST) or the New York open (8 00 AM EST) because that is generally

Moving average convergencedivergence macd

This leading trend-following indicator consists of three exponential moving averages that give buy or sell signals when they cross. The MACD consists of a solid line and a dashed line. The solid line is the MACD line and the dashed line is the signal line. When the fast MACD line crosses above or below the slower signal line, then a buy or sell signal kicks in. The MACD line is the difference between two exponential moving averages (EMAs). The standard moving averages used are the 26-day EMA and the 12-day EMA. The difference between these two averages produces the fast line. To calculate the slow line or signal line, use the 9-day EMA of the fast line. The advantage of using the MACD is that it will provide a bullish or bearish consensus with less choppiness than plain moving averages do. The right way to use MACD is

Overbought Oversold Oscillators

Overbought (OB) and Oversold (OS) are among the least understood market conditions that traders grapple with. Most lose money attempting to utilize what they know about the subject. This is not surprising, because we're getting into the use of coincident and Leading Indicators and very few traders are properly prepared for the challenge these concepts present. Because of the level of misunderstanding, instead of narrowly defining what I use and how I use it, my approach will be to discuss the broad topic of Oscillators in general what works, what doesn't, and why. Typical thinking about Oscillators can be summed up by the following comment. Oscillators work in a consolidating market, but once a Trend starts, they don't work at all. While this thinking may be typical, it severely limits and distorts a wealth of important trading strategies. The idea behind the statement goes something like this. You can sell Overbought and buy Oversold, as long as the market is consolidating and you...

Generating Entries With Oscillators

There are many ways to generate entry signals using oscillators. In this chapter, three are discussed. One popular means of generating entry signals is to treat the oscillator as an overbought oversold indicator. A buy is signaled when the oscillator moves below some threshold, into oversold territory, and then crosses back above that threshold. A sell is signaled when the oscillator moves above another threshold, into overbought territory, and then crosses below that threshold. There are traditional thresholds that can used for the various oscillators. A second way oscillators are sometimes used to generate signals is with a so-called signal line, which is usually a moving average of the oscillator. Signals to take long or short positions are issued when the oscillator crosses above or below (respectively) the signal line. The trader can use these signals on their own in a reversal system or make use of additional, independent exit rules.

The Difference Between Scalping Momentum Swing and Position Trading

Et's begin this discussion with the understanding that the definition of scalping, turn, swing, and position trading will vary from trader to trader We need a baseline so I will describe each of these trading types as it pertains to how you may want to incorporate each into your approach to the markets and also which you find you may begin to adopt more actively into your trading day. There is one idea I should say one myth that needs to be dispelled. Trading types have nothing to do with how long you are in a trade. The idea that a trade is defined by the time spent in the market is ridiculous. Trade types are defined by how you enter a trade, not by its duration. There are only two reasons to exit a trade because your stop-loss was reached or because your profit target was reached. The time it takes to do either is irrelevant. With that said, we'll cover scalping first. Scalping, in my opinion, is an advanced type of trading, not because of the style itself, but because the speed at...

Moving Average Convergence Divergence Oscillator Macd

In 1979 Gerald Appel improved the price oscillator, discussed in Chapter 3, by adding a moving average of the price oscillator itself. Buy signals came when the price oscillator moved above the second moving average, called a trigger line. He called the new technical oscillator the Moving Average Convergence Divergence Oscillator, or MACD (pronounced M-A-C-D, or Mac-D). Buy signals are generated when the Figure 4-1 shows the addition of the trigger line to the price oscillator that was first plotted in Figure 3-13, The two combined oscillators make up the MACD. Note that this MACD is much faster to signal entrances into upward trends and also much quicker to get out of losing trades. Prove this for yourself by comparing Figures 3-13 and 4-1. Appel studied the MACD at great length and has made a series of recommendations, some of which can be summarized as follows 1. Establish the trend of the security by determining whether the 50-unit moving average has a positive or negative slope,...

Using Technical Indicators Alongside Bullish Trending Candlestick Patterns

Ou can combine candlestick patterns effectively with a variety of technical indicators to produce information that helps you decide when to put on and get out of trades. Like candlestick patterns, many technical indicators tell you when a trend is about to reverse, but several others can let you know that a prevailing trend continues. These indicators are powerful weapons that can add to the versatility of your trading arsenal. If you understand how to use technical indicators in tandem with bullish-trending candlestick patterns, it's easier for you to spot situations where buying to enter a long position is a wise move. And you can also use technical indicators to confirm market or individual security predictions that you've made based on candlestick patterns. I cover all that and more in this chapter, and I focus my discussion on two of the most common technical indicators trendlines and moving averages. If you need a refresher on those two indicators, flip back to Chapter 11. If...

Oscillators And Reversal Indicators

Oscillators and trend-following indicators are valuable tools that help traders to locate trading ideas and to find additional confirmation of what they're seeing in the charts. Technical indicators are broken down into two areas trend-following tools and oscillators. Both will help you to identify trending markets, overbought and oversold conditions, pullbacks, and turning points. You'll find that certain indicators resonate with you, while others don't. The object of using them is to help you narrow down an idea, not for confirmation alone. Price action and volume are the only factual confirmations available to a trader. Indicators will help you locate the potential for price action. Oscillators are powerful tools for confirming a pullback during a trend. It is during the period of time when trends consolidate that oscillators produce potent signals for reentry onto the trend. Going long during a pullback within an uptrend is referred to as trading the up hook. The up hook is a...

Oscillators and Stochastics

Oscillators such as RSI, stochastics, Williams R, etc., are all designed to help people who are trying to pick tops and bottoms. In my opinion, this is a fool's game, and there is no evidence that entry signals based upon oscillators have a reliability much better than chance. In fact, in most cases there is no evidence that the market generally meets the assumptions that many oscillators are making. As a result, I've elected not to give a long discussion on something in which I have little faith. This sort of trading sets up the possibility of a highly reliable trading signal with a very small stop (i.e., the extreme of the reaction). In addition, since the risk of such a trade is quite small, it means that the reward-to-risk ratio of the potential trade could be very high. This is actually an example of a retracement setup as discussed in the last chapter, and it is, in my opinion, the best way to use oscillators.

Implied Probabilities And Arrowdebreu Theory

The purpose of this section is not so much to provide a formal description of the Arrow-Debreu theory as much as to provide a flavor for it. Let us consider the scenario that involves placing bets on a set of outcomes. Examples of such events could be a boxing match or a horse race. In these cases, the set of outcomes is finite and well defined. We will use the horse race example for purposes of illustration. Important to the discussion is the notion of betting. If, for example, the bet is placed in favor of a horse and it wins the race, then the reward is the payoff from the bet. If it happens to lose, then here, too, the reward is the payoff from the bet, except that the payoff is probably zero dollars. Thus, a bet is completely defined when we specify the payoff for every possible outcome. To place a bet, one has to put up the stake money. This is specified by the bookie. The Arrow-Debreu theory states that the full and complete specification of bets with the stake money and the...

Percentage Oscillators

Relative Strength Index Chapter 1 highlighted RSI as a mean reversion indicator because it is among the most popular and well-known of the oscillators. Like stochastics, the RSI is plotted on a 0 to 100 scale, with the 70 30 combination as the most widely used overbought oversold boundary parameters. As with stochastics, the most popular time periods are the 9-and 14-day versions. Traditionally, RSI generates entry signals whenever the index extends into overbought or oversold territory then falls below the upper boundary or rises above the lower boundary. Differential Oscillators We have already examined several differential oscillators, including the two-moving average, the DMI, and the MACD differential oscillator. As stated, differential oscillators are based on the difference between two data series. In contrast to percentage oscillators, which range from 0 to 100, differential oscillators have no numerical limit and so determination of overbought or oversold levels is...

