Understanding support and resistance

Understanding support and resistance is an important reference in the analysis of forex trading. As is well known, prices in the forex market are formed according to the mechanism of buying and selling power . At one time, the strength of the buy could be greater than the selling strength which had previously pushed the price down in a bearish trend. Conversely, there are times when sell forces have outperformed a previously dominating buy power . If that happens, then a point called the price reversal will appear . This is what came to be called the point of support and resistance in the world of trading. No doubt, understanding support and resistance is a basic knowledge that must be known to novice traders, before they learn more about technical analysis . Why do support and resistance points form? Is the trigger? The answer is because of profit-taking by traders .

Profit taking is done when a trader feels that the current price level is too high , so they tend to end long positions . This then causes the price to fall after reaching a certain high level. This is called as resistance. On the other hand, the Take Profit action also occurs when a trader feels that the current price level is too low , so they end their short position . The price was corrected up and triggered a support point.






It seems that the price is very difficult to rise through the point 1358.88 and continue the upward movement from that level. This point is called resistance. Its function is like a roof that prevents a price from moving up through it . In other words, resistance is a point that acts as an "upper limit" of a price movement. As long as this resistance point is valid, traders can make it as a benchmark for sell entries.


On the other hand, there is also what is referred to as a support point. This support point is like a floor that prevents prices from going down through it . This area is created when a price stops decreasing, then reverses. In short, support is the lower limit that prevents the price from continuing to weaken. Below is an example of a support point for XAU / USD in Daily Time Frame . It seems that the price is hard to break the lower limit of 1310.31. As long as the support point is still valid, this level can be a moment for traders to make buy entries.






Need careful observation in determining the levels of support and resistance on the trading platform. Usually it takes minutes, even hours to understand support and resistance, because the level can change at any time . Mapping support and resistance on a trading chart is usually applied by technicalists, before they start their analysis with certain indicators. Here's how to use support and resistance on the trading platform:


1. Create a Trendline


As explained above, support and resistance are constant in preventing prices from moving higher or lower. But for the long term, prices will definitely move up or down in accordance with the trend that happened at that time . For traders following trend following strategies , the High and Low points that form price trends are often also positioned as support and resistance. When unfurled trendline ( trend line ), then the points High on the downtrend will be resistance, while the dots on the line Low uptrend can also function as a support. For an example we can see as follows:












2. Identifying Double Zero (Psychological Level)


By understanding support and resistance, we will also be able to identify Double Zero. What is Double Zero? Basically, Double Zero is a price level that has a round number (two zeros) at the end, and is often referred to as a psychological level . Examples of these integer levels are 1300, 1400, 1500, 1600, and so on. Trading experts who observe price movements in the long run often conclude that real prices tend to reverse when reaching a certain round level. This is likely due to market psychology which generally considers prices to have reached a saturation point when it reaches Double Zero. In addition, this round number is believed to be a strong level at which large banks also set their targets. Examples of the appearance of Double Zero as resistance can we observe through the GBP / USD chart below:








3. Apply Fibonacci Retracement


Fibonacci retracement has a significant role in monitoring and understanding support and resistance. Usually, this tool is juxtaposed with technical indicators as a complement to the trading system. No wonder Fibonacci retracement is a favorite indicator that traders often use. How to draw a Fibonacci retracement line can be done by looking at the distance of the last few candles , for example the last 60 candles. That is, we only need to identify which are the highest and lowest levels of the last 60 candles that line the right side of the graph. The results we can see through the following picture:








From the Fibonacci retracement levels above, it can be seen that in a downtrend the price experiences several retractions that are stopped at the 0.5 and 0.382 levels. The range 0.382 was even tested twice, before the price then weakened again to the Fibonacci Retracement 0 level. From here, the 0.382 level could be a strong resistance reference when the price bounced from level 0.


CLOSING


From the description above, we can get many pictures of support and resistance; starting from the area of ​​price reversal as an entry and exit point position, to the psychology of the market which is reflected by a certain Double Zero.

