3 WAYS TO UNDERSTANDING THE MARKET TREND

One of the major challenges retail traders face is establishing the direction to which the market/currency will tilt to. Is to to the support or resistance levels often times is a game of luck or guts.

However such shouldn't be the psychological attitude towards a trade. Even with all signals and well calculated analysis the trend could still go away, it's your ability to understand the market and interpret it within the short and long haul that separates the intuitive trader from the park.

Here are 3 WAYS TO UNDERSTAND THE TREND.

1. KNOW THE CURRENCY PAIRS.

It is important you know the economic activities surrounding the currency to which you have decided to place a trade on. Take for instance, EUR/USD. Have a clear understanding of the stands the European Central bank(ECB) is taking on interests and inflation rates and programs it has chosen to adopt to either beef up or cut rates(Quantitative Easing). Pay attention also to the stands the Federal Reserve Bank in America on it's interests and inflation rates. Same goes for Bank of Japan(BOJ), Bank of Canada(BOC), Reserve Bank of New Zealand(RBNZ), Reserve bank of Australia(RBA), Bank of Englan (BOE) and the likes. All these central banks have a direct effect on the way the currency pairs plays out in the forex market.

2. INTERPRET THE ACTIVITIES SURROUNDING THE CURRENCY PAIR.

Knowing exactly what and how to interpret the economic activities surround the currency pair you want to place a trade on gives you an edge, irrespective of the noise the market makes. For instance two days ago the mid-term elections created so much hullabaloo and traders were hoping that the outcomes could affect the US currency pairs at high levels. Just like it did a night before the US elections two years ago. Currencies and trades were very low and activities was down across the US currencies. When the results began to filter in and it wasn't much of a surprise, it became business as usual among the currency pairs.
Shortly after early this morning the US currency pairs began some sentimental moves across it's pairs all waiting for the outcome of the Federal Open Monetary Committee statement on rates. USD/JPY is going north, USD/CAD, headed north and later south. All these showing the anxiety in the market as to the prediction and outcome of the statement from FOMC.

Bear in mind its same news both the retail traders and institutional traders all look up to but yet take different position. Yes the Feds in the US is clear on increasing interest rates but such is not done at every meeting held. Your understanding of its decision per time matters on the position you want to take, either buy or sell.

3. LOOK BEYOND THE ECONOMIC ACTIVITIES.

This may sound contradictory to the second above, yes it is from the surface but has an in-depth revelation. Even when you see all the green lights, inflation needs to be kept at bay, Job rates is high, interest rates is spiking up and this is a go to the buy area. In some trades you just find out that the price rather than move to the resistance area heading north it goes the contrary down.
At such instance a well informed trader knows that it's the market sentiment at play and there is no economic justification for such a reversal. Yet same informed traders know it's an opportunity to buy low and wait for another spike to take profit.

There are other several economic events that affect currency pair movements and these are important as well to help retail/ day traders understand the short term positions they can take.
I have had people and some self acclaimed traders say they can can turn  $10 to $100 and I just smile and walk away at such ignorance and naivety. I am bold to say I have been scared and still bear scars from account i have blown $500 several times.

Yet I still dust myself up and make a come back. Forex trading a not a straight bull ride all the time. It comes with some painful losses and happy gains, this is when you here well informed and knowledgeable traders say your psychology to trading is key.
A british trader in commodities puts it better, he says 'know when to count your losses and move rather than praying and hoping for the market to move in your favour'

I hope this helps I look forward to your comments, questions and opinions on currency, I recommend a reading with www.jarrattdavis.com, I have never met him but he has truly beefed up my confidence in the Fx market ever knowing him online 4 years and counting.

Cheers!

UNDERSTANDING CANDLE STICK PATTERNS 2

It' been a long while since I talked about candle stick patterns and profitable trading. Quiet a lot of people and friends have always asked why I am not so keen about the candle stick and also how I get to interpret them.
Please see my earlier post on candle stick.

TIME FRAMES.

There are various time frames on the Meta4 trading platform, ranging from M5,M15,M30,H1,H4,
D1.
These symbols stands for 5 minutes,15 minutes, 1 hour, 1 day time frames respectively. They reveal the time to which each candle stick will reflect the number and range of traders within that time frame and price actions respectively.

The candle stick as explained by other 'professional traders' does not necessarily give you a signal to where prices will be heading to. Rather it just reveals the price action per time. Some technical analysis uses have drafted and ruled some lines and Fibonacci graphs, Moving average convergence divergence (MACD), hammer heads and crosses respectively to justify the next move of price but honestly that's not it.

The activity the candle stick displays however high it climbs or low it gets is a function of the back end economic activities going on. Most times too is about the sentiments in the market irrespective of fundamental analysis. At any given time frame you could have traders, either shorting a currency(taking quick profits) or going long(for bigger profits).

Retailers traders like me have always believed or being told that ones you understand candle stick patterns like the diagram above you can be a good trader(that's absolutely incorrect).
Again candle stick is just a picture of what the market is doing, revealing many buyers or sellers per time and vise versa.

Ones you have a clear understanding of the fundamentals governing a particular currency. You will clearly interpret the picture the candle stick is given you. That's what makes and informed trader.

I would be putting out a video very soon on the realities to forex trading. I have blown my accounts several times and still do, as well as as make some reasonable pips. I still demo trade side with my live accounts.

The Forex market is an interesting one if you clearly understand the rudiments. Again I recommend you visit www.jarrattdavis.com. He was ranked as the 2nd best Forex trader in the world by Barclays. I have never met him he resides in England but has been the only Fx trader who has clearly explained the rudiments to forex trading and understand the fundamentals.

I look forward to your comments, questions till I we meet again. Hope you made some pips from the US mid-term election fiasco..

Best Regards