Foundation 4 Learn how to use the technical indicators in this course and always trade with stop losses

It is worth your time to be patient and learn how to use the technical indicators on the charts that you will be reading about shortly. It is important when you are trading Forex, to be disciplined and to stick to a plan. Don't just trade your 'gut' feeling. Use the technical indicators outlined and always enter in stop losses on every trade. Remember that everyone who trades has a different tolerance for losses. Depending on your risk capital, and strategy, set your stop losses accordingly.

Momentum and Oscillators

The study of momentum and oscillators is an analysis of price changes rather than price levels. Among technicians, momentum establishes the speed of price movement and the rate of ascent or descent. Analysts use momentum interchangeably with slope, a straight-line angle of inclination of price movement as measured from a horizontal line representing time. Momentum is also thought of as force or impact it is often considered, as in Newton's Law, that once started prices tend to remain in motion in a somewhat straight line. Rate-of-change indicators, such as momentum and oscillators, are usfcd as leading indicators of price change. They can identify when the current trend is no longer maintaining its same level of strength. This gives the trader an opportunity to begin liquidating the open-trend trades before prices actually reverse. As the time period for the momentum calculation shortens, this technique of leading a trend changes to become more aggressive and is interpreted as a...

Technical Indicators and Charting Patterns

Over the years, technical analysts have developed hundreds of technical indicators and detected dozens of chart patterns that they contend help them forecast future price changes. While we cannot describe or even list all of them, we can categorize them based upon the nature of irrationality that we attribute to markets. Consolidating all of the irrationalities that have been attributed to financial markets, we have created five groupings Investors change their minds frequently and often irrationally, causing significant shifts in demand and supply, causing prices to move. If you believe that this is the way markets work, you would use technical indicators and charting patterns to detect these shifts. There are external forces that govern up and down movements in markets that override fundamentals and investor preferences. Technical indicators and charting patterns that allow up to see their larger cycles in stock prices can allow us to get ahead of other investors. Within each, we...

MACD versus Bollinger Bands

In this comparison MACD is obviously the superior performing system. Not only does it enjoy a better P MD, but it does so while enjoying a higher percentage of winning trades, better profit-to-loss ratio, and fewer consecutive losses. So why would anyone choose to trade the Bollinger bands system The most obvious reason is that MACD's results were achievable only if one had the prerequisite 200,000 in equity under management needed to withstand its maximum drawdown. If one had only 100,000 under management, employment of MACD would entail the weathering of a 42.55 percent maximum drawdown (compared to a 28.32 drawdown for the Bollinger band system). Moreover, remember that MACD's superior performance was only achievable if one had the patience and fortitude to hold trades for an average of 143 days. If a trader showed me the results from Tables 3.10 (Bollinger bands) and 3.6 (MACD), then asked which I thought was the better trading strategy, I would pose four questions

Moving Average Convergence Divergence MACD

Convergence Trading

The moving average convergence divergence (MACD) indicator combines some of the principles of oscillators, like those already discussed, with a dual moving average crossover approach. It uses two metrics, both represented with lines. The faster of the two lines (called the MACD line) is the difference between exponentially smoothed moving averages of closing prices the 12- and 26-day moving averages are most commonly used. The slower of the two lines is the exponentially smooth average of the trailing nine MACD periods. These metrics can be adjusted, but they are the most common examples and are used by a majority of traders. There are two ways in which traders use MACD to generate buy and sell signals. The first involves a classic moving average crossover event. When the MACD line, the faster of the two, crosses the signal line, a signal is generated. If the MACD crosses and becomes higher than the signal line, this is a buy signal if the MACD line crosses and becomes lower than the...

Moving Average MACD Combo

We have developed a strategy that answers all of the questions above while at the same time giving us clear entry and exit levels. This strategy is called the moving average MACD combo. We use two sets of moving averages for the setup the 50 simple moving average (SMA) and the 100 SMA. The actual time period of the SMA depends upon the chart that you use. This strategy works best on hourly and daily charts. The 50 SMA is the signal line that triggers our trades, while the 100 SMA ensures that we are working in a clear trend environment. The main premise of the strategy is that we buy or sell only when the price crosses the moving averages in the direction of the trend. Although this strategy may seem similar in logic to the momo strategy, it is far more patient and uses longer-term moving averages on hourly and daily charts to capture larger profits.

Soes commissions and scalpers

Scalping is a day trading tactic used to capture small discrepancies in price, as little as 1 16. Scalping for small fractions has become an increasingly hazardous path toward successful day trading. Popularized through the SOES day trading tactics of the late 1980s and early 1990s, scalping for fractions was less complicated then than it is today. At first, all a SOES day trader had to do was pick off a market maker and offer the stock back out to the street at a better price. This tactic was easy and profitable when competition for the prime executions was minimal because of the smaller number of SOES traders. Market makers also displayed larger sizes on the inside market, and were slower to react to an SOES trade because of antiquated technology. Today, however, scalping for fractions is much harder. Now there are thousands of traders using SOES, many competing for the same print from a single market maker. It has also become increasingly difficult for SOES scalpers to receive...

How and When to Use Key Technical Indicators

By now, you can see that trading forex involves making a sequence of decisions. You begin by first deciding which direction to take the next trade. This decision is based on assessing sentiment and trend direction. The second step is deciding where to enter the trade. Entering the trade off a trend line or Fib line is an example of the basis for this decision. But the third key step is pulling the trigger-deciding to put on the trade. This is where technical indicators come into play and become a critical tool to confirm your analysis and instincts. The list of potential indicators used to help shape forex analysis is quite extensive. Many technical indicators used for equity and futures markets do not apply to forex because forex trading does not provide volume data. The new trader is likely to become confused as to which indicators to use. This chapter will guide you. Average True Range Bollinger Bands Commodity Channel Index Envelopes MACD MACD Histogram Momentum Moving Average...

MACD Confirming Trend Direction and Reversal of Trend

A rule of thumb is that a buying opportunity occurs when the MACD line crosses the signal line and goes above it. A selling opportunity occurs when the MACD line crosses below the signal line. The center line or the 0 line is useful also. When the MACD swings above or below the center line there is another buy or sell potential. Traders find the MACD complicated. Thomas Aspray introduced a new idea called the MACD Histogram. The MACD histogram is useful in indicating that a trend reversal may be near. What you want to look for is divergence. If the price is going up and the MACD is going down below its signal line, the trend may change. The histogram version is very useful because the Histogram is a way of showing the distance between the MACD and its signal line. By seeing whether the histogram bars have changed slope, you can see early on if there is a divergence. If the histogram slope is pointing up and the price is flat or still down, this is a sign of a possible reversal. Charts...

The Exponential Moving Average And The Macd

One of the most popular uses of the exponential moving average is for use in the MACD (Moving Average Convergence-Divergence). The MACD is composed of two lines. The first line is the difference between two exponential moving averages (usually the 26- and 12-period exponential moving averages). The second line of the MACD is made by taking an exponential moving average (usually a 9 period) of the difference between the two exponential moving averages used to make the first line. This second line is called the signal line. More about the MACD in Exhibits 13.7 and 13.8.

Market Timing based upon Technical Indicators

In chapter 7, we examined a number of chart patterns and technical indicators used by analysts to differentiate between under and over valued stocks. Many of these indicators are also used by analysts to determine whether and by how much the entire market is under or over valued. In this section, we consider some of these indicators.

