I Love Trading

Triple Bottom

2008-07-30T11:02:00.003+07:00

A triple bottom pattern displays three distinct minor lows at approximately the same price level. The triple bottom is considered to be a variation of the head and shoulders bottom. Like that pattern, the triple bottom is a reversal pattern.

As illustrated below, the triple bottom pattern is composed of three sharp lows, all at about the same price level. Prices fall to a support level, rise, fall to that support level again, rise, and finally fall, returning to the support level for a third time before beginning an upward climb. In the classic triple bottom, the upward movement in the price marks the beginning of an uptrend.

How to trade this pattern?

Go long above the neckline (resistance level) when the price breaks from (its third bottom) below, the most likely price direction is now UP. Place your stop below its third bottom price!

Your target must be at least twice the distance from its third bottom break to the neckline.

Rounded Bottom

2008-07-30T11:00:00.003+07:00

A Rounded Bottom is considered a bullish signal, indicating a possible reversal of the current downtrend to a new uptrend.

Rounded Bottoms are elongated and U-shaped, and are sometimes referred to as rounding turns, bowls or saucers. The pattern is confirmed when the price breaks out above its moving average.

Following are important characteristic to look for in a Rounded Bottom.

The price pattern forms a gradual bowl shape. There should be an obvious bottom to the bowl. Price can fluctuate or be linear; however, the overall curve should be smooth and regular, without obvious spikes. For example, a V-shaped turn would not be considered a rounded bottom.

Rounded Bottoms are long-term patterns. Martin J. Pring identifies that the pattern can occur over a period of about 3 weeks, but can also be observed over several years.

The duration of the pattern indicates the significance of the price movement. John J. Murphy writes that rounded bottoms "are usually spotted on weekly or monthly charts that span several years. The longer they last, the more significant they become."

Head and Shoulders

2008-07-30T10:58:00.002+07:00

A Head and Shoulders Bottom is considered a bullish signal. It indicates a possible reversal of the current downtrend into a new uptrend.

The first point - the left shoulder - occurs as the price of the financial instrument in a falling market hits a new low and then rises in a minor recovery. The second point - the head happens when prices fall from the high of the left shoulder to an even lower level and then rise again. The third point - the right shoulder - occurs when prices fall again but don't hit the low of the head. Prices then rise again once they have hit the low of the right shoulder. The lows of the shoulders are definitely higher than that of the head and, in a classic formation, are often roughly equal to one another.

The neckline is a key element of this pattern. The neckline is formed by drawing a line connecting the two high price points of the formation. The first high point occurs at the end of the left shoulder and beginning of the downtrend to the head. The second marks the end of the head and the beginning of the downturn to the right shoulder. The neckline usually points down in a Head and Shoulders Bottom, but on rare occasions can slope up.

How to trade this pattern?

Go long when the currency price CLOSES above the neckline and put a stop-loss below the last bottom (right shoulder).

Use a risk reward ratio. Better to calculate your profit target (if you risk 50 points, your target should be at least 75 points).

Upside Breakout, Rectangle, Slim Jim

2008-07-30T10:55:00.001+07:00

An Upside Breakout is considered a bullish signal, marking a breakout from a trading range to start a new uptrend.

An Upside Breakout occurs when the price of a financial instrument breaks out through the top of a trading range. This Technical Analysis indicates that prices will rise explosively over a period of days or weeks as an almost vertical uptrend appears.

The duration of the trading range for which the breakout occurred can provide an indication of the strength of the breakout. The longer the duration of the trading range the more significant the breakout.

The "narrowness" of the trading range can also be used to gauge the breakout. To determine the narrowness of the trading range compare the upper boundary with the lower boundary of the trading range. If the trading range has a small difference between the upper and lower boundary (making it narrow) then the breakout is considered stronger and more reliable.

Symmetrical Continuation Triangle

2008-07-30T10:53:00.002+07:00

The triangle pattern, also called the "coil," appears in three varieties:

1. symmetrical, 2. ascending, and 3. descending.

Generally, a triangle pattern is considered to be a continuation or consolidation pattern. Sometimes, however, the formation marks a reversal of a trend.

Symmetrical triangles are generally considered neutral, ascending triangles are bullish, and descending triangles are bearish. From a time perspective, triangles are usually considered to be intermediate patterns. Usually, it takes longer than a month to form a triangle. Seldom will a triangle last longer than three months. If a triangle pattern does take longer than three months to complete, Murphy advises that the formation will take on major trend significance.

Converging trendlines of support and resistance gives the triangle pattern its distinctive shape. This occurs, Kahn explains, because "the trading action gets tighter and tighter until the market breaks out with great force." Buyers and sellers find themselves in a period where they are not sure where the market is headed. Their uncertainty is marked by their actions of buying and selling sooner, making the pattern look like an increasingly tight coil moving across the chart.

As the range between the peaks and troughs marking the progression of price narrows, the trendlines meet at the "apex," located at the right of the chart. The "base" of the triangle is the vertical line at the left of the chart which measures the vertical height of the pattern.

Flag and Pennant

2008-07-30T10:49:00.001+07:00

Flag and pennant are considered as bullish signal, indicating that the current uptrend may continue.

A Pennant (Bullish) follows a steep, or nearly vertical rise in price, and consists of two converging trendlines that form a narrow, tapering flag shape. The Pennant shape generally appears as a horizontal shape, rather than one with a downtrend or uptrend.

Apart from its shape, the Pennant is similar in all respects to the Flag. The Pennant is also similar to the Symmetrical Triangle or Wedge continuation patterns however; the Pennant is typically shorter in duration and flies horizontally.

A Flag (Bullish) follows a steep, or nearly vertical rise in price, and consists of two parallel trendlines that form a rectangular flag shape. The Flag can be horizontal (as though the wind is blowing it), however it often has a slight downtrend. A bullish signal occurs when the price rebounds beyond the upper trendline of the Flag formation, and continues the original upward price movement. This is considered a pattern confirmation.

How to trade these patterns?

Always trade Flag and Pennants in the direction of the previous (main) trend. If the previous trend was up, wait for a break out to the upside and go long when the currency pair rises above the upper resistance trend line. Place your stop below the lower support trend line.

Diamond Bottom

2008-07-30T10:44:00.001+07:00

The Diamond Bottom pattern occurs because prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. The Technical Analysis occurs when prices break upward out of the diamond formation.

The target price provides an important indication about..

Wise Words Part 2

2008-07-21T11:53:00.003+07:00

I know where i’m getting out before i get in I believe, if I stay true to my basic trading strategy, I will eventually rebound
The key is consistency and disciplined
The most important rule in trading is ; play great defense, not great offense
I have the attitude that if I trade loses, I can handle it without any problem and com back to do the next trade
The elements of good trading are ; 1) cutting losses, 2) cutting losses, 3) cutting losses
I know when i have to cut losses, ride winners, keep bets small, follow the rules without question, know when to break the rules
I love to trade, and I love to win
If I don’t take a hard look at risk, it will take me
My sytem never trades counter to the market trend
I always follow my system
The maximum risk on each trade is limited to 1 percent of total equity
Good trading is peculiar because the balance between the convinsion to follow your ideas and the flexibility to recognize, when you have made a mistake is the best learned through extensive experience and mistakes
The market are always changing, and the successful trader needs to adapt to these changes
Anything is possible with persistence and hard work.

Types of Trading Order

2008-07-21T11:51:00.001+07:00

There are three types of trading order which can help traders to take the position, such as :

Market Order

This is an order to buy or sell a given price at the current market price. This means that the trader will be buying at the “current” ask or selling at the “current” bid that is quoted. The market order can be used to enter or exit trades. When placing a market order, trader specifies the currency pair that he wants to buy or sell and the number of lots or contracts trader wants to trade.

Limit Order

This is an order to buy or sell a given price a pre specified quote or better, and can be used to enter or exit trades. It “limits” the price at which you are willing to trade at. When a Buy Limit order is placed, the trade cannot be executed at a price that is higher than the specified limit price. Therefore the buy limit is placed below the current market price. It can be used to obtain a better entry price when looking to go long, or used to close out or exit an existing short position at a profit.

When a Sell Limit order is placed, the trade cannot be executed at a price that is lower than the specified limit price. Therefore the sell limit is placed above the current market price.

Stop Order

This is also an order to buy or sell a given price a pre specified quote and can also be used to enter or exit trades. This is a very useful order, in that it is placed on the opposite side of the current market price than the limit order.

