Sunday, April 8, 2012

UNDERSTANDING CANDLE STICK PATTERNS 1


One of the most effective technical analyses in Forex trade is candle stick. These patterns are regular observation of the area to which prices are trending towards. A lot of traders have based their trades on the movement pattern and appearance of the candle stick. These patterns reveal the bullish and bearish trends of the market.
In using the Meta 4 trader platform, you need to set the candle stick to colours that are easily understood by you. The movement of the candle stick reveals a lot in price pattern.

Below is A step guide to adjusting the candle stick to reveal the bear and bull sticks.

  •  Click on the candle stick after downloading, and then right click on the mouse. Move the cursor down to properties at the bottom of the table. Complete properties of the candle stick will be opened. 
  • Scroll down to bear candle, click on the arrow and click on the orange colour, this changes the bear candle colour to orange. Scroll to bar down and repeat the process, change the colour to orange. This completely changes the entire bearish candle to orange.
  • Scroll to the bull candle, click on the arrow and change the colour to lime, scroll up and do the same to the bar up icon. This completely changes the bull candle to lime. Click on OK and everything you have set changes on the trading platform.

At this point it doesn’t matter the time frame at which the platform is. The colours will remain that way for all time frames. The reason I prescribe these colour is to assist you understanding the signals of an Up market and a Down market. A closer look at the candle stick during market hours will see the stick rising or falling; depending on the prevailing market economic indices affect the currency of trade.

Some professionals have been able to successfully anticipate the move and appearance of the candle stick. However these observations have their own limit to a successful trade. When it comes to making the right decision to buy or sell currency based on the Resistance or Support level, then the candle stick is a good start otherwise, take a second thought.

As an advice, do not place your trades based on candle stick pattern alone, as this is very unprofessional, it could be tantamount to playing in the casino.

One of the best ways to use candle stick is to see it as a guide to the level of effect the currency is having in the market per time frame.
In the next edition I would be revealing how best to use candle stick in response to time frame.
 Remember, Forex is all about timely decision making.

Wishing you the best of trades!!!

Wednesday, February 22, 2012

TRADING PLAN


In carrying out a profitable trade, you need to ask yourself the following questions,
1.   Do you have a trading plan
2.   What strategy do you want to adopt
3.   What would be your initial cost implication (variable and fixed capital)
4.   Understanding Time zones
5.   What ideal and realistic profit are you envisaging( day, week, month, year)

Let’s have a clear look at these questions
1.   DO you have a trading plan?
As a guide I advice you have a trading plan, as a solid house is built on solid foundation. Your plan should be such that allows you to go online and place your trade without been worried over the profit margin. As a trader you need to be confident of your trades in either way. Do not gloat over the system and watch as the price fluctuates as this will cause unnecessary panic and may cause you to make wrong decisions. Just place your trade and get out of the market. If in doubt of your trades, ensure you use a stop loss. I rarely loss stop loss for my trades not because I am confident, rather I do not want the trade to close at my Stop loss knowing well that it will definitely hit the take profit even if it will take 4hours. However to do this you need to know your margin in the trade to know when to accept the loss and move forward. Only baby traders sit with the system observing the price as it fluctuates.

2.   What strategy do you want to adopt ?
It is very imperative that you have a trading strategy to place a trade and know when to walk away. The market is not a must win affair. Sometimes just allow your doubts to have its way, and make profit some other day. Personally , I do not place trades in the morning hours no matter the signals or news I have at my disposal. I just feel I do not want to get in the rush with the big dogs in the market. The London hours are the most active in the Fx market and a lot of trades go on during these hours. Getting into the market at such periods is too uncertain a risk for me. I just trail the market and allow the price to fluctuate as high or low as it can get. When its 4pm GMT I prefer going into the market. At this hour, the London session has winded up and the Newyork session is already on full swing. As the time begins to go, currency prices begin to react to the market naturally, as traders in most part of the world in the Eastern time (EST) zone are rounding up and closing for the day. These evening hours on the GMT are my trading hours. Prices usually drop, and I place my trade on the sell area. The fluctuation of price is usually between 10 to 25pips. At late hours of 8pm GMT, my trades are placed on the buy area, even though I am aware that the price will go against me at that time, it is certain that at Tokyo session(1am GMT+1), prices will take a new turn and will hit my take profit. However, I make sure that the margin for loss is very high so I don’t get knocked out the market untimely. Please practice as much as you can and adopt a strategy that you are comfortable with.