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Showing posts from May, 2018

8 Golden rules of trading on Forex

In just a few years, the foreign exchange market has rapidly escalated and gained confidence in the issues of trading in the Forex market. And yet, not every trader can increase his investment, although opportunities for this are usually enough. All this happens for the most part because of a lack of experience, the inability to organize a trading process and the lack of a clear trading strategy.
Discipline is a quality that must be inherent in every trader. It helps to plan and execute the conceived deals. To understand the principles of work, we have collected for you a list of the basic rules of Forex trading. Let's look at each of them in detail.
Rule number 1: do not rush things
Many beginners tend to set incredibly high goals. Of course, this is a good quality, but only if you know how to achieve them. Many traders are not able to really assess their capabilities and lose their starting capital almost immediately. Often starting traders implement the same scheme: the first few …

How does automated forex trading work?

Forex traders and investors can customize the entrance, exit and rules of money management in automated forex trading systems that allow computers to execute and monitor transactions. One of the biggest advantages of an automation strategy is that it can eliminate any negative and destructive emotions from the trade, because deals that meet certain criteria are automatically executed.
In other words, the chosen program or forex robot performs all trading processes, opens and closes deals while you sit and relax. But is such a trade effective, and if so - how to perform automated Forex trading? In this article we will answer some of the most frequently asked questions so that you get a true understanding of automated trading in the Forex market.
What is an automated trading system?
Automated trading system, or automated Forex trading, allows traders to set certain rules for entering and exiting the transaction, which can be automatically executed by the computer. Trading rules for entry a…

EURUSD Technical Chart | 30-May-2018

Below is the technical chart of EURUSD currency pair on H4 time frame. For a change, this time, I've used Alligator technical indicator.

EURUSD Technical Chart

As you can see, the price closes below Alligator's Lips i.e. Green line and EURUSD started its downtrend again.

Now, let us see the same chart using Doda DonchianDoda-Bollinger BandsIchimoku and ADX Candles technical indicators.

Doda-Donchian gave last sell signal @1.16775 and after that It has moved about 143 pips and still counting. Do NOT take any long position whatever technical indicator you're using till EURUSD is trading below Ichimoku - Kumo - which is its great resistance.

It's immediate target and support is at 1.14950 as per Wolf Wave Theory.

Major Support Levels:



Major Resistance Levels:



Guide to Accumulation Swing Index Indicator (ASI)

The cumulative fluctuation index (Accumulation Swing Index, ASI) was developed by the well-known trader-analyst Wales Wilder. The indicator examines the previous minimums and maximums of the price of the trading instrument and on the basis of them gives its signals.
For the first time, the indicator is described in Wilder's book "New concepts of technical trading systems." The author claims that the indicator is very close to this schedule. Therefore, the ASI graph can be analyzed using graphical analysis. The cumulative fluctuation index (Accumulation Swing Index, ASI) perfectly confirms the breakdowns and rebounds from the support and resistance lines. If there was a breakdown in the price chart, the indicator will save you from false signals, when you can not confirm the breakdown on your chart. And vice versa.
The formula for calculating the Accumulation Swing Index (ASI)
SI (i) = 50 * (CLOSE (i-1) -CLOSE (i) + 0.5 * (CLOSE (i-1) -OPEN (i-1)) + 0.25 * (CLOSE (i) - OPEN …

Is it possible to earn money on Forex?

How much you can earn in the Forex market - the main question for those who are just mastering trading. There are no exact answers to it. Everything depends on the circumstances: market conditions, trader's skill, deposit size, analysis accuracy and many other factors. Let's understand.
How much do they usually earn on Forex traders?
In international practice, professionally managing assets of the organization - various investment funds - on average show an average annual return on each dollar invested at a rate of 15-20%. Of these, the most successful are 30-40%. These figures can be considered a target for the trader to understand how much profit he can get.
Factors determining profitability
State of the market
For a year from the summer of 2014 to the summer of 2015, millions of traders could earn on Forex. The fact is that during this time the dollar has risen in price relative to the euro by 30%. Meanwhile, the EUR / USD pair is the most popular instrument of the Forex market,…