When a Buy Stop order is placed, the order cannot be placed at a specified price that is lower than the current market price. Therefore the buy stop is placed above the current market price. In this way it can be used to enter a new long position when the price of a given currency breaks above, “a price break-out”, a certain rate or it can be used to limit a loss in an existing short position. When a Sell Stop order is placed, the order cannot be placed at a specified price that is higher than the current market price. Therefore the sell stop is placed below the current market price.

This is why it is also referred to as a "Stop Loss" or “Protective Stop” order.

Cash Management

2008-07-21T11:50:00.001+07:00

Market analysis is always combined with cash management which constitutes cash flow arrangement aspects, such as :

1. Trading Strategy

In principle, trading is an application of widely known portofolio theory, namely diversification of the funds invested in different stock indices which are considered to have a smaller risk. Diversification of transaction times, suh as combination of short term, medium term, and long term trading that will further diminish the risk.

2. Risk Management

By means of risk management, the risk of stock indices trading can be managed and also limited through :

Stop Loss

Limiting the risk at a certain level of stock indices

Locking

Taking a contradictory position against the original position (temporary), and than for liquidation of the locking position when it is considered safe

Average

It is used when the investor is convinced that the first open position risk and the subsequent one will be lower when the price rebounds and close to the original open position price. This technique is usually co,bined with stop loss or locking

Holding Position

This mechanism is used because investor enters in long term transaction, and it may ne combined with stop loss, locking, and average

Switch Position

The risk is reduced with the assumption that the initial position taken is apparently misdirected and then position is reversed

US Economic News

2008-07-21T11:49:00.001+07:00

1. Non Farm Payroll (NFP):

NFP represents all business employees excluding general government employees, private household employees, and employees of nonprofit organizations, accounting for about 80% of the workers who contribute to GDP. NFP is released every first Friday of the month and can cause big gaps on the forex market.

NFP Release Schedule: First Friday of the month at 8:30am EST

2. FOMC Decision

The FOMC holds eight regularly scheduled meetings per year. If the FOMC wants to increase economic growth, it will reduce the target fed funds rate. Conversely, if it wants to slow down the economy, it will increase the target rate with a rate hike.

3. Trade Balance:

The difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than your imports; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The Trade Balance also has a sizable impact on GDP.

4. Consumer Price Spending (CPI):

CPI measures the change in prices at the consumer level for a fixed basket of goods and services paid for by a typical consumer. Items included in the CPI reflect all goods and services that people buy for day-to-day living.

5. Retail Sales:

Retail sales is the first real indication of the strength of consumer expenditure .Measures the percentage monthly change in total receipts of retail stores, and includes both durable and non-durable goods.

6. Gross Domestic Product (GDP):

There are four major components of the GDP are: consumption, investment, government purchases, and net exports. GDP measures the market value of goods and services produced in a country.

7. Current Account

The current account is the sum of net income from trade in goods and services, net factor income, and net unilateral transfers from abroad. It's a statement of the country's trade with other nations over a period of time.

8. Durable Goods Orders:

Durable Goods include large ticket items such as capital goods, transportation and defence orders. They are extremely important because they anticipate changes in production and thus, signal turns in the economic cycle.

9. TICS

The Treasury International Capital (TIC) Report measures foreign demand for US debt and assets. Strong demand tends to strengthen the dollar as foreigners convert their money in order to purchase US securities.

Trading Journal

2008-07-21T11:46:00.001+07:00

Trade number: 23

Trade Date	13/07/2008 - 09.15 AM (GMT)
Trade Spec	Hangseng
Type of Trade	Long 10 lots
Style of Trade	Short Term
Entry Price	21700
Reason for Entry	Stochastic on 8% to an uptrend Crossover SMA
Target Level	21750
Reason for Exit	Watch Out for Resistance

Stop Loss	50 pts (according to each traders)
Gain or Loss:	-$500
Sell Date:	13/07/2008 - 09.25 AM (GMT)
Trading Error1:	System gave a buy signal but I didn't pull the trigger In the extreme market, I should increase the stop loss points, cause after the price broke my stop loss, it bounced
Solution:	When the system signals, I have to enter the trade without any fear Feel the volatility of the market

Profit / Loss Formula

2008-07-21T11:44:00.001+07:00

On Long Position

Mr. X takes long position as 5 lots Hangseng Indice at 21800 and liquidates it at 21850.

Profit / Loss Calculation :

( liquidation price – initial price ) * one poin value * quantities

( 21850 – 21800 ) * Rp 50,000 * 5 = 12,500,000 IDR

On Short Position

Mr. Y takes short position as 3 lots Nikkei Indice at 13250 and liquidates it at 13300.

Profit / Loss Calculation :

( initial price – liquidate price ) * one poin value * quantities

( 13250 – 13300 ) * Rp 50,000 * 2 = - 5,000,000 IDR

Wise Words Part 3

2008-07-21T11:42:00.001+07:00

I love what i’m doing, and I am going to be a lot more successful
The point you use to measure the time lement is not the price high, but an oscillator high
I turn my losses to a winner is when I am able to separate my ego needs from making money, when I am able to accept being wrong, it’s not so painful to take a loss, and if I make mistake, SO WHAT !!
I always take my losses quickly
Don’t increase your position size until you have doubled or tripled your capital
The market is always right
I learn how to think for my self ; to be able to see that the emperor has no clothes
The trend is my friend
I have no boundaries, i’m totally flexible, I’m open to everything, and I pursue everything, I have no more compunction about speculating
I know when to hold and when to liquidate a losing position
I understand well about Charts, Elliot Wave, Gann Analysis, Fibonacci Number, Cycles, Sentiment, Moving Averages, and Various Oscillators, and I know when to use each method
I always do my homework (journal)
I’m not an arrogant trader
I understand my limitations
I am my own person
I don’t trade until an opportunity presents itself
It is important to learn how to lose, but it is more important to learn how to win

Wise Words Part 1

2008-07-21T11:40:00.001+07:00

The question of who wins and who loses is determined by skill, not luck
I decided that I would never again allow myself to lose everything on single trade, no matter how convinced I was of my market view
The undisciplined use of leverage is the single most important reason why most traders lose money in future market
Cutting down the number of trades you make
The best trades are the ones in which you have all three things going for you : fundamentals, technicals, and market tone
If you can restrict your activity to only those types of trade, you have to make money, in any market, under any circumstances
One of my rules is to get out when volatility and the momentum become absolutely insane
Always use STOP
Good feel is very important
When something happens to disturb my emotional equilibrium and my sense of what the world is like, I close out all position related to that event
Being a successful trader takes courage, the courage to try, courage to fail, courage to succeed, and the courage to keep on going when the going gets tough
I have the ability to imagine configurations of the world different from today and really believe it can happen
I stay rational and disciplined under pressure
I always trade on market view
I don’t trade simply on technical information
I don’t hold position unless I understand why the market should move

Technical Analysis Basics: Dow Theory

2008-07-21T11:38:00.001+07:00

Mon, 02 Apr 2007 09:59:14 MDT Written by Greg Standford

Dow Theory is a theory on price movements that provides a basis for technical analysis. The theory was derived from 255 Wall Street Journal editorials written by Charles H. Dow (1851–1902), journalist, first editor of the Wall Street Journal and co-founder of Dow Jones and Company. Many technical analysts consider Dow Theory's definition of a trend and its insistence on studying price action as the main premises of modern technical analysis.

What does the Dow Theory tell us?

1) The market discounts everything

The actual price is the true price. For example, when the Hangseng is quoted at 21550/55 than that is a fair value for that market. Dow assumes that all information about the Hangseng has already been taken into account and is reflected by the current market price.

2) The market is comprised of three trends

Dow defined an uptrend (trend 1) as a time when successive rallies in a security price close at levels higher than those achieved in previous rallies and when lows occur at levels higher than previous lows.

Downtrends (trend 2) occur when markets make lower lows and lower highs. It is this concept of Dow Theory that provides the basis of technical analysis' definition of a price trend. Dow described what he saw as a recurring theme in the market: that price would move sharply in one direction, recede briefly in the opposite direction, and then continue in their original direction (trend 3).

3) Trends have three phases

Major market trends are building up of three phases: an accumulation phase, a public participation phase, and a distribution phase represented by a primary trend, a secondary trend and several minor trends.

I. Primary trend- usually lasts more than one year and may last for several years

These movements are typically referred to as bull and bear markets.

II. Secondary trend - represents a temporary (corrective) change in price within a primary trend that may take weeks or few months.

III. Minor trends - are short-term movements lasting from a few days to several weeks but are of little significance.

Main point to remember about the Dow Theory:

There are three types of trends in the market, a primary trend, a secondary trend and minor trends.

