n Part 1, Matthew Cherry details how traders can use the two statistics, frequency and range to help navigate sideways markets. To read part 1, click here.
In the second part of this article we will discuss the remaining two statistics, reaction time and strength, as well as start our initial development of a trading strategy.
Reaction time and strength are both measures of the price movement, however unlike the other statistics, these two measures are highly time sensitive. To calculate reaction time, you need to count the amount of bars that fall in to the range and divide it by the total frequency of each bound. To get the best representation of this measure you need to view the price action on a shorter time frame, one where you can break the price movement down to more precise time frames. If you do not break the chart in to more manageable time frames then you can get a very different figure that can lead to miscalculations in your trading.
Friday, August 14, 2009
How to Properly Trade a Range Bound Instrument, Part 2
What Are The Advantages Of Creating A Long-Term Forex Trading Strategy?
A major reason why so many people are drawn to forex trading is because the volatility of the currency markets makes it possible to trade the markets on an intraday basis. Indeed a lot of people generate some decent profits from day trading the forex markets, but my own view is that you should always focus on finding a profitable long-term trading system as well.
With regards to the forex markets, long-term trading generally refers to trades that last anything from a few hours up to a few days, weeks or months. However I personally think that if you use the 4 hour charts and upwards, then you can regard yourself as a long-term trader.
In my opinion if you only concentrate on taking short-term intraday trading positions, then you are taking undue risks and are missing out on lots of profitable trading opportunities. Of course it's possible to make money trading the 1, 5 and 15 minute charts, for example, and I've been known to trade these time frames myself on occasions, but it's generally a lot easier to trade the longer time frames.
FX Universal Offers Spot Gold and Silver Trading in Addition to Forex
FX Universal Offers Spot Gold and Silver Trading in Addition to Forex
FX Universal, a New York based company specializing online forex trading services, now offers spot gold and silver trading on the same cutting edge platform: GTS (Global Trading System). Their global client base now has access to spot metal trading in addition to the 28 currency pairs already offered.
Lake Success, NY (Advertiser Talk) 12-Aug-2009 — FX Universal is proud to introduce Spot Gold and Silver trading now available in the GTS platform in addition to Forex trading. Traders can enjoy the same unprecedented execution quality, speed and accuracy of data feed available in the Global Trading System to place buy/sell trades anytime, 24 hours a day, 6 days a week.
Spot gold trading has been gaining increasing popularity among traders recently due to world-wide economic instability of the financial markets driving prices of precious metals to all time highs. Gold closed at $948.00 USD/Oz yesterday, and in the neighborhood of all time high of $1002 in mid 2007. A strategic position in gold or silver can be used to potentially hedge a position in foreign exchange or other markets.
Using the GTS trading platform, traders can take advantage of small minimum trade sizes with low margin requirements and tight spreads. Access these two popular Precious Metal markets and benefit from: commission-free trading, increased leverage and flexible contract sizes starting at 1 Oz gold and 100 Oz silver.
Based in New York, the financial capital of the world, FX Universal, LLC is a world class provider of Forex (foreign exchange) and spot metal trading services. Their staff is comprised of a dedicated group of trading, technology, and finance professionals who apply their experience, teamwork and innovation towards a common goal – helping traders succeed in the market. FX Universal provides its global client base with access to trading accounts, platforms, signals, charting and analysis software as well as an array of free Forex trading tools.
FX Universal also offers one of the industry’s leading Forex signals and analysis software: DashBoard FX Pro. Using a multitude of technical analysis and proprietary indicators, DashBoard FX provides Forex signals for 20 of the most popular currency pairs. It features an easy to use interface with visual indicators providing information such as trend, strength, volatility, range and other pieces of information in an intuitive format. Users can also receive buy/sell alerts to their email, mobile phone via SMS (text messaging) or IM (instant messengers such as Yahoo!, MSN, AIM and ICQ).
CCI Divergence forex trading system
his is one of the simple trading system available nowadays that can really spin your investment into creating fortune. The system is very simple to use and can easily be adopted by the new forex traders. It will only take you a few days to master how the system works and you will certainly be ready to commence trade on any given market at that particular period and day.
This simple trading system is basically based on the CCI or Commodity Channel Index divergence and it is an indicator which shows you the effective trade divergence patterns on any given market. The system may look complicated at first glance due to the patterns you will have to observe but when you get to understand how the system works you will soon find out that the divergence patterns are entirely observed automatically by the system and all you have to do is decide which trade market would be best for you.