Guide to Alligator Indicator

Most of the time the market does not move anywhere. Only 15-30% of the time it forms some trends, and many traders derive almost all of their profits from these trend movements. Everyone knows that the best trading system is one that avoids a double interpretation of signals, that is, the simplest one. And today we will analyze the trend indicator, which is quite capable of becoming the main element of such a vehicle - the Alligator from Bill Williams.
Introduction to Alligator Indicator
Indicator Alligator (or Alligator Bill Williams) is a trend and signals the beginning of a new trend. It includes a number of moving averages , in which fractal geometry is applied, as well as nonlinear dynamics. The indicator is quite popular and comes in packages for the analysis of most terminals. It was used by Williams in the system " Trading chaos ", described by him in the book "New Changes in the Exchange Trade."
Characteristics of the Alligator Indicator
Platform: Metatrad…

EURUSD Technical Chart | 23-May-2018

Below is the technical chart of EURUSD. Time frame used is H4. Technical charts used are Doda DonchianDoda-Bollinger BandsIchimoku and ADX Candles technical indicators.

After trying for little upward movement last week, EURUSD failed to cross Kumo as shown in above chart.

Then, it started its downward journey again, followed by Doda-Donchian and Doda-Bollinger Bands indicator.

Even at this stage, the chart is weak and is in a downtrend.

The weekly EURUSD chart indicates that it will take some support at 1.6792

Major Support Levels for EURUSD



Major Resistance Levels for EURUSD



Linear Regression Technical Indicator

The Linear Regression Indicator is a simple indicator included in the basic equipment of MT4 and MT5 trading terminals.

[caption id="attachment_1538" align="aligncenter" width="546"] Linear Regression Technical Indicator[/caption]

The indicator builds a channel on the chart of the price of the trading instrument. Despite the simplicity, most Forex traders do not use it when trading, but in vain. But first things first.
Applying the Linear Regression Indicator to the graph is very simple. If you have MT5 - open the Insert-Objects-Channels-Regression channel menu.
Once again, this is a very simple indicator in its essence, the only thing that is really difficult in it is the formula for calculating it, built on the basis of regression analysis. You do not need to understand it, because it is not necessary for practical application in trade.
Appearance of the indicator Linear Regression
The indicator is three lines. The central line is built on the basis of regres…

Price Channel Technical Indicator

Description of the Price Channel Indicator
Probably the most common trading tactic in financial markets, including Forex, is the use of channel strategies for trading. The simplest strategy is to build a channel for three extremums on the chart of the price of the trading instrument. This is not difficult, but requires the trader to constantly "handmade" the schedule. It is much easier to use technical indicators to build channels. There are many options for such indicators. Let's look at one of the most popular indicator:
Application of the Price Channel Indicator

The boundaries of the indicator are calculated from the average values of the price minima for the lower limit and the highs for the upper for a certain period of time (the number of candles). The average line of the indicator is the arithmetic mean between the boundary values.
The Price Channel indicator can be adjusted by one parameter - by time (by the number of candles for calculation). The standard value is 1…

Beginners Guide to Moving Average

Moving average ( MA - moving average ) is a technical indicator based on an analysis of the behavior of securities quotations and their moving average. The moving average is one of the oldest and most common indicators of technical analysis related to trend indicators.
The moving average is a low-pass filter, that is, it passes low-frequency activity (long-term cycles and their trend lines), cutting off high-frequency - random oscillations.
To use the indicator at the same time, the price charts and its moving average are combined.
The type of moving average and the construction period (the number of time periods over which averaging is performed, sometimes called the order or time window or length ) is selected by the trader at his discretion and depends on the trading horizon, the market volatility and the instrument. And, at different intervals of time different types of moving averages and different construction periods can be used. The choice of these parameters is considered so com…

EURUSD Technical Chart | 15-May-2018

Below is the technical chart of EURUSD. Time frame used is H4. Technical charts used are Doda DonchianDoda-Bollinger BandsIchimoku and ADX Candles technical indicators.

After settling around 1.18493, EURUSD currency pair started its upward movement and this currency pair managed to close ABOVE Doda-Donchian and Doda-Bollinger Bands. That indicates beginning of upward journey.
But wait a sec...
The currency pair is still trading INSIDE kumo, which is no trade zone and major resistance for it. So, DO NOT take any long position, till it manages to close above Kumo cloud. The future kumo is also bullish. So, it can show some upward movement.
But if it closes below Doda-Donchian and Doda-Bollinger Bands, just take short position without any second thought as EURUSD Daily chart is weak.
Major Support Levels for EURUSD
Major Resistance Levels for EURUSD

Theory of Fibonacci numbers in technical analysis

Theory of Fibonacci numbers
The Fibonacci mathematician lived in the twelfth century and was one of the most famous scientists of his time. Among his achievements is the introduction of Arabic numerals in Europe in place of Roman numerals. He opened the summation sequence, called his name:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ...
This mathematical sequence arises when starting from 1, 1 the next number is obtained by adding the two previous ones. But why is this sequence so important?