Types of Time Frame

2008-07-21T11:36:00.004+07:00

Timeframe	Description	Advantages / Disadvantages
Intraday	Designed for active currency traders, such as the scalper and the daytrader. Timeframe's usually used to trade are 1 and 5 minute for scalpers and 5-15-60 minute for daytraders.	Intraday trading can be very stressful, whether it's scalping or day trading, the trader needs to set aside dedicated an uninterrupted work. You will have lots of intraday trading opportunities and no overnight risk or rollover fees.
Intraday	Trades are typically held for minutes (scalpers) or couple of hours (daytraders). Intraday traders will close their positions before market close (5 PM EST)	Scalpers and daytraders are the real deal. This is what they do for a living. Usually, they don't have a second job. Most online currency traders are intraday traders. Both scalpers and daytraders will keep a close eye on key economic data. Make sure you have an Economic Data Release Calendar on your trading desk!
Swing or Position	Designed for the less active currency trader. Timeframe's usually used to trade are 60 min, 240 min, daily and weekly charts. Trades are typically held for days or weeks	If you want to trade currencies but have a job, then become a swing or position trader. Looking to your charts once or twice a day is fair enough to make your trade decisions. Less stressful compared to intraday trading. Rollover fees will affect your account since you are holding overnight.
Long-term	Designed for the passive currency trader. Timeframe's usually used to trade are daily and weekly charts. Trades are typically held for several months or even years.	Your primary income is a full time job and you don't have the time to watch your forex charts every day. Rollover fees will affect your account since you are holding overnight. Holding a carry trade might be a good idea for you. Trading long-term timeframe’s requiring a large stop and the best approach is to be a long-term trend follower.

8 Trading Tips

2008-07-21T11:36:00.003+07:00

http://www.aboutcurrency.com/content/view/577/488/

Tue, 27 May 2008 09:24:10 MDT Written by Aboutcurrency

Trade With Sufficient Capital

One of the worst blunders that forex traders can make is attempting to trade without sufficient capital. The trader with limited risk capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading his preferred system or strategy. Recommended trading capital to open a mini account.

Exercise Discipline

Discipline is probably one of the most overused words in trading education. However, despite the cliché, discipline continues to be the most important behavior one can master to become a profitable currency trader. Discipline is the ability to plan your work and work your plan. It's the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you're uncomfortable with risk. Discipline is also the ability to continue to trade your system or strategy even after you've suffered a series of losses. Do your best to cultivate the degree of discipline required to become a world-class trader.

Be patient and Persistent

Many traders have become sorely disappointed when immediate success was not attained. Be consistent in allowing yourself sufficient time to achieve success. Persistence is one of the most important qualities a trader can possess. Those who quit too soon or haphazardly apply their trading system will not be trading in the market to allow their system to produce the wins they are looking for. In order to develop persistence you must force yourself initially to do everything according to the rules of your trading system or method. Follow through on this commitment, and you will find that after you have taken every trade according to your tested system or method, your consistency will have paid off and you will have profits to show your efforts.

Employ Risk-to-Reward Ratios

A risk-to-reward ratio compares the potential for reward against the potential for loss. A trader must view his trade as a business transaction. We identify risk by counting the pips between the forecasted entry price at which one would exit the market in a losing trade (stop loss). We identify reward by counting the pips between the forecasted entry price and the forecasted price at which one would exit the market in a winning trade. To effectively manage risk, we look to find high probability trades that have a 1 to 1 or greater risk-to-reward ratio. Most professional traders look for positive RTR ratio's between 1-3.

Follow Trading Rules

The proper execution of trades is a very important aspect of becoming a profitable currency trader and one of the most difficult to learn. The problem comes with the initial analysis of the market. When you are studying examples of past trades, it is much easier to recognize direction, entries, and exits that if you were live trading. Recognizing opportunities in the "now" is much more difficult to do. To develop this important skill, one must pay very close attention to specific price patterns and the chart positions of technical indicators. Following trading rules and a trading system is no small matter. It requires the trader to obey rule after rule, even when their initial response to markets is not to trade, end a trade or get into a trade, based on emotion? Trading should only occur when the right setups are present and when confidence is high.

Accept Losses

Since no trading system or method is 100% accurate, losses will happen sooner or later. Develop the ability to admit to your losses. Sometimes traders will remove their stops and let their losses run in the hope the trade will come back. They do this because they are unwilling to admit that their forecast of market direction or their timing of entry into the forex was incorrect. Losses can occur primarily for two reasons. The first reason is when the trader fails to follow established tested rules and guidelines of a trading system or proven method. The second reason is when the trading system or method fails to encompass unexpected changes in the market conditions. In either case, by anticipating the reasons for most of the losses you're going to take, you can put precautions into place beforehand to help reduce losses in the future.

Always Use Stops

Stops are orders in the market placed a distance from your entry price, in the event market prices turn and move opposite from the anticipated direction. The idea behind a stop is to prevent a loss from "running" too far and thereby consuming excessive capital in one single trade. Too often traders are so convinced of where they believe market prices are headed, they lose their sense of reality and begin to trade on hope. They choose not to trade with a stop, or remove their original stop, simply hoping that market direction will eventually turn (again) their way and their loss will turn into a win. However, by the time they finally realize that such will not be the case, and that their hope was an illusion, they have risked far more that they wanted to at the outset of their trade, and the result is a devastating, excessive loss, eventually wiping out their entire trading account.

Keep a Trading Log

Keeping a log of trades is like taking a snapshot in time. You'll find that after making your first analysis, market conditions develop so rapidly that it can be difficult to remember exactly what you saw in the beginning that caused you to enter the market. By recording just a few notes about each trade you make and the technical picture you see, you will sharpen your skills in recognizing strong trade setups.

Economic Indicators Explained

2008-07-21T11:33:00.001+07:00

Tue, 26 Sep 2006 11:50:53 MDT Written by Aboutcurrency

Balance of Payments:

The balance of payments is separated into two main accounts: the current account and the capital account. It's a complete summary of a nation’s economic transactions and the rest of the world including merchandise, services, financial assets and tourism.

Beige Book Fed Survey:

The Beige Book, is published eight times a year by the Federal Reserve Bank. It highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration.

Business Inventories and Sales:

Inventories are an important component of the GDP report. Business inventories and sales figures consist of data from other reports such as durable goods orders, factory orders, retail sales, and sales data.

Construction Spending:

Spending Measures the value of construction during the course of a particular month.

Consumer Price Spending (CPI):

Current Account:

Durable Goods Orders:

Durable Goods include large ticket items such as capital goods, transportation and defense orders. They are extremely important because they anticipate changes in production and thus, signal turns in the economic cycle.

Employment Report:

In the US, the employment report is regarded as the most important among all economic indicators. The Employment Report contains 3 components: Payroll Employment: Measures the change in number of workers in a given month.

Unemployment Rate:

The percentage of the civilian labor force actively looking for employment but unable to find jobs.

Average Hourly Earnings Growth: The growth rate between one month’s average hourly rate and another.

Factory Orders:

The factory orders report contains data on orders and shipments of non durable goods, manufacturing inventories, and the inventory/sales ratio.

FOMC Decision:

Gross Domestic Product (GDP):

There are four major components of the GDP are: consumption, investment, government purchases, and net exports. GDP measures the market value of goods and services produced in a country.

Housing Starts/Building Permits Starts:

Are divided into single-family and multi-family categories. In both cases, a housing unit is considered “started” when excavation actually begins.

IFO:

Germany’s leading survey of business conditions. The index surveys over 7,000 enterprises on their assessment of the current business situation and their resulting plans for the short-term.

Industrial Production and Capacity Utilization:

Industrial production measures the monthly percentage change in volume of output of the nation’s factories, mines, and utilities. Capacity utilization measures the extent to which the capital stock is employed in production.

National Association of Purchasing Managers (NAPM):

This is leading survey on US manufacturing activity, arranged by the National Association of Purchasing Management (NAPM).

New Home Sales:

Monthly data new home sales data contains information on home prices, and number of houses for sale.

Non Farm Payroll (NFP):

Personal Income:

Personal Spending, also known as PCE, represents the change in the market value of all goods and services purchased by individuals. It is the GDP's largest component.

Producer Price Index (PPI):

PPI measures the monthly change in wholesale prices and is broken down by commodity, industry and stage of production.

Purchasing Managers' Index (PMI):

PMI is widely used by industrialized economies to assess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries.

Retail Sales:

Retail sales are the first real indication of the strength of consumer expenditure.