Markettiming Oscillators

Most traders are familiar with a set of market-timing indicators that are described as oscillators. Their goal is to identify trading opportunities which may exist whenever the oscillator indicates a market is overbought or oversold.* Those who use oscillators typically relate market price activity to oscillator behavior over compa Although the preceding comments are applicable to almost all market-timing oscillators, we are partial to using them with the ones we have developed. Many other widely followed oscillators are exponentially calculated and, consequently, have a tendency to create faulty readings. Also, the calculations for these oscillators require closing price comparisons from one price bar to the next. Because of this requirement, unscheduled market closings due to electrical failures or bad weather or unexpected news or political events such as assassinations or earthquakes can all skew closing price levels, thereby distorting the overall oscillator reading, not only for...

Available Technical Indicators

Generally speaking, the technical investor will use a combination of price, volume and time-sensitive technical indicators to maximize their profits. Here is a complete list of technical indicators utilized by SwingTracker, IQC Corporation's award-winning technical analysis charting software.

Mathematical tools for the technical analysis Technical indicators

The quantitative, or mathematical tools for the technical analysis called the technical indicators are being obtained as a result of the mathematical processing of prices averaged in time as well as other characteristics of market movements. They are applied to get signals for an additional evaluation of trade channels and patterns analysis by means of the indicators charts. The main groups of technical indicators are moving averages and oscillators. Oscillators. Oscillators were designed to provide signals regarding overbought and oversold market conditions. Therefore the signals of oscillators are mostly useful at the extremes of their scales. Crossing the zero line, when applicable, usually generates direction signals. The major types of oscillators provided by the RoyalForex program are considered below. Convergence Divergence of Moving Averages. The moving average convergence-divergence (MACD) oscillator is built on exponentially smoothed moving aver ages. The MACD is a...

Oscillators

Although channels are a good way of trading, they can be improved by obtaining confirmation from other sources. A group of indicators that can confirm the channels are called oscillators. Many people have studied the securities markets with the hope of inventing a perfect oscillator, and there are probably at least 100 oscillators appearing somewhere in the literature none of them perfect, but some of them quite useful. They vary from A, the Accumulation Swing Index, to U the ultimate oscillator. Here we deal with the ones that have stood the test of time and proven useful in actual practice.

Kamikaze Scalpers

I think that is it worth mentioning here that there are people that I would label as Kamikaze Scalpers. This IS NOT something that I would endorse for you, but will mention it here because sooner or later you will be tempted to start thinking about it, and there are many people who do it. Because scalping involves tiny trades (in duration and amplitude) many scalpers trade significantly larger amounts of lots (regular or mini) to leverage the tiny pip gains into more substantial profits. The Kamikaze Scalpers might thus be risking far more than the suggested 1 to 2 per trade. I urge you to consider against becoming a Kamikaze Scalper simply because the higher your risk percentage per trade the greater the risk that a draw-down

Technical Indicators

Technical indicators are the basic tools of technical analysis. They distill market movement so you don't have to deal with a lot of the static that comes with erratic price movements. There are literally thousands of technical indicators available to you as an investor. In fact, we even created one of our own called the Forex Forecast a proprietary forecasting indicator that is available only through iNVESTools at www.investoolsct.com. There is also an iteration of this forecasting indicator on www.investools.com that is used for investing in the stock market. But when it comes right down to it, most Forex investors stick to a repertoire of fewer than 20. Our goal is not to overwhelm you with thousands of technical indicators that you will have to weed through. We want to keep this as simple as possible because it is much easier to be profitable when you don't clutter things up too much. Often you will see technical indicators classified into two categories trending and nontrending...

Macd histogram

Subtracting the slow line (signal line) from the fast line (MACD line) creates the MACD histogram. Plot the difference in the form of histogram bars. When the fast line is above the slow line, the histogram bar is plotted above the zero line. When the fast line is beneath the slow line, the bar is beneath the zero line. The slope of the histogram depends on the difference between the fast line and the slow line. Stronger bull action will cause the fast line to be farther above the slow line thus the histogram will have longer lines above zero. The same holds true to the downside when the bears take control. The right way to use the MACD histogram is Figure 17-2 shows a chart of Dell Computer (DELL) with MACD lines superimposed on top of the chart, and with an MACD histogram displayed beneath the chart. The chart also has an 8-period moving average. Toward the end of July and the beginning of August, DELL formed bullish divergence with the MACD histogram. On the second higher bottom of...

What Is Scalping

Scalping can have various descriptions depending on whom you ask. Some folks would say that some Forex Surfing techniques are considered scalps due to the small size and duration of the trades. Different traders have different techniques for scalping, but one thing that can be universally agreed upon is that scalping involves tiny trades (both in amplitude and duration). Typically, scalping is a specialized technique that involves making a tiny trade to capture a very small movement in the market. Whereas a position trader may engage in trades that are intended to last for multiple days to months (aiming for targets of hundreds to thousands of pips), and a day trader typically engages in trades that are intended to last for less than a day (aiming for targets ranging from 20 to 100 pips), a scalper engages in trades that might only last a few minutes aiming for targets of 5+ pips. A scalper typically trades multiple Forex lots (mini or regular lots depending on the size of the account...

Kinds Of Oscillators

There are two main forms of oscillators. Linear band-pass filters are one form of oscillator. They may be analyzed for frequency (periodicity) and phase response. The MACD and MACD-H are of this class. Another form of oscillator places some aspect of price behavior into a normalized scale (the RSI, Stochastics, and belong to this class) unlike the first category, these oscillators are not linear filters with clearly defined phase and frequency behavior. Both types of oscillators highlight momentum and cyclical movement, while downplaying trends and eliminating long-term offsets i.e., they both produce plots that tend to oscillate. The Moving Average Convergence Divergence Oscillator, or MACD (and MACD-Histogram), operates as a crude band-pass filter, removing both slow trends and offsets, as well as high-frequency jitter or noise. It does this while passing through cyclic activity or waves that fall near the center of the pass-band. The MACD smooths data, as does a moving average but...

Gamma Scalping

Often, when I ask What is the best position for a market maker to have (I am looking for the answer a flat position) students say, Long gamma. It is true that a long gamma position creates deltas favorable to the market direction. That is a wonderful thing to have happen, but remember that there is a luxury tax attached to this position and can be very costly. The exposure is negative theta, which means that your asset is wasting away and is also subject to potentially devastating decreases in implied volatility. Gamma scalping methods can be used to recapture some or all of the lost premium, but it is more of a defensive play (money saver) than a money maker. Gamma scalping is basically fading the market as the position manufactures deltas. Gamma scalping is not for everyone, but the following discussion will surely tie up a lot of loose ends regarding options behavior. The gamma scalping type of neutralization, also referred to as delta hedging, is performed on an as needed basis by...

The Macd Turn

Oscillators come in all shapes and sizes, but for my money nothing beats the MACD histogram for sheer simplicity or accuracy. The MACD turn, which is a setup I like to trade on anything from as small as 15-minute bar charts to as large as weekly candlesticks graphs, operates on a deceptively simple premise but actually uses rather fancy money management to turn it into success. The basic premise of the MACD turn is this Momentum precedes price. That means in a battle between price and momentum always trust momentum. 2. Overlay the MACD histogram using standard MACD settings of 9-period exponential moving average (EMA) and 12-period EMA. 4. For a short setup look for the MACD histogram to print a lower high bar indicating that momentum is waning. 8. If price moves in the opposite direction of the trade and makes new swing highs but MACD histogram does not, sell another one-third of the position at market.