[caption id="attachment_1521" align="alignleft" width="306"] Fibonacci numbers[/caption]

This sequence asymptotically (approaching more and more slowly and slowly) tends to some constant relation. However, this ratio is irrational, that is, it is a number with an infinite, unpredictable sequence of decimal digits in the fractional part. It is impossible to express it accurately. If any member of the Fibonacci sequence is divided into the preceding one (for example, 13: 8…

Guide to ADX Indicator (Average Directional Index)

Introduction to ADX Indicator
J. Welles Wilder developed the Average Directional Index ( ADX) indicator to determine the strength of the trend, whether the trend will develop further or gradually decline. The ADX indicator allows analyzing market trends and making trading decisions, including in the forex market.
Formula for ADX Indicator
Calculate positive and negative directional movement (Directional Movement or DM) - + DMj and -DMj
If Highj (maximum current bar)> Highj-1 (maximum of the previous bar),
then + DMj = Highj - Highj-1, or + DMj = 0
If Lowj (at least the current bar) <Lowj-1 (low of the previous bar),
then -DMj = Lowj-1-Lowj, otherwise -DMj = 0
if + DMj> -DMj,
then -DMj = 0
if -DMj> + DMj,
then + DMj = 0
if + DMj = -DMj,
then + DMj = 0 , -DMj = 0
Determines the true range - TRj (True Range)
TR = the maximum of the modules of the three values ??of
| High - Low |, | High - Close j-1 |, | Low - Close j-1 |.
Where Close j-1 is the closing price of the previous period…

Guide to MACD Indicator and MACD Histogram

In our previous tutorial on MACD, we've learned the basics of MACD. In this tutorial, we'll try to understand MACD in detail.
Introduction to MACD
The MACD indicator (moving average convergence divergence, which translates as convergence or convergence - the divergence of moving averages) is, on the one hand, classed as oscillators, on the other hand, it can also be referred to the class of complex averages, since it is nothing more than an improved visual the perception of two simple moving averages (or exponential moving averages). It is believed that the MACD indicator significantly reduces the inherent drawbacks of moving averages.
MACD Formula
There are two ways to build and analyze MACD:

MACD linear, which is more often used for the analysis of the trenches;
MACD-histogram, by the method of analysis and value rather refers to the class of oscillators.

1. Linear MACD
To calculate the linear MACD from the moving average price (usually an exponential moving average is taken) with a…

EURUSD Technical Chart | 08-May-2018

Below is the technical chart of EURUSD. Time frame used is H4. Technical charts used are Doda DonchianDoda-Bollinger BandsIchimoku and ADX Candles technical indicators.

As it is clearly visible from the chart, the currency pair EURUSD is in downtrend since 19-Apr-2018, when it closed below Doda-Donchian indicator @1.23410. It started its downtrend journey and has not given any buy signal thereafter.
Even at this stage, the chart is bearish. It gave sell signal @1.19300 and getting some support around 1.19010 but it's just a matter of time. It can easily go further down from here.
Do NOT take any long position even if any buy signal given by any technical indicator at this stage. Just make a stop-loss of 1.19457
Important Support Levels are:
Important Resistance Levels are:

Understanding Relative Strength Index (RSI)

Introduction to Relative Strength Index
The indicator was developed by J. Wallace Wilder. For the first time, the Relative Strength Index was introduced in June 1978 in the journal Commodities (now known as Futures), and then published in his book "New concepts in technical trading systems" and has since become one of the most popular oscillators assessing the strength of the movement. The Relative Strength Index compares the value of recent asset price rises with the magnitude of its falls and provides this information in the form of a number ranging from 0 to 100. The only parameter of the relative strength index is the time period used in the calculation.
Note: Be careful, since the name Relative Strength is quite common in various types of technical market analysis , for example, John Murphy's Relative Strength analysis or indicators that show the relative strength of various securities in the stock market. It must be remembered that the Relative Strength Index is calc…