Developing the Mind to Become a Successful Trader

As a trader, do you ever wonder why you can’t achieve the results that you want to achieve? Do you find yourself constantly making the same mistakes? Are you controlled by your emotions? These are mistakes that all traders make, but the successful traders have learned how to manage their inner game. In this section, we are going to learn how to overcome the eight road blocks to successful trading.
Without integration of each component, you are an incomplete
trader - risk is stacked against you.
First you need to have a trading platform, trading methodology and a trading state of mind. There are multiple trading platforms and numerous trading methodologies you can use, so it’s important that you choose risk management strategy and trading platform you’re most comfortable using. But it’s also critically important to have the right trading psychology. If you don’t have the right mindset, it really doesn’t matter about your trading platform or methodology. You need to have balanced integration of these three critical trading components. It doesn’t matter how good you are at knowing how to trade if you can’t hold your wits together.
Let’s face it, most traders early on are looking for the magical secret, or the “Holy Grail” of successful trading. They chase the best charting software, newest indicators, data and news services, mentoring programs, you name it. What they are looking for is the magic solution to trading, when they don’t recognize that they themselves are the problem. There is no magical “Holy Grail” for trading success “out there”. The secret to trading success lies within yourself, just waiting to be discovered. Remember this adage:
“80 percent of trading is in your head”.
What separates the elite golfers from the rest of the field? They all have the best equipment in the industry. They have spent countless hours practicing and perfecting their craft. They know how to drive, chip and putt. So what separates the elite golfers from the rest of the crowd? They know how to do it in the clutch, when the money is on the line. This article is about learning how to develop the mindset of a peak performance trader – to separate yourself from the sea of traders who are inconsistent and bleed out their accounts.

What the Untrained Brain Sees when the UntrainedMind Experiences Uncertainty

Since the beginning of time, our brains have been trained to see uncertainty and fear as one in the same thing. How many times have you had your finger on the trigger, but you just couldn’t bring yourself to execute the trade? How many times have you bailed out early on a trade, only to watch it run in the direction you thought it would? That is your brain perceiving psychological discomfort as a biological threat. Unless you can untangle that association, and re-train your mind, you are likely to repeat these behaviors over and over again.
The markets don’t care about you. You can trade them as long as you have capital, but sooner or later, usually after drawing down your accounts, you come to the realization that you need to work on yourself if you are going to be successful at trading.
Recognizing that we have historically been wired to associate psychological discomfort (fear) with a biological threat, let’s break down the components of emotions. An emotion is how the body/brain/mind gets triggered to any disruption of a familiar status. It’s a common buzzword in trading to talk about simply taking the emotion out of trading. The reality is that the only time humans can do anything without emotion is if they’re dead. Emotions are biological and they take over our psychology. We need to accept that we are emotional creatures and that our psychology is governed by our emotions. So the key is - how do you manage your emotions? We don’t have freedom from emotions, but we can have freedom of emotions. You can become the designer of the emotions that you respond to.

Emotions can be broken down into five major components:

1.- Arousal
That’s the revving-up of an emotion. Think about yourself when you are in the midst of engaging in a trade. Your body starts tensing. You stop breathing, or your breathing may be “high” and “low”. Your heart accelerates. Your eyes are fixated on the screen. That’s arousal, and it’s the first aspect of your emotions that you must learn to manage. If you can’t, then you will lose control of your emotions.

2.- Feeling
This is where the biological chemistry creates a subjective experience of the emotion. If cortisol is pulsing through your body, it can produce a sense of fear. If testosterone levels become elevated, it produces a sense of grandeur. Both of these responses can lead to costly trading mistakes. You can be afraid to pull the trigger on a trade, exit a trade early or double-down on a risky trade.

3.- Motivation
Once the chemistry is released into your system, your body will usually pointed into a “fight or flight” response. You perceive a threat, and you are either going to attack it or avoid it. If you hesitate on a trade, you are in avoidance. If you revenge-trade after a losing trade, you are in attack mode. It’s important to have a trained mind to regulate these responses to a perceived threat. Developing a curious mind allows you to act with patience and discipline, keeping your long-term interests in mind.

4.- Meaning
These are the beliefs you have developed to manage uncertainty. We need to rationalize our behaviors so they make sense to us.