Scalping

The main idea behind the scalping strategy in FOREX trading is to take very small profits very quickly from very small movements of price, such as 2 to 10 pips. The trades normally are entered and exited within minutes or even seconds. Small profits add up because the number of daily trades can be very high, ranging from 20 to 100 trades on average. Scalping is considered to be a risky trading style. However, this will depend on which times of the day and which types of markets are used. Although it is possible to scalp successfully in trending conditions, the best trading times are when the market is ranging inside consolidation patterns. Most of the time, this is so thus there are plenty of times to choose from to implement this strategy. High volatility or news releases are not recommended because of a higher risk involved. The strategy has to be very well determined in advance, as for any trading system, especially in terms of risk management. A fast reaction and decision time is...

The Joy Of Scalping

Why be a Forex Scalper Simply put, it is both fun AND profitable The concepts are easy to learn, easy to do (once you're skilled at it), provides you with an adrenaline rush, and can fatten your bank account. Personally, I think that of all Forex trading methods that scalping is simply the most fun. The trading style is mentally stimulating, and it's exciting to watch your profits grow. If you are a chronic trader, someone who enjoys doing frequent trades, you'll find that here you'll have the chance to be trigger-happy. Day traders often have to wait for hours before a good trading opportunity comes along (sometimes they don't even trade that day if nothing seems to happen), position traders often have to wait for days or even weeks before a suitable trading opportunity presents itself, but a scalper can be joyfully raking in fantastic profits while the other traders are bored out of their minds For these reasons experienced Forex traders can also add scalping to their trading I'll...

Scalpers

What Do Scalpers Do Scalpers look to enter and exit trades in minutes. The time that scalpers stay in a trade can range from seconds to minutes. Requirements for Scalpers Stamina. The constant focus drains mental energy as scalpers make dozens of trades every day. They must constantly focus their energy throughout the entire trading day and only take a brief lunch break. Discipline to take small stop-losses. Scalpers must use 2 to 4-cent stop-losses and never, ever more than 10 cents. Scalping is a style of trading when the trader tries to pull 5, 10, or 20 cents out of the market. Scalpers look for very fast moves that range from seconds to minutes. They do not like to ride through many small wiggles they hop on the boat and get off at the first sign of danger. The scalper always uses a very tight stop-loss and normally uses 1,000-share lots. If he is looking for a 10-cent ride, his stop-loss would be about 2 cents. If he is looking for a larger ride in a higher-priced stock, he...

Local Oscillators

The superheterodyne receiver utilizes one or more local oscillators and mixers to convert the echo to an intermediate frequency that is convenient for filtering and processing operations. The receiver can be tuned by changing the first LO frequency without disturbing the IF section of the receiver. Subsequent shifts in intermediate frequency are often accomplished within the receiver by additional LOs, generally of fixed frequency. In many early radars, the only function of the local oscillators was conversion of the echo frequency to the correct intermediate frequency. The majority of modern radar systems, however, coherently process a series of echoes from a target. The local oscillators act essentially as a timing standard by which the echo delay is measured to extract range information, accurate to within a small fraction of a wavelength. The processing demands a high degree of phase stability Range Dependence. Most modern radars use the stalo to...

Spread Scalping

Most traders would rather go home with a flat position. Day traders, scalpers, position traders, options speculators, and market makers would all be delighted if the market were to do what they expected before the closing bell, so that they could get flat. They would rather not have to worry about it overnight and enjoy the fact that they had had a good day. The next section is devoted to the concept of getting in and out of spreads which do not have a transparent price level.

Scalp Trading

Scalp trading is a way of profiting from price fluctuations in the stock market. These trades are usually fast and sometimes difficult to judge, lasting from seconds to mere minutes with only 0.125 to 0.5 point gains. When just beginning, trade with small shares to reduce the cost of learning as you gain experience. Think of it as baby steps. Most people that put on skis for the first time, wouldn't likely climb the highest mountain in Denver, Colorado before at This kind of adventure requires gaining experience the old-fashioned way through trial and error. Due to the quick time frame of scalping, there are various levels of risk-rewards ratios and strategies used. The best scalp traders have trained themselves to think quickly on their feet and to place numerous orders like second nature. Hesitation is always a risky cost in the stock market, but even more so when scalp trading. Before you even begin a scalp trade, do your research on what's happening in the market. Once you've...

A word on MACD

If you want to fully understand its use, please refer to That page will tell you all you really need to know about this truly powerful indicator. It is important in forex trading, as in other forms of trading, that you use MACD in different time frames to get a handle on where price action really is going. Don't just depend on any one time frame. It's best to view this indicator at different levels, starting at higher levels - i.e., longer-time duration - and then cranking the microscope down to lower levels. To explain, a downtrend can persist in spite of higher MACD lows on a shorter time frame, indicating that, if the price range has been huge, it has progressively reduced the effectiveness of this indicator on the shorter time frame. The higher time frame can remain in a sell mode, and confirm a downtrend, even though the shorter time frame is faking you out with what appears to be a buy signal.

Premises Of Scalping

There are a few main premises of scalping that are useful to keep in mind to understand the logic behind these techniques. Smaller moves are easier to gain - In my previous eBooks I mentioned that the larger your target pip gain the higher the possibility that the target won't be reached. I have been known to say that it is easier to catch 20 pips than 200 simply because in the time that it would take to reach that goal the market sentiment could change due to unforeseen circumstances. As a scalper it is reasonably easy to determine a small movement in a particular direction and to capitalize on a few pips before the market will likely reverse. Limit risk due to limited exposure - An active scalp trade typically lasts for a very brief duration. This reduces the likelihood that unforeseen news or a Fundamental Announcement will negatively affect the trade. Profit from trending sentiment - Currency pairs tend to trend or bounce around in the absence of any news or relevant events....

How to Create MACD

The original MACD indicator consists of two lines a solid line (called the MACD line) and a dashed line (called the Signal line). The MACD line is made up of two exponential moving averages (EMAs). It responds to changes in prices relatively quickly. The Signal line is made up of the MACD line smoothed with another EMA. It responds to changes in prices more slowly. Buy and sell signals are given when the fast MACD line crosses above or below the slow Signal line. The MACD indicator is included in most programs for technical analysis. Few traders calculate it by hand a computer does the job faster and more accurately. To create MACD 3. Subtract the 26-day EMA from the 12-day EMA, and plot their difference as a solid line. This is the fast MACD line. Crossovers of the MACD and Signal lines identify shifts in the balance of power of bulls and bears. The fast MACD line reflects mass consensus over a shorter period. The slow Signal line reflects mass consensus over a longer period. When...

Scalper

The scalper has the goal of a quick trade for small but leveraged profits. The scalper prefers to trade frequently for small moves instead of working for larger moves. The scalper focuses on the goal of taking profits quickly from the market and trades in a very limited time frame. Scalpers focus on the most recent price action and on small time intervals, from 10-minute candles to 1-minute candles. The trader seeing a high probable trade can decide to put on multiple lots and then attempt to obtain 5 to 10 pips or more. Parabolic patterns are excellent conditions for a scalp. After a parabolic move up, the probability of a fading of the sentiment is great. The scalper has to minimize the risk of a whipsaw. There is no perfect strategy, but the use of renko blocks

MACDHistogram

MACD-Histogram offers a deeper insight into the balance of power between bulls and bears than the original MACD. It shows not only whether bulls or bears are in control but also whether they are growing stronger or weaker. It is one of the best tools available to a market technician. MACD-Histogram MACD line - Signal line MACD-Histogram measures the difference between the MACD line and the Signal line (see worksheet, Figure 26-1). It plots that difference as a histogram a series of vertical bars. That distance may appear puny, but a computer rescales it to fill the screen. If the fast line is above the slow line, MACD-Histogram is positive and plotted above the zero line. If the fast line is below the slow line, MACD-Histogram is negative and plotted below the zero line. When the two lines touch, MACD-Histogram equals zero. When the spread between the MACD and Signal lines increases, MACD-Histogram becomes taller or deeper, depending on its direction. When the two lines draw closer,...