Measures the percentage monthly change in total receipts of retail stores, and includes both durable and non-durable goods.

TICS:

Tankan Survey:

Japan’s chief business survey, compiled quarterly by the Bank of Japan. The survey consists of two major parts; the "judgment survey," asking businesses about their situation in the previous, current and following quarters on macro-economic variables, business conditions, inventory levels, capacity utilization levels and employment level. The other main part is related to "current management issues" confronting companies.

Trade Balance:

Type of Charts

2008-07-21T11:28:00.001+07:00

As mentioned before, charts are primary tools to analyze the indice market in real-time. There are three main types of charts :

1) Candlestick chart

There are 4 components needed to construct a candlestick, the Open, Close, High and Low price for a given period. Looking to the below examples, the high is marked by the top of the upper shadow; the low is marked by the bottom of the lower shadow representing the high/low price extremes for the period.

The Body of the candlestick is called the real body, and represents the range between the open and closing prices. If the close price is lower than the open price, the body will be black, if the close price is higher than the open price, the body will be filled-in. Most commonly used among traders are candlestick charts because they are much more visually appealing than the other charts.

The white candlestick is called BULLISH (Close price > Open price indicates Buying Pressure)

the black candlestick is called BEARISH (Close price

2) Bar chart

The bar chart is made up of four parts components: open, high, low, and close price for a given period.

This type of chart is not very popular in trading.

3) Line chart

A line chart uses only the closing prices to form a line and present much less useful information than a candlestick or bar chart. Therefore, they are not used when trading.

This is Future Indices, This is Short Term Trading !!!

2008-07-21T11:27:00.001+07:00

This is Future Indices, This is Short Term Trading !!!

Making money in times of market uncertainty

My grandfather used to liken everything ti fishing, driving a car, drinking beer, even my grandmother. One that was particulary relevant was the stock market. : it’s a changeable beast,” He used to say. “ you don’t want to be using the same technique everytime. “One of those techniques he taught me was short-term trading. Once mastered, it will allow you to make profits on the stock market even during times of unpredictability.

Short term trading isn’t day trading ; the actual holding term can be as changeable as the market itself. Generally, the rule for successful trading is to use the longest holding term you can. But in a choppy market, long term trading will usually always result in losing profits.

Successful short term trading is done by capturing the market trust, just before the breakout, and in today’s market, that is usually between two and three days. Also, keep in mind that often breaks out will retest the breakout area, emphasizing the need to get rid of these stocks quickly. When trading this way though, there are golden rules to follow :

1) Know when to exit

This is the hardest part of short term trading. Many lose here here because they hang on that little bit longer and end up losing the lot. My grandfather used to say to exit at any sign of weakness in the market. Short term trading is about taking small profits quickly. It can pay off to take a risk, but risking it all is simply not worth it. Besides, a small profit is better than none at all.

2) Watch the market constantly, even if you are not trading

Look especially at what happens to the breakout. Winning short term traders have a good understanding of current market trends. While no one gets it right all the time, practice does greatly improve your odds of getting it right.

3) Mind the gaps

These occur when the market opens the next day, greater than when it closed. This happens in the market constantly, and usually, they are always filled within the first half hour of trading. So when buying for a short term trade, it is usually better that you wait until the first half hour to hour of trading is done.

On the whole, short term trading is more difficult than trading longer term. But still, regular traders should know how to use the method when he market warrants.the same technique is not going to be successful everytime, especially in a game as changeable as the stock market. You have to have an arsenal with just a much variety.

( from ASIA TOMORROW Nov.2004 )

Market Analysis

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There are two ways to analyze the market movement and make trading decisions. These two ways are complemently each other.

Technical Analysis

Technical analysis focuses on the study of price movements. Historical currency data is used to forecast the direction of future prices. Therefore, studying price action is all that is required to make informed trading decisions.

The primary tools of the technical currency trader are charts. Traders are used to identify trends and patterns in order to find profit opportunities. Being able to identify trends in their earliest stage of development is the key to technical analysis.

Fundamental Analysis

Traders who prefer fundamental analysis to make trading decisions examine a wide array of economic, social, and political.

However, there is no single set of beliefs that guide fundamental analysis. The main idea behind this type of analysis is that if a country’s economy is doing well, their investment volatility will also be doing well. The fundamental factors, such as :

Trade balance
Gross Domestic Product
Unemployement rae
Interest rate
Inflation rate
Country risk
Market sentiment and expectation

Williams %R Oscillator

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Thu, 25 Jan 2007 15:14:54 MST Written by Kent Gerard

Developed by Larry Williams, Williams%R is a momentum indicator used to indicate overbought and oversold levels.

Overbought market conditions are found at the upper band (readings from 0 to -20) and oversold conditions at the lower band (readings from -80 to -100).

Interpretation

The interpretation is similar to the Stochastic Oscillator, except that Williams %R ranging scale is plotted using negative values from 0 to -100.
0 to -20 readings are considered overbought; -80 to -100 readings are considered oversold.

Larry Williams

Formula

%R= -100 x [(Highest High - Current Close) / (Highest High - Lowest Low)]

Popular trading signals from Williams%R

In trending markets

Take only signals from Williams%R in the main direction of the trend. If the main trend is up, take only oversold signals from Williams%R. Conversely, if the main trend is down, take only overbought signals from Williams%R. Some currency traders identify the currency pair's long-term trend and then use extreme readings for entry points. If the mid long-term trend is bearish for a currency pair, then overbought readings could mark potential entry points to go SHORT (again).

In ranging markets

Go long when Williams%R falls below the oversold level and rises back above

Go short when Williams%R rises above the overbought level and falls back below.

It is recommended to use Williams%R in conjunction with other technical analysis tools to make a complete trading system.

Momentum

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Fri, 19 Jan 2007 16:31:30 MST Written by Pete V.

Developed by Donald Lambert, the momentum indicator measures the difference between the current market price of a currency pair and the price of the same currency pair a certain number (n) of days ago.

Trading Momentum is very simple. Buy a currency pair when Momentum crosses from below the zero line to above or sell when Momentum crosses from above the zero line to below; however, to achieve better trading results from Momentum, below you will find the trading rules for use in both trending and ranging currency markets.

Popular trading signals from Momentum

I. Ranging Markets

Go Long when the Momentum indicator falls below the oversold level and then crosses the zero line from below;

Go Short when the Momentum indicator rises above the overbought level and then crosses the zero line from above.

II. Trending Markets

Is the market trending or not? First, measure the strength of the trend using a trend-confirming indicator such as ADX or draw a simple trend-line to find out.

The Momentum indicator tends to stay above the zero-line during an up trending market and below the zero-line in down trending markets.

Take trading signals only in the main direction of the trend!

Up trending market: Go long when the Momentum indicator falls below the zero-line and then turns back above;
Down trending market: Go short when the Momentum indicator rises above the zero-line and then turns back below.

Please remember that Momentum, as with all other technical indicators should not be used by itself butshould be combined with other indicators / studies to make a complete forex trading system.

Average Directional Index

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Sun, 18 Mar 2007 15:23:18 MDT Written by Tom Plesk

Developed by J. Welles Wilder, the ADX is a momentum indicator that measures the strength of a prevailing trend. ADX and can be extremely useful to determine if a trend is strong or weak or to filter out false breakouts in non-trending markets. ADX doesn't tell you if the trend is going up or down, it just tell how strong or weak the current trend is.

ADX is used very often as a trend-confirming indicator in forex trending systems. As a general rule, if ADX >= 25, the trend is confirmed, either up or down.

Formula

ADX = modified moving average of DX (ADX fluctuates between 0 and 100)

Interpretation

ADX readings below 20 indicate sideways movement or a very weak trend, either up or down.
ADX readings at or above 25 indicate a trend, either up or down.
ADX readings above 40 indicate a strong trend, either up or down.
ADX readings above 80 are very rare and indicate an extremely strong trend, either up or down.
ADX can be very useful for the currency trader if combined with a trending system such as the MA Cross trending system.

Please remember that ADX, as with all other technical indicators should not be used by itself but should be combined with other indicators / studies to make a complete forex trading system.

Moving Average

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Fri, 08 Dec 2006 09:19:19 MST Written by Aboutcurrency

Moving averages (MA's) are one of the most popular technical analysis tools used when trading forex. Moving averages lag price, in other words, if price starts to move sharply upward or downward, it will take some time for the new data to filter into the moving average calculation and for it to react or "catch up".

The basic concept is, that when it is above, conditions are "bullish" and when below, conditions are "bearish". Additionally, moving averages will slope upward or downward over time. This adds another visual dimension to the analysis.