5.- Temperament
Quite simply, this is genetics. How is your body genetically predisposed to handling emotion?

Separating Uncertainty, Worry and Fear

Understanding that we are emotional creatures, the first task in re-training your mind is to separate uncertainty, worry and fear.

Uncertainty
You can’t control the markets. The markets do what they want to do. Nothing can be predicted with absolute certainty, only varying degrees of probability. We have been trained as we grew up not to make mistakes. We have conditioned ourselves and our brains are biased to predict with certainty.

Worry
If you feel that you can’t control the outcome of a trade, then worry sets in. Your brain starts to project into the future and it’s seeing bad things on the horizon. So your brain becomes a negative assessment machine, and you continually traumatize yourself by worrying.

Fear
Fear is wear all thought becomes hijacked, and you panic or freeze.
The mind that you bring into trading isn’t necessarily a mind that is conducive to successful trading. Remember that the brain associates psychological discomfort with biological threat, and we need to learn to avoid fight or flight behaviors. Ninety percent of traders lose money because they are making fear-based trades or impulse-based trades. On the fear side, they are afraid to pull the trigger at the right time, or they get out of trades too early. The impulse-based trader gets involved in revenge trading, throwing good money after bad. What you’re looking for is mindful trading where you make well-reasoned decisions with your emotions under control.
So the question then becomes,
“How do I organize my mind for higher function in trading?”

The Impact of Emotions on Your Trading

Fear, until mastered, blocks the development of your potential. To develop as a trader, you need to be able to confront fear to change your pattern of reacting to an uncertain world. Your brain is a negative assessment machine that does not distinguish uncertainty from fear. It’s organized for avoidance, and trying to keep you in your comfort zone, which is the familiar. It forms self-fulfilling patterns based on the avoidance of fear and uncertainty. These patterns are set on “cruise-control” and dominate your state of mind, forcing you to trade from avoidance and greed rather than calm impartiality.

The best way to get started in gaining control of your emotions
is to label your fears:

1. Fear of uncertainty (hesitation)
2. Fear of loss (pulling the trigger at the wrong time)
3. Fear of missing out (impulse trades and exits)
4. Fear based urgency to make up for prior losses (revenge trading)
5. Fear of not being right (making a mistake)
6. Fear of inadequacy (not feeling that you’re good enough to trade)
7. Fear of self-sabotage (blowing yourself up)
8. Fear of success or failure
9. Fear of growth and change (moving out of your comfort zone)

Which one of these fears drives your trading? If you’re honest with yourself,
you may have experienced most or all of these fears at some point in your trading

Everything starts with your emotional state. That feeds your state of mind, which forms a decision, and triggers a trade which ultimately has a profit or loss. The results of that trade feed into your emotional state prior to your next trade. Trading without emotion is not possible, but it is possible to design the mindset you need to trade with calm impartiality. Your trading account is the scorecard if your emotions are under control.

Manage the Biology of Your Emotions First

Emotions have biological components that you can control on your own to alter the emotion. Once you realize that fear or anger affects your breathing, whether you stop breathing, or breathe in “high” or “low” patterns, you can change that. If you regulate breathing with steady diaphragmatic breathing, you lower your heart rate and alter the emotion. This in itself doesn’t solve the problem you are experiencing, but it makes it much easier to prepare the mind when you face uncertainty.

Becoming Mindful of Your Thoughts: Who is doing “YOUR” Trading?

There comes a time when you start noticing your thoughts, and you start thinking “Where are these thoughts coming from?” Pink Floyd had a lyric “There’s someone in my head, but it’s not me.” So who is this person in your head? Our thoughts and our beliefs are not us, we are separate from them. Knowing that, you can step outside of yourself and question your thoughts and beliefs. You can use powers of observation and curiosity, and dissect the voices in your head that are governing your trading decisions.
Observation is a strong mindfulness tool. Once you observe your fear-based emotions, confront them and question them, then you can start becoming mindful. If you ignore the voices and patterns you have developed in your head, then a perfectly good trading plan can become wasted. Since you can’t escape your internal dialog, you must learn to manage the fear-based aspect of it. Once you do that, you can develop the foundation of a strong psychological trading plan. You learn to become the author

Beneath our fears are beliefs.