Is Technical Analysis Informative

Although there have been many tests of technical analysis over the years, most of these tests have focused on the profitability of technical trading rules.9 Although some of these studies do find that technical indicators can generate statistically significant trading profits, but they beg the question of whether or not such profits are merely the equilibrium rents that accrue to investors willing to bear the risks associated with such strategies. Without specifying a fully articulated dynamic general equilibrium asset-pricing model, it is impossible to determine the economic source of trading profits. Tables III and IV report summary statistics means, standard deviations, skewness, and excess kurtosis of unconditional and conditional normalized returns of NYSE AMEX and Nasdaq stocks, respectively. These statistics show considerable variation in the different return populations. For example, in Table III the first four moments of normalized raw returns are 0.000, 1.000, 0.345, and...

Implications For Technical Analysis

Technical analysis lias always had an inward focus. Emphasis was placed on a particular market to which a host of internal technical indicators were applied. There It was enough for the technical analyst to study only the market in question. To consider outside influences seemed like heresy. To look at what the other markets were doing smacked of fundamental or economic analysis. All of that is now changing. Intermarket analysis is a step in another direction. It uses information in related markets in much the same way that traditional technical indicators have been employed. Stock technicians talk about the divergence between bonds and stocks in much the same way that they used to talk about divergence between stocks and the advance decline line.

The Purpose Of This Book

The goal of this book is to demonstrate how these intermarket relationships work in a way that can be easily recognized by technicians and nontechnicians alike. You won't have to be a technical expert to understand the argument, although some knowledge of technical analysis wouldn't hurt. For those who are new to technical work, some of the principles and tools employed throughout the book are explained in the Glossary. However, the primary focus here is to study interrelationships between markets, not to break any new ground in the use of traditional technical indicators.

Basic Premises Of Intermarket Work

All markets are interrelated markets don't move in isolation. 2. Intermarket work provides important background data. 3. Intermarket work uses external, as opposed to internal, data. 4. Technical analysis is the preferred vehicle. 5. Heavy emphasis is placed on the futures markets. 6. Futures-oriented technical indicators are employed.

How This Book Is Organized

The fourth chapter teaches modern methods of computerized technical analysis. Indicators provide a deeper insight into mass psychology than classical technical analysis. Trend-following indicators help identify market trends, while oscillators show when trends are ready to reverse.

Institutional Forex System wwwforexcobracom

When I show you the strategy behind the Institutional Forex System, you will quickly realize how simple it is. Don't be fooled into thinking the simplicity makes it less powerful. In fact, the biggest mistake individual traders make is always feeling the need to be doing something. Increased trading does not mean better results nor does making the strategy complicated. The best professional traders will sit on their hands when a good opportunity is not there and the best strategies are those that are simple in nature. Most individual traders are wiped out by the institutions simply because they are trading too much, partly because of greed and partly because of the need to feel like they are involved in the market. Professional traders aren't looking for action we go to Vegas for that. We are looking to take down other traders that are opposite our view on a particular trade and that is easy to do when you have individuals who are trading without a sound strategy. Another...

Note from John Murphy

On the other hand, the proliferation of computers over the last two decades has spawned a new breed of technicians. I've labeled these statistical technicians. Statistical technicians take raw price data (i.e., open, high, low, close, volume, and open interest) and then crunch it to arrive at objective buy sell signals. Human emotion and subjectivity are enemies to the statistical technician, so he attempts to remove these enemies by developing a computerized, mechanical trading system. Statistical technicians may or may not use price charts in their work. The traditional chartist relies on visual interpretation, while the statistical chartist relies on mathematical interpretation. Since the computer is so adept and speedy at performing accurate mathematical calculations, it is little wonder that the growth in the number of technical indicators over the last two decades has been tremendous. The old standbys, RSI, Stochastics, Momentum, and others still serve us well. However, new...

Similarities Of Daytrading And Position Trading

Intraday charts can be traded utilizing Fibonacci, Gann, and Elliot techniques, fan lines, speedlines, pitchforks, oscillators, moving averages, RSI, Stochastics, DEMA, MACD, Commodity Channel Index, Volatility Stop, Parabolic Stop, Cycle Projection, and any other of the host of technical analysis tools available for use in the market today.

Emphasis On The Futures Markets

Since most of our attention will be focused on the futures markets, I'll be employing technical indicators that are used primarily in the iutures markets. There is an enormous amount of overlap between technical analysis of stocks and futures, but there are certain types of indicators that are more heavily used in each area. For one thing, I'll be using mostly price-based indicators. Readers familiar with traditional technical analysis such as price pattern analysis, trendlines, support and resistance, moving averages, and oscillators should have no trouble at all.

Benchmark Models Theory And Methodology

The premise of this chapter is to examine the use of regression models in EUR USD forecasting and trading models. In particular, the performance of NNR models is compared with other traditional forecasting techniques to ascertain their potential added value as a forecasting tool. Such methods include ARMA modelling, logit estimation, Moving Average Convergence Divergence (MACD) technical models, and a naive strategy. Except for the straightforward naive strategy, all benchmark models were estimated on our insample period. As all of these methods are well documented in the literature, they are simply outlined below.

The confirming pattern

Most traders prefer the long side of the market and look for an uptrending market. The confirming pattern identifies exactly that condition. When the Adx and Macd move up in unison, they confirm rising price direction the Bristol-Myers Squibb Co. (Bmy) chart in Figure 2 offers a good example of a confirming pattern. The Adx and Macd rose as price moved up strongly in September to December 2000. When price changed direction in January 2001, both the Adx and Macd followed suit. The falling Adx was not indicating that a downtrend had begun merely that it no longer could find a trend. In this example, the Macd showed that price was retracing its prior upward march. But sometimes when both indicators fall, price forms a sideways trading range, rather than the more pronounced downward move seen in this chart.

Short term strategies

Scalping Scalping describes ultra short term trading. Scalpers try to take advantage of very small price movements and sell their shares immediately when they have a big enough profit or the stock isn't moving in their direction or goes against them. Cutting the spread Cutting the spread can be seen as a scalping variety. Cutting the spread means to take advantage of the spread (the price difference between the bid and the ask price). It means to buy a stock on the bid side and to sell it immediately afterwards on the ask side for a small profit. Since the decimalization of the markets this type of trading has certainly become much more difficult because spreads have gotten much smaller, however I still see traders implementing this strategy pretty successfully.

An Objective Filter to Identify High Probability Trade Setups

In almost every trading book and course I've seen over the past 20 or more years, the trading educators show many after-the-fact examples of how their trend indicator identified the trend direction long after the trend was established. It is easy to show a trend on any chart long after the trend is established. But how do we identify trend direction in the early stages How do we identify when an established trend is in the later stages and in a position to make a trend reversal Without some approach to help identify where within the trend the market likely is, typical trend analysis will usually be too early or too late to be useful over time. In fact, most methods of identifying a price trend are doomed to failure for practical trade strategies with as many false reversal signals as confirmed ones. This is a bold statement, but I believe it is true. It's time to stop the madness and and deal with the reality of trend position. I defy any trading educator to provide evidence that his...