Three types of Moving Averages:

Simple moving average (SMA)
Exponential moving average (EMA)
Weighted moving average (WMA)

1) Simple Moving Average (SMA)

A simple moving average (SMA) study for a historic data chart is calculated by adding a

constant number of the price data values, where the value of the constant is known as the smoothing constant of the moving average, and dividing the result by the same value of the constant. This is repeated for all data points of the drawn chart to give a series of moving average points.

NRM (mva – n) = (Sum (Pi) for i = 1 to n) / n

Where P = the price value of data point, which can be selected to be high, low, close or open (default is close).

For example, to calculate a 20 days simple moving average, you need to take the sum of the closing prices from the 20 past days and divide the result by 20.

2) Exponential Moving Average

An exponential moving average (EMA) is similar to a simple moving average except that the EMA gives more weight to recent prices (increases exponentially). This also results in a greater emphasis being placed on the most recent data point.

3) Weighted Moving Average

The calculation of a weighted moving average (WMA) is similar to that of a simple moving average except that every price point is linearly weighted according to its age. The emphasis therefore is placed on the most recent price values. This type of moving average will respond to a changing price trend more rapidly than will a simple moving average, and will be seen to cross the price chart sooner than would a normal one. The weighted moving average is therefore said to be “fast”.

Why We Should Use the MA’s ?

The most powerful point of the moving averages is that they are trend-following in nature and there purpose is to anticipate the beginning of new trends, or to identify new trends as soon as possible after their inception.

The most common time periods used in forex are 10, 20, 50, 100 and 200 days.

Trading signals from moving averages

One of the most common buy or sell signals in all chart analysis is the MOVING AVERAGE CROSSOVER. These occur when two moving averages representing different trends crisscross. For example, when a short-term average crosses BELOW a long-term one, a SELL signal is generated.

Conversely, when a short-term crosses ABOVE the long-term, a BUY signal is generated.

Looking to the above chart, for example, when the 10 period EMA crosses the 200 period SMA from below, this will generate a BUY signal.

or, when the 10 period EMA crosses the 200 period SMA from above, this will generate a SELL signal.

Please note: Moving Averages, as with all other technical indicators should not be used by themselves but should be combined with other indicators / studies such as candlestick patterns to make a complete trading system.

Bollinger Bands

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Tue, 09 Jan 2007 18:11:01 MST Written by Thomas Heck

Developed by John Bollinger in the 1980s, Bollinger Bands can be used to measure changes in supply and demand for the underlying currency pair.

Bollinger Bands consist of three components:

a middle band being a N-period simple moving average(SMA)
an upper band at K times a N-period standard deviation above the middle band
a lower band at K times a N-period standard deviation below the middle band

Standard values for N and K are 20 and 2

Interpretation

Bollinger bands adjust themselves to the current market conditions. During periods of lower volatility, in sideways moving markets, the bands contract toward the moving average (middle band); during periods of high volatility, the distance between the two bands will widen and move further away for the middle band.

John Bollinger

Mr. Bollinger notes the following characteristics of Bollinger Bands:

Price breakouts tend to occur after the 2 bands (upper and lower) narrowed too far, as volatility lessens.
When prices move outside the bands, a continuation of the current trend is implied.
Price bottoms and tops made outside the Bollinger bands followed by bottoms and tops made inside the bands call for possible trend reversals.
A move that originates at one band tends to go all the way to the other band. This observation is useful when projecting price targets.

Popular Trading Signals from Bollinger Bands

When the bands are contracting (due to decrease of volatility), look for price breakouts because the market is about to trend.
In a trending market, a price move outside the upper - or lower band indicates that the current up - or down trend is likely to continue.
In a ranging market, when price is close near the lower band, look for BUY opportunities since the currency pair is oversold, similarly, look for SELL opportunities when price is close near the upper band.

Summary

Bollinger Bands serve two primary functions when trading forex:
To identify periods of low volatility in the currency market
Look possible for breakouts.
To identify periods when currency prices are at extreme, and possibly unsustainable, levels.
Look for possible pull backs.

Bollinger Bands, as with all other technical indicators should not be used by themselves but should be combined with other indicators / studies to make a complete forex trading system.

Relative Strength Index

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The Relative Strength Index (RSI) is an oscillator that measures a particular financial instrument's current relative strength compared to its own price history. The RSI should not be confused with relative strength which rates a financial instrument in relation to a market such as the S&P index. The RSI is plotted on a vertical scale numbered from 0 to 100. The most popular is a 14-day period. The "A" for a 14-day period is calculated by dividing the 14-day "up" close average by the 14-day "down" close average. An "up" close or a "down" close is defined as the absolute change in price from close to close.

The RSI sometimes shows more clearly than the price chart itself the support and resistance lines for a financial instrument. Failure Swings which are also known as support or resistance penetrations or breakouts can be detected by using the RSI. Failure swings occur when the RSI passes a previous high or falls below a recent low. Divergences (when market trends go in a different direction than market indicators predicted, usually signifying the onset of a trend change) occur when the price makes a new high (or low) that is not confirmed by a new high (or low) in the RSI. Prices usually correct and move in the direction of the RSI.

A financial instrument is considered to be oversold when its RSI falls below 30 and overbought when its RSI rises over 70. RSi sometimes gives the late signal. It means when the line is between 30-70 period, we could take an abstract signal, which generated to a failure. Look for a longterm signal, when the line crosses over the bottom or up line

Parabolic SAR

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http://www.aboutcurrency.com/content/view/118/46/

Thu, 11 Jan 2007 06:47:20 MST Written by Tom Plesk

Developed by J. Welles Wilder, SAR stands for "stop and reverse" and Parabolic refers to the parabolic-shaped series of dots that are overlayed on the underlying currency price chart.

Parabolic SAR is a very popular technical indicator used in currency trending markets to tell you where to set your trailing stops.

It can help you to remove fear and greed from your trading.

Popular trading signals from Parabolic SAR

Use Parabolic SAR in trending currency markets only because it will generate many false stop signals in ranging markets.

First determine whether a currency pair is trending or moving sideways before plotting SAR on your charts, you can use a trend following indicator or trend lines to find out.

How to use?

This indicator is primarily used to trail your stops and NOT to take entry signals from it.

Applying SAR is very simple; just trail your stop to the most current SAR dot until you got stopped out form the market.

Exit a long trade when:

Currency price hits the most current SAR dot, note that SAR is always below the up trending curve

Exit a short trade when:

Currency price hits the most current SAR dot, note that SAR is always above the down trending curve

Please remember that Parabolic SAR, as with all other technical indicators should not be used by itself but should be combined with other indicators/ studies to make a complete forex trading system.

Commodity Channel Index

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Mon, 08 Jan 2007 20:32:26 MST Written by Tom Plesk

Commodity Channel Index (CCI)

Developed by Donald Lambert, CCI measures the position of price in relation to its moving average and is designed to identify cyclical turns. CCI works well in ranging markets and typically fluctuates between +100 and -100 readings.

CCI is considered to be overbought at +100 readings or above and oversold at -100 readings or below.

Donald Lambert

Formula

CCI = (Average Price - MA) / (0.015* Mean Deviation)

Overbought / Oversold levels

Oscillator readings at or below -100 are considered oversold.

Oscillator readings at or above +100 are considered overbought.

Popular trading signals from CCI (Same picture to the last pic. for CCI)

Take only signals from CCI in the main direction of the trend. If the main trend is up, take only oversold signals from CCI. Conversely, if the main trend is down, take only overbought signals from CCI.

Some currency traders identify the currency pair's long-term trend and then use extreme readings for entry points. If the mid long-term trend is bearish for a currency pair, then overbought readings could mark potential entry points to go SHORT (again).

In ranging markets

Go long if the CCI turns up from below -100 back above.

Go short if the CCI turns down from above +100 back below.

Please remember that CCI, as with all other technical indicators should not be used by itself but should be combined with other indicators / studies to make a complete forex trading system.

Moving Average Convergence Divergence

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MACD shows the relationship between two moving averages of prices. The MACD is the difference between a 26-day and 12-day exponential moving average. A 9-day exponential moving average called the "signal line" is plotted on top of the MACD to show bullish and bearish signal points. A bullish signal is generated when the MACD rises above the signal line, or above zero. A bearish signal occurs when the MACD falls below the signal line or below zero.

The MACD is best used in strongly trending markets.