Some of the self-limiting beliefs we need to master are:

1.-A sense of inadequacy
“I’ll never be good enough, smart enough. I can’t make mistakes. Mistakes are proof of my inadequacy.”

2.-A sense of not mattering
“I only matter based on what I do, not who I am.” Self-loathing or arrogance.

3.-A sense of being unworthy
“I have to prove myself by my performance to have value.”

4.-Powerlessness
“Nothing I do seems to make a difference.” Victimhood.
This fear-based thinking shows up in our minds as thoughts, and our avoidance of them is what keeps us fused to them.

Other internal voices that can make up the “Trading Committee of your Mind” include:

The Inner Critic
The voice that judges you
The voice that criticizes
Never measuring up
Never good enough
Tempts (You need more)
Predicts doom
The Doubter (I never win)
Chicken Little (negative appraisal)
Gambler (leave no money on the table)
Perfectionist (must win every time)
Entitled One (greed)
Con (lying to yourself)
Fraud (pretending to look good)
Orphan (missing out)
Saboteur (blowing things up)
Alpha (have to win to prove worth)
The Adapted Voice

You are born into self-limiting beliefs, but that’s no reason to stay stuck in them. It’s important to identify and be aware our fears and self-limiting beliefs before we can become mindful.

Developing the Mind to Become a Successful Trader

If the members at the “Trading Committee Table of Your Mind” are fear-based, self-limiting beliefs, then you are doomed to repeat the same trading mistakes over and over again. What you need to do is clean house and invite some new guests to the table.
Changing self-limiting beliefs requires recognizing what they are, and addressing them for long-term re-organization of self. Compassion is the emotion that reorganizes the self for internal validation rather than external validation. Think about this for a minute – whenever you “beat yourself up” after making a mistake, does it every really do you any good? No it doesn’t. All it does is continue to feed self-limiting beliefs of inadequacy or powerlessness. Re-building the “Committee of the Mind” will help you create a new playing field for trading.
Just as we have built-in programs for fear, we also have programs for courage, patience and impartiality. As a trader, you need to build a mind for the management of probability. There are four major programs, hard-coded in your DNA that you need to invite to the “Trading Committee of the Mind:
From time to time, each of these programs has been called into service, and you can remember instances when you faced a challenge head-on, showed extraordinary discipline, exercised impartiality and demonstrated compassion. These traits are inside you, and they need to be called to the surface. They are your friends in the trading world.

1.- The Courage of a Warrior
To be able to push through fear and face adversity head-on

2.- The Discipline of a Ruler
To keep your act together under pressure

3.- The Impartiality of a Sage
Once fears are put to rest, you can exercise impartiality

4.Self-Compassion of a Caregiver
Recognizing you are valuable and important

If you really want long-term change, you start with emotional regulation

Stage1. That gets you to mindfulness

Stage 2. Next you disrupt the self-limiting beliefs that have been developed without your knowledge

Stage 3. Now you can engage the Warrior, the Ruler, the Caregiver and the Sage ‘

Stage 4. When you can trigger the emotions of courage, discipline, compassion, patience and impartiality, then you have re-organized the trading mind

Stage 5. You are developing a calmer mind that thinks and processes information, rather than knee-jerking to perceived threats. With an empowered mindset, you approach uncertainty from a position of Discipline, Courage, Patience and Impartiality rather than fear.
Over 90 percent of traders may have the best trading platform and trading methodology, but they are controlled by self-limiting or self-destructive emotions. The 10 percent are “mindful traders” who govern their trading activities with a calm, focused mindset. Their emotions are under control and they face uncertainty with courage, discipline, patience and impartiality.