Perfect Market for Technical Analysis

Currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80 of volume is speculative in nature as a result, the market frequently overshoots and then corrects itself A technically trained trader can easily identify new trends and breakouts, which provide multiple opportunities to enter and exit positions. Charts and indicators are used by all professional FX market traders and candle charts are available on most charting packages In addition, the most commonly used indicators such as Fibonacci Retracements. Stochastics, MACD. Moving Averages. RSI and support resistance levels have proven valid in many instances. In the NZD USD chart below, it is clear that Fibonacci Retracements. Moving Averages and Stochastics have at one point or another given successful trading signals For example, the 62 retracement level has served as support for the NZD USD from the beginning of September 2002 to the end of September 2002

Detecting Trend Direction And Strength

Raders use technical indicators to The indicators involved are the average directional index (Adx) and the moving average convergence divergence (Macd). The Adx functions as a trend detector, rising as price strengthens into an identifiable trend and falling when price moves sideways or loses its trending power. Adx values in the 20 to 30 range indicate mild to moderate trending behavior, while values above 30 usually signify a strong trend. Unfortunately, the Adx does not reveal the trend direction. The Macd, on the other hand, indicates price momentum and can also be used to identify price direction as it rises above its trigger line or falls below its zero line. When both indicators are plotted on the same chart, trend strength and trend direction become clear. The chart of Aol Time Warner (Aol) in Figure 1 illustrates how the two indicators complement each other. The Adx in the upper panel rose from April through May 2001, indicating a trending market. The Macd rose above its...

Important Preliminaries

A caveat As you study, try not to let your mind wander. If you have experience with bar charts, P& F charts, moving averages, oscillators, technical formations, etc., don't think about them. They do not have anything to do with this study. We do use graphs, but they do not incorporate the aforementioned factors.

The diverging pattern

The indicator combination shines when a price downtrend is in progress and they form a divergence. The Adx rises as it identifies the trend, while the Macd falls below its trigger line and often below its zero line. The two indicators no longer move in tandem instead, they diverge and form almost a mirror image of each other. During the severe 2000-01 decline in Cisco Systems (Csco), the Adx-Macd combination formed several easily identifiable diverging patterns as one rose and the other fell (Figure 3). They reflected the falling prices in September-october and December 2000 time periods, as well as the continuing decline in February-March 2001.

How You Can Benefit from Trader Psychology

Gerald Appel is known as he father of moving average convergence divergence (MACD), an indicator he developed for the purpose of trading stock index futures. He is an accomplished professional trader who has achieved both the respect and recognition of his peers as a highly disciplined and innovative trader. He brings to Market Masters his skill, insights and observations.

What Are Your Trading Beliefs

You must ensure that your beliefs are consistent. For example, if you like fast action, you probably will not use weekly data, nor hold positions as long as necessary. Nor are you likely to use fundamental data in your analysis. Hence, a need for fast action is more consistent with day trading, and using cycles, patterns, and oscillators with intraday data. Similarly, if you like a trend-following approach, you are more likely to use daily and weekly data, hold positions for more than five days, trade a variable number of contracts, and trade a diversified portfolio. If you hold multiple beliefs, ensure that they are a consistent set and develop models that fit those beliefs. A set of consistent beliefs that can be used to build trading systems is listed below as an example. 1 like to trade with price oscillators. a a

Making Technical Analysis Part of Your Candlestick Charting Strategy

Take the time to get familiar with an array of technical indicators to make you a more versatile trader and enrich your work with candlestick charts. For example, it's great when you spot a candlestick pattern indicating that it's time to buy, and at the same time, your favorite technical indicator is also flashing a buy signal. Combining trading tools helps build your confidence and can help you quickly determine when a trade isn't going to work out, allowing you to exit with minimal losses. I explore several different types of technical indicators in Chapter 11 and clue you in on a few ways that you can combine these indicators with candlestick patterns in Part IV (Chapters 11 through 15). Find a few technical indicators that match up to the type of trading you want to pursue and add them to your candlestick charts. Read up on the choices, and if Chapter 11 isn't enough, you can always turn to Technical Analysis For Dummies (Wiley) by Barbara Rockefeller. The added understanding of...

What youll get from this book

Getting the market direction right over the period you are trading is vital to making good trading decisions. This is true not only if you are trading market instruments like index futures and options, index-tracking mutual funds or exchange traded funds, but also if you are trading individual stocks. Even the cheapest of stocks is unlikely to respond if the market is crashing at the time. There is a software package that can help you to look at the underlying technical condition of the U.S. market - the most important in the world - through examining a wide range of proven technical indicators. Chapter 9 looks at multiple time frame analysis - how to incorporate the key technical indicators in different relevant time periods into your decisionmaking. This is an arguably less wrell known technique, but one that is both venerable and highly successful. There is an interview with the developer of the best known standalone software product that incorporates this technique.

New Broker Instructions

In my previous eBooks I recommend that you use either FXCM or RefcoFX as your Forex trading broker. As I've stated in Forex Scalping that recommendation isn't because I consider them to be the best brokers overall, but simply because they are the best brokers, in my opinion, to use for a new trader. 2. In the eBook Forex Scalping I promised to share the secret of which broker (at the time of this writing) still guarantees stop orders under all volatile circumstances (i.e. FA), which means that you can sleep easy at night not worrying that something bad could happen to blow out your account. I will discuss this topic and reveal the broker a little later in this section.

Risk Management Conditions for Entry

Let's begin by looking at the commonly accepted technical definition and visualizations of a trend. The technical definition of an uptrend is the occurrence of higher highs and higher lows. The technical definition of a downtrend is the occurrence of lower highs and lower lows. Some technical analysts require two touches of a trend line to achieve the conditions of drawing the line, while others require three. The more touches, of course, the better the confirmation. The commonly accepted method is to draw the downtrend line by locating the highest high and next lower high, and then extending it out into future time (Figure 2.1). To draw the uptrend line (Figure 2.2), locate the lowest low and then the next higher low and extend the line further across the chart, following the arrow of time into the future. The idea is to obtain a sense of where the trend would continue if the price stayed within the boundary.

Outofsample forecasting accuracy results

The forecasting accuracy statistics do not provide very conclusive results. Each of the models evaluated, except the logit model, are nominated best at least once. Interestingly, the naive model has the lowest Theil-U statistic at 0.6901 if this model is believed to be the best model there is likely to be no added value using more complicated forecasting techniques. The ARMA model has the lowest MAPE statistic at 101.51 , and equals the MAE of the NNR model at 0.0056. The NNR model has the lowest RMSE statistic, however the value is only marginally less than the ARMA model. The MACD model has the highest CDC measure, predicting daily changes accurately 60.00 of the time. It is difficult to select a best performer from these results, however a majority decision rule

The Method Behind The Madness

Hooks that attempt to teach people how to trade using stochastics and for the most part they are useless. The reason is that in strongly trending upmarkets, these oscillators will tell you the market is overbought, but unfortunately markets can remain this way for days and weeks (the reverse is true for downtrending markets). Traders get killed setting into these markets as they continue to rise.

Outofsample trading performance results

A comparison of the trading performance results is presented in Table 1.20 and Figure 1.18. The results of the NNR model are quite impressive. It generally outperforms the benchmark strategies, both in terms of overall profitability with an annualised return of 29.68 and a cumulative return of 34.16 , and in terms of risk-adjusted performance with a Sharpe ratio of 2.57. The logit model has the lowest downside risk as measured by maximum drawdown at -5.79 , and the MACD model has the lowest downside risk 21 As the MACD model is not based on forecasting the next period and binary variables are used in the logit model, statistical accuracy comparisons with these models were not always possible.

Editors note We hope readers appreciate Roberts sarcasm

I am an Italian trader and I want to offer you my congratulations. Your site has all the right concepts about trading, not like so many others. People use fundamental analysis, technical analysis (methods like Elliot, Gann, Fibonacci, pattern recognition and other technical indicators that are completely useless) or new technology like neural networks or genetic algorithms because they want to predict markets, control the market and because they do not know the really important things for trading success. We must have rigid money management rules and control volatility. If we do not do this and the market go against us, we will lose.