The MACD indicates overbought and oversold conditions. An overbought situation occurs when prices have risen too far too fast and are ready for a downward correction. An oversold situation occurs when prices have fallen too far too fast and are ready for an upward correction. When the shorter moving average pulls away from the longer moving average (i.e., the MACD rises), it is likely that the financial instrument's price is too high and will soon return to more realistic levels.

An indication that an end to the current trend may be near occurs when the MACD diverges from the financial instrument's price. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought/oversold levels.

Directional Movement Index

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Wed, 10 Jan 2007 06:39:57 MST Written by Tom Plesk

DMI Indicator - Directional Movement Index

Developed by J. Welles Wilder, the DMI indicator is a trend following indicator designed to determine first whether a currency pair is trending or non-trending before providing buy or sell signals in the direction of the trend.

Directional Movement Index (DMI) consists of three components:

ADX measures whether a currency pair is trending or not trending
Current Positive Directional Index (+DI)
Current Negative Direction Index (-DI)

Welles Wilder

ADX is used very often as a trend-confirming indicator in forex trending systems. As a general rule, if ADX >= 25, the trend is confirmed, either up or down.

ADX Interpretation

ADX readings below 20 indicate sideways movement or a very weak trend, either up or down.
ADX readings at or above 25 indicate a trend, either up or down.
ADX readings above 40 indicate a strong trend, either up or down.
ADX readings above 80 are very rare and indicate an extremely strong trend, either up or down.
ADX can be very useful for the currency trader if combined with a trending system such as the MA Cross trending system

Formula

ADX = modified moving average of DX (ADX fluctuates between 0 and 100)

DX = 100[+DI - (-DI)]/ [+DI + (-DI)]

Popular Trading Signals from Directional Movement Index (DMI)

When +DI rises above -DI, it can generate a buy signal for a new up trend, similarly, if +DI crosses below -DI, it can generate a sell signal for a new downtrend.

Go Long when

+DI rises above the –DI
ADX should be >= 25

Exit the position when +DI crosses -DI from above or when ADX falls below 20.

Go Short when

DI rises above the +DI
ADX should be >= 25

Exit the position when -DI crosses +DI from above or when ADX falls below 20.

Note: When ADX falls below 20 or both below +DI and -DI, this indicates a non-trending currency pair with low volatility (side ways movement).

Fast Stochastic Oscillator

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The fast stochastic oscillator compares two lines called the %K and %D lines to predict the possibility of an uptrend or a downtrend. In price charts, the %K line typically appears as a solid line, and the %D line appears as a dotted line. The fast stochastic oscillator can be used effectively to monitor daily, weekly or monthly periods.

Those two lines identify :

Bullish: %K and %D lines fall below and then rise above the 20 threshold, indicating bullish potential, along with a %K line cross above the %D line, triggering a bullish signal event if these 3 crossovers occur within a 5-day period.
Bearish: %K and %D lines rise above and then fall below the 80 threshold, indicating bearish potential, along with a %K line cross below the %D line, triggering a bearish signal event if these 3 crossovers occur within a 5-day period.

When you are using stochastics with price charts, you have to keep severals ideas :

When the %K line nears the 100% or 0% line a powerful move is set to occur. Some technical analysts equate the extremes with overbought or oversold conditions, and that prices cannot get any higher or lower. However, Edwards and Magee identify that this is not true in all situations, and that the extremes instead represent the strength of a price move.
A divergence is said to have occurred when the price and oscillator trend lines move in different directions. A price reversal may follow.
Lane referred to a flattened %K or %D line as hinges. A hinge may indicate that the uptrend or downtrend has become exhausted, and that a price reversal may occur.
When the price has reached 80 or higher, and a divergence has occurred, a crossover is the sell signal. Similarly, when the price has reached 20 or lower, and a divergence has occurred, a crossover becomes the buy signal.

Slow Stochastic Oscillator

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Those two lines recognize :

Bullish: %K and %D lines fall below and then rise above the 20 threshold, indicating bullish potential, along with a %K line cross above the %D line, triggering a bullish signal.
Bearish: %K and %D lines rise above and then fall below the 80 threshold, indicating bearish potential, along with a %K line cross below the %D line, triggering a bearish signal

The slow stochastic oscillator compares two lines called the %K and %D lines to predict the possibility of an uptrend or a downtrend. In price charts, the %K line typically appears as a solid line, and the %D line appears as a dotted line. The slow stochastic oscillator can be used effectively to monitor daily, weekly or monthly periods.

The difference between the slow and fast stochastic oscillators is the way that the %K and %D values are calculated. Slow stochastics are based on the moving averages values calculated for fast stochastics. As such, John J. Murphy writes that most traders favor slow stochastics because they tend to be more reliable.

When you are using stochastics with price charts, keep the following factors in mind:

Extremes
When the %K line nears the 100% or 0% line a powerful move is set to occur. Some technical analysts equate the extremes with overbought or oversold conditions, and that prices cannot get any higher or lower. However, Edwards and Magee identify that this is not true in all situations, and that the extremes instead represent the strength of a price move.
Divergences
A divergence is said to have occurred when the price and oscillator trend lines move in different directions. A price reversal may follow.
Hinges
Lane referred to a flattened %K or %D line as hinges. A hinge may indicate that the uptrend or downtrend has become exhausted, and that a price reversal may occur.
Crossovers
When the price has reached 80 or higher, and a divergence has occurred, a crossover is the sell signal. To summarize Lane, Robert W. Colby writes that "the sell signal is more reliable when %D has already turned down when %K crosses below %D"." Similarly, when the price has reached 20 or lower, and a divergence has occurred, a crossover becomes the buy signal. Robert W. Colby writes that "the buy signal is more reliable when %D has already up down when %K crosses above %D".

Star

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A type of candlestick formation that is identified when a small bodied-candle is positioned above the price range of the previous candle as a result of a gap in the underlying assets price.

One of the four categories (quadrants) of the BCG growth-share matrix that represents the division within a company that has a large market share in a rapidly expanding industry.

Small bodied candles in the star position often suggest that market participants are becoming indecisive and that the strength of the current trend could be reversing. For a valid star pattern, most traders will watch for small bodied candles to follow a large bodied candle because this setup generally leads to a higher probability of a true trend reversal than when the body of the first candle is small.

Morning Star

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A bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:

1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.

3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar's body.

A morning star pattern can be useful in determining trend changes, particularly when used in conjunction with other technical indicators. Many traders also use price oscillators such as the MACD and RSI to confirm the reversal.

Island Bottom

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An Island Bottom is a bullish candle signal. It indicates a possible reversal of the current downtrend to a new uptrend. The Island Bottom occurs when the price "gaps" below a specific price range for a number of days and then is confirmed when the price "gaps" above the original range.

Statistics

Percent of successful formations – 85%

Failure rate - 17%

Hanging Man

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The Hanging Man is a bearish candle signal. It indicates that the prior uptrend may reverse to a downtrend or move sideways. The name "Hanging Man" is used because it has a gloomy connotation, and also because the candlestick that defines this pattern looks like a hanging man with dangling legs. The Hanging Man pattern is shaped by a small Real Body near the top of the price range. The Real Body can be black or white, although a black candlestick is preferable. A black candlestick is slightly more bearish since it shows that the close could not get back up to the opening price level.

The Hanging Man has a long lower shadow that should be at least twice the length of the Real Body. The upper shadow should be very small or non-existant.

A Hanging Man can be confirmed by a bearish gap between the Real Body of the Hanging Man and the open on the next session. In other words, the investor should look for the next session opening lower than the Real Body of the Hanging Man. The greater the gap, the stronger the signal. A Hanging Man may be a stronger signal if it is followed by another, well-formed Hanging Man in the next session. The longer the Lower Shadow of the Hanging Man the greater the significance of the pattern. The smaller the Real Body and the Upper Shadow the more significant the pattern. A Hanging Man with a white Real Body (where the close is higher than the open) may indicate weakness in the pattern.

Gravestone

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The Gravestone indicates that the prior trend is about to end and may reverse or move sideways. The Gravestone is mostly seen as a top pattern indicating the end of an uptrend. This pattern is an indication of a financial instrument's SHORT-TERM outlook.

The Gravestone consists of a long Upper Shadow and no Real Body (that is the open is equal to the close for the session). There should be no Lower Shadow for a Gravestone. A small Lower Shadow is acceptable.

A small Real Body is acceptable.

The longer the Upper Shadow the more significant the pattern.

If a Lower Shadow exists and is too long then it will reduce the significance of this pattern.