Conclusion

When you look at some of the top traders in the industry, or leaders of successful corporations, you will notice that many of themselves carry themselves with a calm sense of confidence. They are almost Zen-like. They seem to process information effortlessly, and make well-reasoned decisions. These people are not operating from a fear-based mind. None of that noise is cluttering up their minds.
Successful trading requires a good trading platform, a good methodology and a trader’s state of mind. You need to recognize and identify your fears, and the self-limiting belief systems you have patterned based on fear. Find out who is sitting at the table in “Trading Committee of You Mind”, and replace the fear-based members with members that represent Discipline, Courage, Patience and Impartiality. When you get to this place, your trading account will look much better.

The Advantages of AutomatedForex Trading

Forex trading is nowadays the preferred form of investment for an increasing number of people

these days. It is apparent why this is so.

As the largest trading market in the world, the Forex market has a steadily growing trading

volume, which has risen from around $500 billion to about $2 trillion in the last twenty years.

Additionally, since it is not tied to any particular trading floor, it is an unusually liquid market.

Operating around the clock also makes it a permanently open market. Thus, since many markets

are opening and closing at the same time, one can effectively follow the markets around the

world.

Both big and small traders are thus being attracted to Forex trading. They enjoy a wide choice of

trading strategies based on the various aspects of the foreign exchange rates. Many traders

coming into the market find the different things that affect currency exchange rates very attractive

for a very simple reason – they can use a wide range to tools when working in this exciting and

stimulating market.

Automation is perhaps the greatest influence today on the future growth of the Forex market, as it

brings with it more advantages than disadvantages. Manual systems trying to operate in a fast

paced and volatile environment bring with them several losses.

A simple time delay in buying and selling may cause a row of losses in a manual system and thus

cause the trader immense frustration. Automated Forex trading allows trade to be conducted

anywhere in the world, in real time, and eliminates the losses seen in manual systems.

Operating in a wide range of different currency markets at the same time, without worrying about

the time zones of the places concerned, is another advantage that automated Forex trading

brings. Sitting in New York at 2 o’clock in the morning, one can conduct business with traders in

different countries on the other side of the globe, simultaneously and with great ease. All thanks

to automated Forex trading.

Risk management is often a source of worry for traders, but even this is reduced with automated

Forex trading. Payments can now be synchronized in real time and this leaves traders satisfied,

as opposed to manual trading where there is always uncertainty about payment being made after

completion of trade. The automated trading system is developing progressively, and that brings

with it hopes that the settlement system will be updated and markets risks will soon cease to

exist.

If there is one technology that has advanced by leaps and bounds over the past few years, it is

computer technology. Indeed, one hopes that it will continue to grow for many years to come.

Most importantly, advances in computer technology spell good for traders who wish to access the

best Forex automated trading.

Access to technology easily and cheaply from the comfort of the traders’ homes means they can

manage their own investments with ease. Automated Forex day trading will thus come as a

welcome addition to a fully empowered investment vehicle for those in the currency-trading world.

Choosing the Right AutomatedForex Trading Software

Automated forex trading has a few advantages of its own. Here all you have to do is follow trade

signals that are generated and if you are able to execute them with discipline and if your system

is logical, then you can easily pile up gains.

Before looking at the various ways you can gain profit through these software, let’s take a look at

what not to do.

Many traders find forex robots online and buy them. But you must keep in mind that most of these

are pieces of junk and have never been traded in real time. Take a look at the track record and

then at the disclaimer. It is probably hypothetical or stimulated and that is no sure indication of

future results. It is strange how some one can just take a test and claim to make money with it.

Of course, they do make money for the vendor, they get the sale of the software and the trader

gets spanked in the market. No one gets 100k annual income for a hundred bucks. You will never

make any money with these stimulated systems so try and steer clear of them.

Let’s now take a look at how automated forex trading is done in the proper way and discuss the

options.

Buy a system with a track record that has been audited over two years. These may not be cheap

but they can pay for themselves many times over. You only make sure that you understand and

agree with the logic before you begin to use it.

Try the free systems. Look up our other articles to know more about them and you will realize

why this is a great place to begin your automated forex trading career.

Go ahead and build your own. This is easier than it sounds. It is also a better way of trading

because if you build and customize the system, you will gain more confidence and you will be

able to trade with discipline, even during periods of loss.