Use With Forex Freedom

Can you combine scalping techniques with the exponential growth plan presented in the eBook Forex Freedom Absolutely Most scalping techniques initially rely upon a 10 pip stop (elaborated upon later in this eBook) however the plan as laid out in Forex Freedom assumes you are using 20 pip stops. As scalping is somewhat riskier don't double your lots, but just follow along with the suggested amount of lots as described in that eBook. If you do intend to scalp your way through the Forex Freedom plan I would strongly recommend that you have plenty of practice in a demo account (and have demonstrated profit) before scalping in your real money mini account.

Reversal Distances A Key Metric

Once he knows that average, the trader can shape several trading strategies based on the average. If it is almost always the case that a reversal occurrence results in a series of new highs or new lows, then trading that phenomenon with a scalping strategy is worthwhile to pursue. Each market traded has its own reversal signature, and in each case, data on reversal distances needs to be generated and evaluated. What are important are the maximum and the average reversal distances. Once the trader knows these two fields of data, he will have the ability to preset scalping entry and exit targets. We will show this in Chapter 8.

Reward Must Be Proportionate To Risk

On very short-term trades, characterized as scalping, you can be successful with a 1 2 or even a 1 1 ratio. This means if your loss limit is a nickel, you can accept a reward of a dime or even a nickel per the species the underlying entity trades in, e.g., shares, bushels, barrels, bales, pounds, etc. With swing trades, you will be in the market longer (several days to a week or more) and should be looking for ratios of from 1 4 to 1 10. With the former, you are trading heavy and the latter light. Never violate this rule. Long-term investors can look for 100 percent, 200 percent, and more for holding positions for months, quarters, and years.

Made Easy 50 Software

4X Made Easy is a powerful charting and instant trend analysis tool that receives real-time foreign currency price data and updates directly over the Internet. 4X Made Easy boasts a winning combination of high-quality graphics matched with a complete set of money management analysis functions for almost any trade style. 4X Made Easy's on-screen arrows and next-generation buy sell lines are the definitive directional-analysis tools for 4X Made Easy traders. 4X Made Easy 5.0 is perfect for the novice or master trader. 4X Made Easy provides real-time tracking and analysis of the top currencies in the world without the use of complex charts and graphs. Instead, its unique and simple green arrow, red arrow color indicator system identifies trends as well as possible entry and exit points.

Milestones in Financial Modeling and Investment Management

A first round of innovation occurred in the 1950s and 1960s. Kenneth Arrow and Georges Debreu introduced a probabilistic model of markets and the notion of contingent claims. (We discuss their contributions in Chapter 6.) In 1952, Harry Markowitz described mathematically the principles of the investment process in terms of utility optimization. In 1961, Franco Modigliani and Merton Miller clarified the nature of economic value, working out the implications of absence of arbitrage. Between 1964 and 1966, William Sharpe, John Lintner,

Chart Pattern Analysis

The study of chart patterns has gone on for at least a century, and analysts have written many excellent books about this topic over the past decades. Today, many traders prefer to focus on technical indicators that are computer driven and are based on complex mathematical formulas. But computer models have yet to prove that they can consistently outperform pattern recognition as an analysis approach.

Trading Tip Charting Economic Surprises

Technical analysis is a very popular tool for short-term to medium-term traders. It works especially well in the currency markets because short-term currency price fluctuations are primarily driven by human emotions or market perceptions. The primary tool in technical analysis is charts. Charts are used to identify trends and patterns in order to find profit opportunities. The most basic concept of technical analysis is that markets have a tendency to trend. Being able to identify trends in their earliest stage of development is the key to technical analysis. Technical analysis integrates price action and momentum to construct a pictorial representation of past currency price action to predict future performance. Technical analysis tools such as Fibonacci retracement levels, moving averages, oscillators, candlestick charts, and Bollinger bands provide further information on the value of emotional extremes of buyers and sellers to direct traders to levels where greed and fear are the...

New terms in this chapter

MACD - Moving Average Convergence-Divergence. A widely used technical indicator that measures the difference between two moving averages as a way of highlighting early change in direction of the underlying price. Market scanning - use of computer logic to find trading opportunities that have trigger pre-set technical indicators.

Mean Reversion Indicators Why They Work

If trend following is such a successful methodology, how can indicators based on the exact opposite philosophy generate consistent profits The simple answer is that mean reversion indicators, such as RSI and other oscillators, work because they capitalize on the market's tendency to overex-tend itself. Although mean reversion indicators such as oscillators attempt to somehow quantify these unsustainable levels of market emotionalism, they

Hype Spin and Bad Trading Ideas FAQs

Q Are the following technical indicators used Gann, Fibonacci, moving average stochastic, MACD, Bollinger, Williams, RSI or ADX A No. These techniques rely on predictive entry exit indicators. Predictive techniques are futile. If you learn only one lesson from the TurtleTrader site, stop the focus on only entry exit indicators. It is a sure way to the poor house.

Follow the Large Players Accumulating in a Trading Range

The daily graph (Figure 1.18) shows that at point A we are in a trading range, but it is difficult to evaluate the best timing to purchase the stock Is it better to buy at point A or at point B Please note that during a trading range, both RSI and moving average convergence divergence (MACD) are of little use.

When the Dollar Was King 19992001

Determining why foreign exchange rates move the way they do may seem a far too ambitious and challenging task, as it requires making sense of an unlimited array of factors ranging from fundamentals (macroeconomic changes, central bank actions, capital markets changes, corporate dealer transactions, political and geopolitical factors, and news reports) to technicals (price charts, momentum, oscillators, moving averages) to pure flow-driven developments. Other books tackle the theories of international economics and finance that explain the principle drivers of foreign exchange rates. Since this book aims at focusing on the real-world developments impacting currencies, textbook theories take a secondary role in shedding light on the major developments in currencies. These theories are only briefly mentioned. Chapter 3 and 4 tackle the trends in major foreign exchange rates between 1999 and 2007, identifying the highest- and lowest-performing currencies, and citing the fundamental...

Practice Makes Wisdom

By the time you finish reading this eBook you'll likely feel confident that you can successfully scalp trade. Chances are that you'll probably be able to, but just because you can do something doesn't mean you should do something. You really do need to practice to gain proficiency as a scalp trader. You can read this entire eBook, study all the trading rules and trading set ups presented, however there is simply something that I can't teach you that you can only learn by your own practicing. Being able to read the charts in real time and being able to decipher & to make the decision whether to trade or exit a trade requires what can seem like intuition. Once you are skilled at scalping you almost appear to be psychic to someone sitting next to you. This eBook will teach you the knowledge you need to know to be able to able to scalp trade the Forex market, but, as any athlete can tell you, you need to practice to develop proficiency. Many people have knowledge, but few people have...

Eee5555s5e55s5s55555se55

The B arrow of Figure 1.21 shows that some lucky investor bought 170,000 shares at an average price of 9.9, to see the price increase to over 12 in a matter of two days, as shown in Figure 1.22. This is a no-risk profit of more than 357,000. This is not a hedge fund or an institutional investor just a standard information leak.

Other Selected Angles

You can't simply move to a point using the regular cursor arrow keys. Use the 'Move To' keys or Tool Bar icon. Notice on the keyboard overlay that the function keys control a number of different items depending on which mode is active. You will learn later that the program can have more than one mode active at the same time. Using the Tool Bar icon or the 'Move To' keys does two things. It moves the cursor exactly onto the setup point you wish to modify and it makes that mode the last active mode so that the function keys modify the proper item. For example, you can have selected angles, planets and a square all on the screen at once. If you hit the < Fl> key do you want the program to add or remove Mercury, add or remove a lx1 angle inside a square or add or remove the lxl selected angle By using the 'Move To' key or icon you remove all doubt. If you forget you will see this reminder box. Make sure you are exactly on a high or low when using this feature. The Left and right arrow...