If a Real Body exists and is too large then it will reduce the significance of this pattern

Engulfing Line (Bullish)

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An Engulfing Line (Bullish) indicates a possible reversal of the current downtrend. This pattern is an indication of a financial instrument's SHORT-TERM outlook. The Engulfing Line (Bullish) occurs when the Real Body for a price bar is larger than the Real body for the previous price bar. In addition, for an Engulfing Line (Bullish), the Real Body of the previous session must be Black (close lower than open) and the Real Body of the second session must be White (close higher than open). The difference in the sizes of the two Real Bodies can be an important indicator of the signifiance of the Engulfing Line. If the Real Body of the previous session is substantially smaller than the Real Body of the following session then this pattern should be considered more significant. The greater the size difference the more significant the formation. If the following session "engulfs" more than one session's Real Bodies this pattern is very significant.

Dark Cloud Cover

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In candlestick charting, a pattern where a black candlestick follows a long white candlestick. It can be an indication of a future bearish trend.

Essentially, the large black candle is forming a "dark cloud" over the preceding bullish trend.

The dark cloud must have a closing price that is:

1) within the price range of the previous day, but

2) below the mid-point between open and closing prices of the previous day.

Tri Star

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A type of candlestick pattern that signals a reversal in the current trend. This pattern is formed when three consecutive doji candlesticks appear at the end of a prolonged trend. The chart below illustrates a bearish tri-star pattern at the top of the uptrend and is used to mark the beginning of a shift in momentum.

A single Doji candlestick is an infrequent occurrence that is used by traders to suggest market indecision. Having a series of three consecutive doji candles is extremely rare, but when it is discovered, the severe market indecision generally leads to a sharp reversal of the given trend. The "three stars" pattern can also be used to signal the reversal of downward momentum when the pattern is formed at the end of a prolonged downtrend.

Shooting Star

2008-07-21T09:45:00.001+07:00

A Shooting Star indicates that the prior uptrend may reverse to a downtrend or move sideways. A Shooting Star forms when the Upper Shadow is longer than the Real Body and the Lower Shadow is small or non-existant. The Shooting Star is the same as an Inverted Hammer, only the Shooting Star appears at the end of an uptrend, whereas the Inverted Hammer appears at the end of a downtrend.

The Real Body of the Shooting Star should "gap" away from the Real Body of the previous period. The greater the size of that gap the more important the Shooting Star. Measure the gap between the Real Bodies by taking the lower of the open or the close for the Shooting Star and comparing it to the higher of the open or close for the previous period. If the Shooting Star's lower value is greater than the previous period's higher value then a gap is present.

The Lower Shadow of the Shooting Star should be close to zero. The Upper Shadow of the Shooting Star should be as large as possible. The larger the Upper Shadow, the more important the Shooting Star.

Island Top

2008-07-21T09:33:00.002+07:00

An Island Top is a bearish signal indicating a possible reversal of the current uptrend to a new downtrend. The Island Top occurs when the price "gaps" above a specific price range for a number of days and then is confirmed when the price "gaps" down below to the original range.

Statistics

Percent of successful formations – 77%

Failure rate - 13%

Inverted Hammer

2008-07-21T09:24:00.001+07:00

An Inverted Hammer indicates that the prior downtrend may reverse to an uptrend or move sideways. An Inverted Hammer forms when the Upper Shadow is longer than the Real Body and the Lower Shadow is small or non-existant. The Inverted Hammer is the same as an Shooting Star, only the Inverted Hammer appears at the end of an downtrend, whereas the Shooting Star appears at the end of an uptrend. The Real Body of the Inverted Hammer should "gap" away from the Real Body of the previous session. The greater the size of that gap the more important the Inverted Hammer. Measure the gap between the Real Bodies by taking the higher of the open or the close for the Inverted Hammer and comparing it to the lower of the open or close for the previous session. If the Inverted Hammer's higher value is less than the previous session's lower value then a gap is present.

The Lower Shadow of the Inverted Hammer should be almost non-existant. The Upper Shadow of the Inverted Hammer should be as large as possible. The larger the Upper Shadow, the more important the Inverted Hammer.

Hammer

2008-07-21T09:16:00.001+07:00

The Hammer indicates that the prior downtrend and may reverse to an uptrend or move sideways. The Hammer is characterized by a small Real Body near the top of the price range. The Real Body can be black or white, although a white candlestick is preferable. A white candlestick is slightly more bullish since it shows that the market sold off sharply during the session and then rebounded to close slightly above the opening price level. The Hammer has a long Lower Shadow and an Upper Shadow that is very small or non-existent. In cases where a major uptrend followed by a Hammer exists, the investor should consider vacating short positions.

A Hammer can be confirmed by a bullish gap between the Real Body of the Hammer and the open on the next session. In other words, the investor should look for the next session opening higher than the Real Body of the Hammer. The greater the gap, the stronger the signal. The Hammer may be stronger if the subsequent session shows a white Real Body with a close higher than the close of the Hammer. A Hammer is more significant if it is followed in the next session by another Hammer with superior characteristics. Patterns with longer Lower Shadows have greater significance.

The smaller the Real Body and the Upper Shadow the greater the significance of the pattern. It is important to view signals in the context of prior price action. If the downtrend is strong and there are major bearish indicators before the Hammer, then the Hammer

Doji

2008-07-21T09:06:00.001+07:00

A name for candlesticks that provide information on their own and also feature in a number of important patterns. Dojis form when a security's open and close are virtually equal. A doji candlestick looks like a cross, inverted cross, or plus sign. Alone, doji are neutral patterns.

Candlesticks

2008-07-21T08:39:00.000+07:00

Double Bottom

2008-07-07T14:21:00.000+07:00

Double Bottom

Double bottom is a bullish pattern signal. It occurs when price forms two distinct lows on a chart. A double bottom is only complete, however, when prices rise above the high end of the point that formed the second low. The double bottom is a reversal pattern of a downward trend in a stock's price. The double bottom marks a downtrend in the process of becoming an uptrend. This pattern is often seen and are considered to be among the most common of the patterns. Because they seem to be so easy to identify, the double bottom should be approached with caution by the investor. Double bottom consists of two well-defined lows at approximately the same price level. Prices fall to a support level, rally and pull back up, then fall to the support level again before increasing.The pattern is complete when prices rise above the highest high in the formation. The highest high is called the confirmation point.

How to trade this pattern?

Go long above the neckline (resistance level) when the price breaks from (its second bottom) below, the most likely price direction is now UP. Place your stop below the second bottom price!
Your target must be at least twice the distance from its second bottom break to the neckline.

Cup with Handle

2008-07-07T13:58:00.000+07:00

Cup with Handle is a bullish pattern signal. It is similar with Rounded Bottoms. The pattern is similar in appearance to a coffee cup with a right-side handle, and indicates the potential for an uptrend. The cup always precedes the handle. As the cup develops, the price pattern follows a gradual bowl shape. There should be an obvious bottom to the bowl, a v-shaped turn is not a good indicator. The handle tends to be down sloping, and indicates a period of consolidation. Consolidation occurs when the price seems to bounce between an upper and lower price limit. You can track the down sloping angle of the handle by drawing trend lines across the upper and lower price limits.

Continuation Wedge

2008-07-07T13:46:00.001+07:00

A Continuation Wedge (Bullish) is a bullish pattern signal. It indicates a continuation of the current uptrend. A Continuation Wedge (Bullish) consists of two converging trend lines. The trend lines are slanted downward. This is because prices edge steadily lower in a converging pattern. For example, there are lower highs and lower lows. A bullish signal occurs when prices break above the upper trend line. Percent of successful formations – 81%.

How to trade this pattern?

(1) Go short when the price falls below the lower trend line and place your stop above the upper trend line (resistance) line (continuation pattern).

(2) Go long when price rises above the upper trend line and place your stop below the lower trend line (reversal pattern).

Continuation Diamond Bullish

2008-07-07T13:41:00.000+07:00

A Continuation Diamond (Bullish) is a bullish pattern signal. It indicates the current uptrend may continue. This patterns usually form over several months in very active markets. The Continuation Diamond (Bullish) pattern forms because prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. The Technical Analysis occurs when prices break upward out of the diamond formation to continue the prior uptrend.

Bottom Triangle Wedge / Symmetrical Continuation

2008-07-07T13:20:00.000+07:00

A Bottom Triangle Wedge / Symmetrical Continuation Triangle are bullish pattern signal. It is a reversal of the current downtrend. These patterns have two converging trend lines. The pattern will display two highs touching the upper trend line and two lows touching the lower trend line. They are confirmed when the price breaks upward out of the formation to close above the upper trend line.

How to trade this pattern?