CCI divergence is one of the momentum oscillators indicators. Momentum oscillators react very quickly to short-term changes in price, flipping back and forth between overbought and oversold levels. Oscillators are useful in both ranging and trending currency markets.
There are two types of divergence which are:
1. Regular
2. Hidden
Regular Divergence is often used or understood as a possible trend reversal while hidden Divergence is often used or understood as a possible trend continuation.
Since its introduction, the indicator has grown in popularity and is now a very common tool for traders in identifying cyclical trends not only in commodities, but also equities and currencies. The CCI can be adjusted to the timeframe of the market traded on by changing the averaging period.
The system makes use of trading circles at which it basically focuses on the price whether it makes new highs of falls at a given period of time. Therefore the system uses an indicator to monitor the market prices and you are also able to decide which type of markets you would like to monitor and also set you entry and exit points and also to include setting up your stop losses. To some traders the CCI system may look too complex but this system will definitely give you maximum profits if you are to make use of it and follow the steps closely.
We all know that forex indicators are always lagging but price is king because they are leading indicators. In divergence trading, it's something like price action because you can use it as a leading indicator. You can master this forex strategy after some practicing as practice makes perfect.
When divergence is used properly in forex trading, you can profit from the method consistently too. It is a lower risk to sell near the top and near the bottom of a trend because the risks are relative smaller to the potential reward.
With the CCI system when ever there is a downward trend the system makes new price lows and indicating signals due to the market trend that would have started going out of momentum. Therefore the CCI system would always make divergence patterns indicating a reversal that is taking place.
So when the price is making higher highs and lower lows, we expect the indicators to follow suit. If they are not, then the price and the indicator, in this case the MACD, are diverging from each other and will mean that the forex market may reverse. Again, the method works better on higher timeframe like H4 or higher.
When making use of the CCI system it is strongly advised that you should plot the price chart along with two CCI indicators. Once this has been done you would have to wait and observe the divergence pattern to emerge from both the indicators. It can also be of great use to make use of a single indicator but the use of both indicators gives out the very best signals. There are also other settings that you are able to try out and these will extremely work well for you. The settings are very easy to employ and you should not be worried at all because the system comes with a tutorial and the best part of this system is that you can make use of it using a demo account before you start off investing with your money. The use of indicators is very useful because it will certainly give out strong signals when ever a market starts to run out of momentum and at this point you will be able to decide whether to exit a trade or to set up stop loses.
For example, you can make an excellent set up on the following pair the GBP/USD giving yourself a 15 minute period chart. You will certainly observe that the prices did not trade lower but it will form more like a double bottom formation. If pairs begin to make low prices then the CCI will definitely make new lows indicating a reversal of a positive sign that is taking place and hence this will be correct in this case.
The CCI system is a forex trading system that is very good to use and you do not have to always monitor the events that are taking place. All you have to do is set up your indicators and the system will do the rest for you. Forex market trade can become very easy only is you make use of the right system for your investment and also if you are to include several trading strategies in your system.
Your system will certainly work well if it is combined with several other forex trading strategies and you should also make it a point that you get to understand how other systems work so that you are able to select the very best system for your investment.
Archive for the 'Canadian Dollar' Category
After finishing 2008 on a low note and getting off to a disastrous start in 2009, the Canadian Dollar (”Loonie”) is slowly clawing its way back. It has now risen over 14% since the beginning of March, and is up 7 cents in May alone, en route to a seven-month high. Circumstances have changed so rapidly that no one could have seen this coming. “The rising Canadian dollar has taken some forecasters by surprise; recent predictions by some Canadian banks said the dollar would be in the high 70-cent US to mid-80-cent range by June.”
USD Sinks Pressured by Improving Risk Appetite
USD traded at a five month low pressured by improving risk appetite as global equities and crude prices rally to a new high for 2009. Hope for second-half of the year recovery in the global economy fuels demand for equities and commodities. The USD was also pressured by report that South Korea plans to reduce exposure to US bonds and concern about financing of US debt. The Daily Telegraph reports that the six-month high in US 10 year bond yields defies efforts by the Fed to push long-term interest rates lower.
GBP/USD Breaks Through 1.60
The Cable busted through our 2nd tier downtrend line and the psychological 1.60 level as investors return to risk. We view the defeat of our 2nd tier downtrend line as a significant move, giving a green light to the Cable’s bull trend. Our 2nd tier downtrend line stretches back to July 2008 highs, meaning the GBP/USD has a ton of room to the upside with all near-term downtrend pressures out of the way. Investors are reacting to a much stronger than expected Nationwide HPI release, showing home values are improving in Britain.