If you do decide to build yourself a system, we have it covered in our articles. But the best way to

go is to trade breakouts, to new highs or lows, have momentum indicators to time your moves

and focus on long term trends. The simpler it is the better. This will enable it to face the ever

changing market condition. Packing it with too many indicators might break it down.

Once you are in possession of a system, get hold of a forex software package, program the rules

and you are all set.

Keep in mind that all forex trading systems, including the best ones will suffer losses that can

continue for a long period of time. You need to continue trading until you hit a home run and

because of this discipline and money management is necessary.

If your system does between 50-100% compounded annually, you are a part of the best

automated forex trading software and you can trade markets and enjoy currency trading success.

Forex Trading PriceMovements-How and WhyMarkets Move and How to Profit

Understanding expense trends of Forex is not easy at all. Businessmen often get wrong ideas

and make agendas based on them and suffer losses. The following can help you understand the

trends:

You predict the Forex expense trends

Businessmen observe a certain level and jumps on to it thinking that it’s stable. However, this is

simply based on assumption and that never works in Forex business. There is no accurate

prediction.

If wining is the goal, you have to base the business on the sure shot expense trends. Related to

this, there are certain factors given below.

The Market obeys Scientific Laws

There is a notion, which believes that market trends are based on logic. Some believers are

Gann, Elliot and the followers of Fibonacci.

However, if everybody knew everything, prices would never have been a surprise and markets

would be non-existent. The layman would accept these ideas and their fantastic suggestions.

However facts say otherwise.

Business Can be made of News

It is not advisable as news is actually insignificant. The way news is supposed is what decides the movements. Let’s see how trends occur.

Actual Expense Trends

Basics + Individual Insight into them = Forex Market Trends

People are seldom rational. They often function emotionally, which is why logical reasoning does

not always hold true. The real human psychology is consistent but these matters have no logic:

1. People make costs move to extreme and these passing points can be used profitably.

2. Carry on with business. Don’t get into guessing.

Win the Competition

Forex is a sport and competition is based on chances. You may not be able to determine chances

but you will never lose.

That applies not for every instance but try out on big probability situations and you will surely take

the cake with very few losses. Get huge proceeds in due course of time.

Voracity and panic fluctuate costs, creating points that are visible on Forex schedules and can be

used gainfully.

It’s a game so when prices fluctuate on your side, get to business. Control your finances well and

be a winner.

Be Imperfect but Never a Loser

Forex markets teem with those who attempt guessing and try to get a non-existent undisclosed

trend cipher. Even though Forex expense trends seem disordered, basing your business on cost

fluctuations will make you a winner.

It may not be an ideal business for many, however if done right, you can make a lot of money

through forex trading.

Forex Traders: The Need to BeObjective

It is difficult for Forex traders to realize that the currency market is extremely unpredictable. As

new traders spend a long time trying to learn the mechanics of the foreign exchange trade and

focus their time and energy on trying to find a method for predicting movements, they naturally

expect there to be rules governing the movement of the market. This not being the case, many

traders find themselves at a disadvantage.

While Forex traders have a number of tools at their disposal, which allow them to judge the right

time to open or close a position, many prefer to rely mostly on one tool. So, having opened a

position, they watch their favorite indicator and, to a large extent, base their trading decisions

solely on it, ignoring the others.

This works well enough until that indicator starts telling them something different from what the

others are. Traders caught in a open position which their favorite tool is telling them to hold, will

often do so, despite the fact that other tools are telling them to close and get off the market, and

end up losing money.

The basic problem, of course, is that the trader is not looking at the market as is, but through the

lenses of his own expectations about it and further using his favorite indicator to reinforce those

ideas instead of looking at the bigger picture. And, encouraged by the fact that his chosen

indicator is forecasting the profit he wants, the trader is focusing more on money than on the

market.

If the Forex market was not unpredictable, it would collapse because all traders would profit all

the time. There are many tools that can help traders predict the direction of the market and they

usually do an efficient job. But even in the hands of the most experienced traders, the best tools

occasionally fail to predict the market’s movements correctly.

Losing in trade because of predicting the market wrongly is an innate part of Forex trading and

traders need to accept it. Besides, they need to learn to avoid getting in a position where they do

not have many choices.