For its best prediction, an established trend should exist, either a strong down or a strong uptrend. Once the indice pair breaks out the symmetrical triangle, most likely, the price will continue it's previous trend.

Ascending Continuation Triangle

2008-07-07T12:59:00.000+07:00

An Ascending Continuation Triangle is a bullish pattern signal. It indicates a continuation of the current uptrend. An Ascending Continuation Triangle is shaped by two converging trendlines. The lower trendline is rising and the upper trendline is horizontal. This pattern occurs because the lows are moving increasingly higher. The pattern will have two highs and two lows and it is confirmed when the price breaks out of the triangle formation to close above the upper trendline. Better investor don’t take a position, until the pattern will have finished, cause usually this pattern occurs at consolidation condition.

How to trade this pattern?

Buy the currency pair when price breaks out of the ascending triangle formation to the upside and closes above the upper resistance trend line.

Triple Top

2008-07-07T12:53:00.002+07:00

Triple Top is bearish pattern signals. Traders can indicate as triple top is when there are three top from a head and shoulders top at the same level. A triple top occurs when prices are in an uptrend. Prices rise to a resistance level, retreat, return to the resistance level again, retreat, and finally, return to that resistance level for a third time before declining. In a classic triple top, the decline following the third peak marks the beginning of a downtrend. The pattern is complete when prices decline below the lowest low in the formation.

How to trade this pattern?

Go short below the neckline (support level) when the price breaks from (its third peak) above, the most likely price direction is now DOWN. Place your stop couple above its third peak price! Your target must be at least twice the distance from it's third peak break to the neckline.

Top Triangle

2008-07-07T12:46:00.001+07:00

Those patterns are bearish pattern signals. These patterns have two converging trendlines. Those lines shape two highs and two lows which the next high / low is tighter than the last. When the price breaks the bottom line, it will continue the downtrend. Traders also call this as consolidation.

Rounded Top

2008-07-07T11:23:00.001+07:00

Rounded Top is a bearish pattern signal. A Rounded Top is dome-shaped, and sometimes looks like an inverted bowl. The pattern is confirmed when the price breaks down below its moving average.

When the downtrend begins, traders draw another line just above the upper limits of the price pattern, and continue down towards the start price of the pattern formation. When the price rises above the line, there is an indication that the new downtrend has ended.

Rising Wedge

2008-07-07T11:20:00.001+07:00

Rising Wedge is a bearish pattern signal. It consists of two converging trend lines. The trend lines are point upward. A bearish signal occurs when price breaks below the lower trendline. And it will continue the downtrend. The rising wedge is tighter than the other consolidation formation. Traders usually configure this consolidation in the long term, or the bigger time frame.

How to trade this pattern?

(1) Go long when the price rises above the upper trend line and place your stop below the lower trend line (support) line. (continuation pattern)

(2) Go short when the price falls below the lower trend line and place your stop above the upper trend line (reversal pattern)

Megaphone Top

2008-07-07T11:16:00.001+07:00

Megaphone Top is a bearish pattern signal. Its shape is opposite to that of a Symmetrical Triangle. Traders often find this patern in the long term. A Megaphone Top is formed because the stock makes a series of higher highs and lower lows. The signal that the pattern is complete occurs when prices fall below the lower low. The last peak is also for the confirmation. When the price breaks the 2^nd line, it will continue the downtrend.

Head and Shoulders Top

2008-07-07T11:13:00.001+07:00

A Head and Shoulders Top is a bearish pattern signal. Head and shoulders pattern is a popular pattern among traders because it is one of most reliable of all formation. It can be easily to recognize. But traders often make mistakes of seeing this formation. The 1^st formation (left shoulder) occurs as the price hits a high and then falls back. The 2^nd formation (the head) occurs when the price hits high which higher than the 1^st peak and then falls back again. The 3^rd formation (right shoulder) occur when price rises again, but doesn’t hit the head, and then falls back. Af ter price shape a head, the confirmation, it will become head and shoulders top is the price create the same lower with the last bottom, we call it neckline. The neckline can be horizontal or it can slope up or down.

How to trade this pattern?

Go short when the currency price CLOSES below the neckline and put a stop-loss above the last peak (right shoulder).

Use a risk reward ratio. Better to calculate your profit target (if your risk is 50 points, your target should be at least 75 points).

Flag (Bearish) and Pennant (Bearish)

2008-07-07T11:08:00.001+07:00

A Flag (Bearish) indicate the continuation of a downtrend. We always see this pattern as consolidation when the price bounce between an upper an lower price limit. Flag is similar with pennant. In flag, the price trendlines tend to run pararell, but in pennants, the price trendlines tend to converge. After the consolidation, the price will continue downtrend, and it will create a reversal trend. This consolidation also reflect decreasing trading volume.

How to trade these patterns?

Always trade Flag and Pennants in the direction of the previous (main) trend. If the previous trend was down, wait for a break out to the downside and go short when the price falls below the lower support trend line. Place your stop above the upper resistance trend line.

Downside Break Out

2008-07-07T11:03:00.001+07:00

Downside Break Out is a bearish pattern signal. It presents two horizontal lines with the same low and high. This pattern occurs when price breaks out through the bottom of a trading range and create as a new downtrend shape. Traders can use this pattern in the different time frame. The longer time frame we use, the range we get.

Descending Continuation Triangle

2008-07-07T10:56:00.001+07:00

Descending Continuation Triangle is a bearish pattern signal. This patern presents two trendlines. The bottom line is a horizontal line and the top trendline shapes downward. You can follow the price when the price breaks out the horizontal line. Use the short time frame to get the best price when you follow the rule.

How to trade this pattern?

Sell the currency pair when price breaks out of the descending triangle formation to the downside and closes below the lower support trend line.

Double Top

2008-07-07T10:52:00.001+07:00

Double top is a bearish pattern signal, this pattern creates an “M” formation. It is one of the most frequently seen and common of the patterns because it so easy to identify. There are two peaks with the similar height and the middle bottom between two peaks has the uncertain range. The 1^st target price when you take a sell position is the middle bottom. If the price goes on your line, max the portofolio you want to take unless a half the beginning to head.

How to trade this pattern?

Go short below the neckline (support level) when the price breaks from (it's second peak) above, the most likely price direction is now DOWN. Place your stop above the second peak price!

Your target must be at least twice the distance from it's second peak break to the neckline.

Continuation Diamond Bearish / Diamond Top

2008-07-07T10:24:00.001+07:00

Continuation Diamond Bearish is similar with Diamond Top. They are bearish pattern signals. They occur when the next peak is higher than last peak, then you can see the next bottom. After the signal begins showing itself, the trading range becomes narrow. You can start to draw the 1^st trendline. The pattern occurs when the price breaks downward out of the the diamond but out of the diamond formation to continue the downtrend. Because this pattern shows the small range, traders should watch out with the time frame. You can use the bigger time frame, such 5 minutes or 15 minutes. It is more useful then you read it in 1 minute.

1^st line

3^rd line

2^nd line

4^th line

break out

Preparation

2008-05-13T13:53:00.000+07:00

First, i want to introduce about my self. I'm a girl. I am twenty one, and i take my business in the future market, especially stock indices. Everybody says that future market is a high risk market (that's true) but worst they mean "the future market is bad". and

I want to share a little bit of my secret, and it's only for the one who loves trading in stock indices. The secret is "The most important way in future market business is defense, not offense" Offense here means strategy, charity, making money, explore your emotion and feeling ; ya..in future market YOU HAVE TO CUT ALL OFFENSE..!!

First, you have to do is wake up in the morning, then finish all the things with your self. Get relaxed and feel fresh air convenience.

Second, try to know what happened with the economic global yesterday and what the next news come out today. You can see it in the business website such as

vibiznews.com

forexfactory.com

forexnews.com

cnbc.com

forexdaily.com...etc

when you get more information about economic global, you are in fundamental area. And you will know why the market should move. Classifying them in two categories, good or bad. Example, export retirement, goods production retirement, unbalanced trade balance are ones of bad news. And low jobless claims, low inflation (CPI), are ones of good news.

While you get news, you have to examine, are those news make the country condition better or worse? Then you can compare how much the impact to the market you trade.

Don't think about the difficult way. Thinking about an easy way. Easy impact. If the production in one country gets low, the growth worse. (that's the idea ^-^)

Third, prepare everything to write. Clean paper, pen, calculator, and a bottle of mineral water (if needed)

Finally, learn about the technical analysis which i will recommend you one by one. Of course that must be simple indicators to analyze.

Have a nice trade training :-)