Harmonic Patterns in Forex
July 26, 2011
I must say, until I found out what Harmonic Patterns were in Forex, I was, without knowing it, blind to many aspects to what make certain moves occur at certain times seemingly without warning; no price action, or indicator could help you predict certain moves. Then comes my learning of Harmonic Patterns with use of MetaTrader4. Read more
Chandelier Stops Useful or Not?
March 8, 2011
I’ve been using Chandelier stop indicators on most of my charts for a long time, but are they useful and should they be followed? Or are they just another lagging or repainting indicator for MT4 that is not worth the space on your forex chart?
The Chandelier Stop indicator comes in many trading platform and is designed to measure the the current volatility of the market; traders like Chuck LeBeau have lauded the indicator for being the basis of some of the purest of trend-following systems that can really help you gain in Forex trading. Without getting into specifics, the exact permutations that account for the plotting of Chandelier Stop indicator on your charts can vary but are generally as follows.
Long Chandelier (blue): CS=HH-X*EMA(Range, Length)
Short Chandelier (red): CS=LL+X*EMA(Range,Length)
HH stands for the highest High since the indicator last changed from a Short(red) to Long(blue) setup, while the inverse is true for the opposite, LL is the lowest Low since the indicator last changed from Long(blue) to Short(red). EMA in the equation stands for the exponential moving average based on another factor you can input. The X quotient in the equation and Length are determined by us the trader depending on how tight or how wide you want the chandelier stop to be. I’ve noticed a tighter chandelier stop on a lower time frame can spell disaster getting you into trades this way and that with little pips earned if at all, so the truest way to profit with this method is to use it on higher time frames with tighter settings or lower time frames with wider settings, more on that later. The creators of the software even allude to this by giving the recommendation to us when we are in the long term trading methods the best values for X in is 2.5 to 4.0 and the Length is from 10 to 20. I’ve done many many studies on which time frames and settings are best with Chandelier stop indicators but I can only recommend to you all to try this on your own as well, it only takes a few moments out of your day to find the best settings for each currency pair for the chandelier, which can vary from pair to pair.
Fibonacci Levels in Forex
May 14, 2008
Using Fibonacci Levels is the cornerstone of many successful forex traders’ systems and it is based on centuries old mathematical techniques that can be applied to almost everything in nature. The numerous Forex trading systems based on this “Fibonacci numbers sequence” result in billions of dollars in profit annually by traders worldwide, and indeed, after trading Forex for a few years, I have come to use them myself every chance I get.
I’ve learned that the ratio between numbers in the Fibonacci sequence that is significant, rather than the actual numbers in the sequence. Read more
RSI (Relative Strength Index)
February 5, 2008
RSI stands for Relative Strength Index. The RSI measures the markets activity as to whether it is over bought or over sold. It gives a trader an indication as to which way the Market is moving. It is important to note, that this is a leading indicator and thus allows one to see what the market is about to do and then act accordingly. The higher the RSI number, the more over bought it is and conversely the lower the RSI number, the more over sold it is. It is a great leading indicator for the micro and macro reversals in the forex market. In the example avove, RSI is in the middle window and I have made two red lines to indicate when the pair has been overbought or oversold, respcetively, I put my lower line at 20 even though most exeprts say put it at 25. Here I’ve used RSI on a longer time frame, but for swing trading, you might want to drill down to 5 or 1 minute charts (or 50 to 100 tick charts).
Got this advice elsewhere, please someone verify if this helps in Forex, I can see it does but have little indication why these settings are the best.
By using an RSI on the 1 minute chart set at a period of 18 and overlaid on the bottom of your charts tend to give the best entry signals. This can also be applied to the 5-minute chart as well. The two significant entry numbers are 25 and 75.
RSI does not (and I believe CAN not) be an accurate way to find the top and bottom of a move in Forex. Sometimes an overbought market in Forex (after a move upward) will be followed by retracement (or a correction downward) in order to gather momentum so it will continue its trend upward. Conveersely, an oversold market in Forex will be followed up by a retracement upward and gains momentum and goes down further, continuing the downtrend.
Drawing Fibonacci levels will help the most at this stage to determine possible retracement levels. In the example above, I’ve used the trend lind approach to find entries and exits in addition to reading the RSI indicator.
Forex Market Hours Around the World
February 3, 2008
(posted at www.mo4forex.com) Here’s a list of times of Markets around the world. Here in the USA, official trading time is from Sunday 2-5PM (depending on your broker) to Friday 5PM. But that is of no consequence when talking about how certain time periods and market hours affect what is going on with certain currencies. I thought it would be useful to me and anyone out there who isn’t away of them to know the times markets open around the world and its significance to your Forex Trading. Technically, there are no Forex Market hours persay, just Forex brokers tapping in to other market makers and institutions that are trading currencies. Why market hours concern us is stocks and commodities have as great an impact on the “big” forex traders’ sentiment as the traders trading the stocks, commodities or whatever it is they are trading.
Of course holidays and weekends do not factor into these time listings here and they are subject to change, please comment me back if you know of any errors I make, as I thought this is the most up to date info available.
When looking at a map of the world and going East to West, the first major market with a great impact on Forex prices to open is Tokyo, Japan, at 7:00 pm EST.
The Singapore and Hong Kong markets both open at 9:00 pm (EST).
The German market in Frankfurt opens at 2:00 am (EST).
The London Market Opens At 3:00 am (EST). Officially marks start of European Open and it’s busiest time while one hour later at 4:00 am EST, all Asian markets have closed.
The United States starts in New York at 8:00 am (EST). By this time, the European market is coming to a close.
The New Zealand market opens at 4:00PM (EST)
The Australian market opens approximately 5:00 pm EST, slightly after the New Zealand markets, the AUD/NZD pair is usually a nice mover around this time, but again, the spread might be too much.
7:00 pm, the Tokyo market is ready to open once more, which is the end or beginning of the trading cycle.
Not knowing when markets open and close even if they aren’t currency markets can have an adverse effect on your Forex trading. In fact, you might be a Forex loser if you repeatedly miss opportunities or have the markets go against you because you were not away of Forex market hours.