By Barbara Rockefeller

Much about technical analysis, or who sometimes actively dismiss it, are saying with straight faces the Dow has been above the 55-day moving average for x number of days, or gold is near-ing resistance. These remarks are not really a substitute for fundamental analysis, but in the absence of principles and rules on which to base a forecast, technical indicators will have to do. FIGURE 1 EURO U.S. DOLLAR TECHNICAL INDICATORS FIGURE 1 EURO U.S. DOLLAR TECHNICAL INDICATORS By looking only at the latest corrective move in the Euro dollar, newcomers are making the mistake of neglecting fundamentals. If it was an exceptional event that caused the spike, we need to watch the fallout from that event to predict the price consequences. We may be able to trade better by drawing moving averages and support and resistance lines and Fibonacci retracements, but these technical indicators measure current market sentiment they do not help us understand what is really going on or predict future market...

Mental Attitude Quiz

There are the adoring fans purchasing shares instead of tickets, cheering for their favorite team. You also have the cheerleaders, telling you why the stock price is going up or, if the market goes down, they want to keep cheering you up with new hope that the price will soon rise. There are the bookmakers, called stockbrokers, who give you stock quotes over the phone and record your bets. Instead of reading the sports page, you read the financial pages. There are even the equivalent of ticket scalpers, but in the financial world they don't sell over-priced tickets to latecomers they sell over-priced financial tip sheets to people who want to get closer to the inside game. Then there are the hot dog vendors, who also dispense antacid pills, as well as the people who sweep up the mess after the trading day is over. And of course we have the viewers at home.

Are There Any Recognizable Patterns that Repeat

Because markets are driven by people who are creatures of habit you will begin to see patterns repeated over and over in different markets. For example, after a nice run-up on a five-minute chart in the S& Ps, you are very likely to see an orderly pullback before the next run-up. Some markets tend to always close in the opposite direction that they opened. Some will tend to reverse between 10 30 and 11ish. Some will close near their high or low and others tend to always close in the middle. Some react perfectly to certain technical indicators while others look like they move randomly. Keep looking for patterns and you'll find that a market tends to do things in a somewhat predictable way.

Why Investing Isnt Risky

You are soon going to be making some very important decisions about what you will be when you grow up, if you haven't already made them. I know your dad is encouraging you to go to college so you can get a high-paying job. If you listen to his advice, you will be going in this direction. Rich dad then drew an arrow to the E and S side of the Quadrant. If you listen to me, you will be studying to become a person on this side of the Quadrant. He then drew an arrow to the B and I side of the Quadrant.

Currency Pair Checklist

The first column in the trending indicator group is the ADX (14) above 25. ADX is the Average Directional Index, which is the most popularly used indicator for determining the strength of a trend. If the index is above 25, this indicates that a trend has developed. Generally speaking, the greater the number, the stronger the trend. The next column uses Bollinger bands. When strong trends develop, the pair will frequently tag and cross either the upper or lower Bollinger band. The next three trend indicators are the longer-term simple moving averages (SMAs). A break above or below these moving averages may also be indicative of a trending environment. With moving averages, crossovers in the direction of the trend can be used as a further confirmation. If there are two or more Xs in this section, traders should be looking for opportunities to buy on dips in an uptrend or sell on rallies in a downtrend rather than selling at the top and buying back at the bottom of the range. The last...

The momentum of a trend

Momentum is the juice behind the development of overbought and oversold oscillators. According to Newton, momentum is the combination of mass and velocity. Newton said that momentum represents the ability of an object to move in one direction at an even speed until an outside force slows it down or stops it. Methods such as oscillators and basic chart patterns will help you isolate when a trend is in the process of changing, and allow you to wet your beak on some of the volatility that takes place when markets turn. The first step, however, is to use perceived inflection points of tops and bottoms of trends as areas to trade around existing positions. Rid yourself of the belief that for every successful trade there is one entry point and one exit point. The most profitable traders trade around a core position, constantly scaling in and out. If your signal is telling you that the market is forming a top, use that signal to sell part or all of your long position. Refrain from trying to...

Safety Requirements For Electronic Trading

Although it is possible to deal in the FOREX through a dial-up connection, it is recommended that you have a fast digital subscriber line (DSL) or cable setup, especially if the platform you will be using requires continuous reception and update of data feed. If you are a long-term trader who checks the charts only occasionally and who operates mostly with pending limit or stop orders, this will not be a high priority, but a scalper, for example, will need a stable Internet flow and a fairly huge bandwidth, which will allow a fast connection to and from the broker's server. The computer itself doesn't have to possess the ultimate high-tech gadgets, but it should be in optimal condition and properly maintained periodically.

How Does It React in Different Market Environments

Once you can pinpoint where a market is and know all of its levels you can start planning trades with much less of a gambling factor than if you were just looking at a small amount of data. Good traders will use different technical indicators and systems depending on the market conditions. Their game plan will vary according to where the market is versus its long-term history. They will be able to make smarter decisions as to where to get in and out as the picture gets clearer. All this in turn will make them better traders.

Stocks Likely Lowest Theoretical Price Level

Tangible book value per share is assumed to be a corporation's liquidation value, or the net value of all assets if the company simply went out of business and paid off stockholders. It is more likely that companies will cease to exist through merger or acquisition, and at a price somewhere at or above tangible book value. Does the worst-case liquidation value of the company also provide a reliable low market price level for the stock In practice, your true support level may have little or nothing to do with the fundamental and tangible value of the corporation's assets. Some technicians prefer to identify a chart-based price-support level, but that is also unreliable the history of trading patterns in any given stock is the history of support and resistance levels being broken through and new trading patterns established. This occurred for many companies during 2008, when nearly half of market value was lost for many stocks, and previously established support levels simply...

Data Integrity Expiration of Futures Contracts

The figures provided in Chapter 2 were either cash market charts, such as spot Interbank foreign exchange (Forex) or cash S& P 500 index, or they were futures contracts for a specific delivery month. This was fine for showcasing how specific technical indicators can be transformed into trading systems, but to generate 10 years of backtested results for a particular trading system on a portfolio, we need to address the issue of expiration of futures contracts.

Medium Term Range Trade Rules

Look for reversals in oscillators such as RSI and stochastics. 6. Confirm with price action failure at key range resistances and bounces on key range supports (using traditional technical indicators). Indicators Options, Bollinger bands, stochastics, MACD, RSI, Fibonacci retracement levels.

The opening price signal

It pays to wait patiently for both the opening price signal and the net price to point in your direction. When these two signals act in harmony, you have optimal conditions for trading from the correct side of the daily trend. Many times, however, market makers have to make a decision when the circumstances are not perfect, and the net price and opening price signal conflict with one another. When this occurs, the opening price signal serves as the more useful short-term trend indicator, because it evaluates how the stock is trading from today's opening, not just from yesterday's close. It also tends to act as a leading indicator for a change in net price. The opening price signal compares the last price to the current market sentiment, by taking into consideration all the news events that have materialized overnight or early in the morning.

Reason For Multiple Brokers

If you are doing large trades (i.e. trading on large scales like daily charts with huge stops of say 200 pips) then a market gap caused by extreme volatility might not affect you significantly. However if you are making highly leveraged trades (as you would be doing using scalping or surfing techniques) then even a small 50 pip gap beyond your stop can be a significant loss.

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