For this, the trader needs to accept the fact that the foreign exchange market pretty much has a

mind of its own and the traders have to follow its movements instead of trying to make it go in the

direction they want it to.

Four Main Types of Orders in Forex Market

Four Main Types of Orders in Forex Market

There are many kinds of orders which traders can place to transact in the Forex market, for

making profit out of it.

Market Order

The market order is the most simple and common kind or order. Here, the trader buys

and sells the currency at the rate prevailing in the market at the time of placing the order.

Due to the huge size of the market and the high volatility, trends can reverse any instant,

so people prefer placing orders at the market price to guard themselves against any

adverse trend.

Limit order

In this case, the trader specifies a price at which he may wish to buy or sell the currency.

Suppose a trader has bought GBP against the USD at 1.9710, then he can place a sell

order at 1.9725, when the exchange will execute the order and he will profit from it. The

order will get cancelled if the target price is not achieved during the day.

Stop loss order

Due to the volatility, stop losses are essential. They determine the maximum loss a trader

is willing to suffer. Suppose in the above instance, the risk-taking ability of the trader is

low, then he may place a stop loss at 1.9705, at which level the exchange will book

losses for him, and he won’t be affected by any fall below 1.9705.

 Entry order

Such an order is filled only when certain conditions are met in the market, which the order

specifies. The entry order can be a limit entry order or even a stop entry order.

 Limit entry order

As an example, let’s assume that the current market price for GBP/USD is 1.9705-10.

This implies that the trader can transact at these levels. Here, a trader can put a limit

entry order to sell his holdings at a price more than the market price, say, 1.9715. His

order would be executed only if that price is attained. In the similar manner, he can place

an order for buying at a level of, say 1.9700, and his ‘buy’ order would remain pending till

the price falls to that level.

- Stop entry order

Such an order is generally used when the trader has sufficient grounds to believe that the

currency is trading in a fixed range and believes that it is on the verge of a breakout from

that range. He might want to buy at a price higher than the market price or sell at a lower

price than the market price. In the same example, the trader may go ahead and buy at

1.9720 or sell at 1.9690, where he believes that once these levels are attained, the

currency will only go up or fall further, as the case may be. A trader exercises the stop

entry order only when a trader has reasonable grounds to believe that there will be sharp

movements in the currency rates in the Forex market.

The Correct Timing in Forex Trading

The Correct Timing in Forex

Trading

When you sense a trading opportunity, the deciding factor is to know exactly when to buy.

Unfortunately this is the very point at which most loose the plot by timing their entry levels

improperly. But here are some basic guidelines to help you at those crucial moments:

Making Proper Use of Support and

Resistance

If you try and use the fundamental rule of the share market – “buy low, sell high” – in Forex

trading, you’ll actually lose money. To understand you need to know how the system of support

and resistance works.

A support price is a historically tested price at which traders intervene and buy, so as to “support

the market”. The more times this price is tested, the more bankable the support price will be.

Inversely, a resistance level is defined as a level at which “prices were resisted from moving any

higher”. Here too the more times this level is tested, the more reliable it becomes.

Why Buy Low and Sell High Doesn’t Work

The reason why this traditional wisdom is counterproductive in Forex trading is that if you actually

wait for prices to fall, you’re going to end up missing some of the best opportunities for making

money. Consider: when a currency starts to pick up, what are the chances of its pulling back?

What if it doesn’t and steadies out? If you keep waiting for a pullback, you could end up never

getting in on the trade because most of the changes in currencies occur from new market highs

and without any pullback.

So if you plan to focus your Forex trade strategy on waiting for an entry at support prices, wake

up! You stand to loose out on the most profitable trades. What your Forex trading strategy should

target is rather, to “buy high and sell higher” – i.e. you should try and do quite the reverse of what

the general crowd is doing. Try and keep a lookout for any breakthroughs in support and

resistance, and then sell and buy correspondingly.

It Takes Guts - But It Makes Money

The policy of going against the crowd takes courage to practice. But think over the strategy with a

cool head and you shall find it is the most logical thing to do. How often have you heard of traders

buying into support, but the market continuing its freefall, breaking the support?

