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Harmonic Price Patterns

Published at: 03:01 pm - Monday January 03 2011

A harmonic price pattern allows traders to pinpoint recent trend retracements. They essentially allow a trader to see the future, and if the conditions are correct, they will show that a trend is going to continue its current trend after a minor detour. This type of trend uses Fibonacci retracements and extensions to allow a trader to make a profit by correctly predicting the pattern continuation.

One of the most basic harmonic price patterns is the ABCD pattern. This pattern can be either bearish or bullish, but either way, if you spot it, you can make a big profit by buying or selling a currency. These trends are easily identified by a change in price, only to be followed by a higher high, or a lower low. The bullish trend will be spotted when a lower low occurs, only to see the price skyrocket back up to a new high. The bearish trend will see a higher high right before its price comes plummeting down. As its name indicates, the ABCD pattern consists of four price changes.

Another basic pattern is the three drive pattern. This pattern is very similar to the ABCD, but has a third component to it. Instead of two peaks, this pattern has three (hence the name). This pattern again shows a retracement in price, but has one more price reversal than the ABCD.

Both of these harmonic price patterns are easily identified and do not take long to interpret. Still, they are powerful tools when it comes to spotting patterns on a price chart. The better you are at identifying these patterns, the more likely you are to make money.

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News Trading Biases

Published at: 01:12 pm - Wednesday December 15 2010

If you are a news trader, you fall into one of two camps: a directional bias or a non-directional bias. If you are a directional bias trader, you are anticipating that news will affect a currency’s exchange rate in a certain direction and plan on capitalizing off of that change. Non-directional bias traders, on the other hand, have a plan in place regardless of which direction the market goes in.

Directional bias traders are limited based upon their trading strategies. They anticipate that the market will move in a certain direction and if it doesn’t, either they do not enter the trade, or they lose money. Because of the limitations of directional biases, non-directional bias trading has become increasingly popular. These traders don’t care which direction the market is moving in as long as it does move. When a market moves, these traders have a plan in place for either outcome. This offers more flexibility and an opportunity for more money making opportunities.

Having a couple plans in place is important. Just as important is knowing exactly when to enact those plans. When a piece of news hits, you need to be prepared to make as much money as possible. Using the Oracle Trader during this time is also a great tool. Without a directional bias, you are opening up the door to making money whatever the market does, but you still need to know which plan to execute. Identifying the trend that a currency is riding on shortly before news is released is an important part of this. This will also help you establish at what price to enter a trade since you will have the general anticipation of the news accounted for as well as an acceptable range pinpointed.

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Paper Trading and Why it’s Important

Published at: 06:11 pm - Tuesday November 30 2010

Forex sites usually offer free demo accounts to their registered clients. These accounts have all the realities of trading associated with them yet carry none of the risk. Because you are trading with play money, you do not have to worry about losing your hard earned real money. This is called paper trading, and it is a valuable way to learn how to conduct your own real trades.

The temptation with fake money trades is to be as aggressive as possible. This might make you a few quick bucks, but it is not the proper way to carry yourself. Aggression is certainly warranted in some instances, but there is nothing to be gained by this. When you are paper trading, you will want to mimic your regular trading style as much as possible. If you are overly aggressive in your paper trading, the worst thing that can happen to you is success. This is because being aggressive will only lead to losing real dollars down the road. A bit of moderation is necessary, even when you are not trading real money.

The more you practice with fake money, the better trader with real money you will be. You will get a feel for your style as a trader, plus, you will see what your strengths and weaknesses are. This will allow you to refine your style even further. Paper trading might seem pointless at first, but it is actually a very good way to learn how to trade and how to use your platform’s software to the best of your ability. This way, you will be fully capable of making consistent profits in the real world of trading.

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Why Trade Forex?

Published at: 02:11 am - Wednesday November 24 2010

Forex trade today refers to the exchange of currency and speculating on it in the open market. Everyday $4 trillion worth of Forex trade takes place worldwide. From being trade that could be done by only banks and financial institutions the market has today been made accessible to individuals as well.

Beginning Forex trade is quite easy. An individual who wants to start Forex trade should have a minimum balance of $25,000 in his trade account. In case of future trading the individual has to maintain account sizes worth 1000’s of dollars with the future brokers. However in Forex trading there are several brokers who will allow you to do trading with just $1,000 in your account.

The best part of the Forex trading is that it takes place 24 hours a day. You can find an active pair to trade at any time of the day or night. The market is open for 5 ½ days a week. Hence even people with full time jobs can trade after their job hours.

You can monitor detailed analysis of your Forex trading with the help of software that is provided free by the Forex dealers. This software show you financial figures in the form of data as well as charts. The charts give you a good idea of the figures over a period of time. Hence you can track the ups and downs of progress quickly when you have a chart in front of you.

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