And again, haven’t you heard tell of the price continuing to soar and never getting to support,

thereby making the trader miss the chance to capitalize on the trend?

So rather than be traditional and lose money, it is easier to adopt the breakouts policy: you won’t

be comfortable on entry but you will be making money. The trick is to break away from the pattern

that the losing majority sets and to do what is productive and logical considering the common and

predictable response.

The Importance of Real Time

Forex Charting

Do you want to earn money in the arena of foreign exchange? In order to accomplish so, you

should possess in-depth technical knowledge, focused on the capability of tracking currency

exchange rates, through interpreting actual forex charts.

If you are an amateur in this field, you should quickly discover authentic forex charts from the

Internet or may opt for free actual forex charts. The best option is however, to take the help of

free chart recognition software and mastering on it, you are well suited for this business.

Online forex charts keep you updated about currency values at any time, even between short

time gaps like minutes to long intervals like several years. The graphs depicting the oscillations in

rates are line graphs, or bar diagrams or candlestick charts.

Line charts are easy to interpret and help you to broadly check ups and downs of prices. It aids

you to track the current trend of rate movement. On the contrary, bar charts are not as lucid as

line graphs but supply a much in depth information.

To summarize, the length of a bar chart depicts the amount of rise or fall in price and the breadth

gives the duration, which has witnessed this. Initial and final rates are mentioned on chart so that

you can identify the range and whether it’s a fall or rise. There are pattern recognition software

available that interpret the bar diagrams for you and make your task easier.

The Japanese were first found to use candlestick charts to plot their amount of their rice

production. Since then they have been increasingly popular. Though they are similar to bar

diagrams, they are colored.

Each color acts as a code to signify the rise or fall in price. The index is written on the graph itself.

Thus candlestick plots are much more user friendly than bars. Candlestick charts have unique

patterns and they are as pretty as to be named after natural beauties. As soon as you are able to

identify the particular pattern you will identify the market trend.

An actual forex chart is often complemented with many technical indicators such as trend,

strength, volatility and cyclic movements. A forex chart is useful itself, but this adjunct information

is provided to ease your task of market analysis to predict both movements in the market and

market volume.

Calculating Interest on

Forex Trades

One of the best things about Forex trading is the fact that one can trade using leverage, thus

borrowing as much as 1,000 times your capital in order to make a trade. However, borrowing

money for trading in foreign exchange is the same as borrowing it for other purposes—interest

must be paid on the loan.

However, as currency trading involves both buying and selling, the interest due on your loan can

be offset by the interest earned on the currency you buy. Before going on to particular examples,

let us take a look at interest rates in general, to see how the foreign exchange market is affected

by it.

In central banks, interest rates are set in accordance with a country’s monetary policy—high

interest rates make the currency more expensive to buy and lower interest rates make it less so.

Imagining the government of a country with high inflation will help you understand how interest

rates are used.

The government, because of rapidly rising prices, might decide to raise interest rates. This would

increase the cost of the country’s currency, and make demand and consumption fall, as

borrowing would be more expensive.

This in turn would cause prices to fall and inflation rates would come down. Similarly, a country

undergoing recession might lower interest rates to boost the country’s economy, as lower price of

currency would cause demand, and, therefore, supply, to increase.

Interest rates set by central banks also determine at what rate commercial banks can borrow from

governments and lend to their customers, including forex traders. Which tells us how interest

rates affect this trade.

A trader who, for example buys GBP/USD, needs to borrow the Dollars to buy the Pounds and

will, thus, pay interest on the USD and earn it on the GBP. If the interest rate the Bank of England

sets for the UK Pound is higher than the one set by the Federal Reserve for the US Dollar, the

trader will earn more on the UK Pounds he bought than he pays on the US Dollars he borrowed,

thus making a profit.

However, unless there is a significant difference between the two interest rates, the net profit or

loss will be marginal. Besides, while interest rates are set on an annual basis, trading positions

are usually opened for short periods. This serves to significantly lower any gain or loss on interest

rates.