Forex and Trading News

May 2, 2012

See what your Forex trading charts look like when using Hector Deville’s custom indicators. You get these indicators as part of his Price Action Forex Trading Course.

May 1, 2012

How to setup the MT4 Platform for forex currency trading.This video discusses the 5 main areas of the trading platform and how you will use them.

Apr 30, 2012

Wall Street closed the trading week in the green as the NASDAQ rose by 0.62% closing at 3,069.20; the Dow Jones added 0.18% to its value, closing at 13,228.30.

Apr 29, 2012

The Moving Average Convergence Divergence or MACD Indicator is calculated by taking the difference between a shorter-term moving average and a longer-term moving average. The two most common are the 12 period moving average and the 26 period moving averages. Because of the way it is figured, the value of the indicator must equal zero when the two moving averages cross over each other. Because of this, a cross through the zero or center line can be a very simple method to identify the direction of the trend as well as key places when momentum might be building up.

The indicator can also be used to spot divergences. In other words, when the momentum isn’t in sync with the price action. For example, you may have a new high on the price chart, but the MACD is failing to make new highs. The histogram, or rows of bars on the indicator are often the most frequently used to find this information. The histogram is simply the difference of the moving averages being displayed in an easy to read format.

The idea of the MACD failing to make new highs can mean that the market is losing momentum, and that the highs might be from light volume. This is often a signal that a fall is about to happen. Of course, the divergence can be spotted in a down trend as well, only in opposite fashion.

Some traders will simply buy or sell depending on what side of the center line, or zero line the moving averages are. If they are below, they simply only sell, and if they are above, they only want to buy. Almost all traders use the MACD in conjunction with other indicators, as it is one of the most favored momentum indicators. However, it should be said that it struggles with range bound markets and shouldn’t be depended upon in those conditions. Because of a lack of momentum in those markets, the MACD can get a trader whipsawed.

Apr 29, 2012

Using forex trading candlesticks to identify trend continuation. This forex trading strategy will allow you to capitalize on a trending market, in addition to forex reversal points.

Apr 28, 2012

Use of the Relative Vigor Index (RVI) assumes that in a bull market the closing price is, in general, higher than the opening price. Conversely, it assumes that closing prices on a candle will more often than not be lower at the close as well. In other words, it assumes that the vigor (energy) of the move is shown in the way a candle closes relative to the trend, and the opening price. In order to make a more smooth calculation, the indicator will often use a simple moving average. 10 is the most common period.

The indicator can be used as a crossover system of sorts, meaning that the two lines on the RVI window can cross, and send a buy or sell signal. The indicator is similar to Stochastic Oscillators in this way, but doesn’t have a overbought or oversold area, and that is to be figured out by the trader themselves, perhaps via another indicator, or just simple observation.

Because of the cyclical nature of this indicator, it can often be used to trade range bound markets, as it will repeatedly fire off buy and sell signals at the extremes of a range. It can also show that momentum is falling as price reaches the top, as well as the bottom – letting the trader know that the market might be about to make a turn.

The concept of the Relative Vigor Index (RVI) is pretty straight forward, as prices tend to close higher than they open when a market is in an uptrend and they will also tend to close lower than they open in a downtrend. The vigor (energy or force) of the move can be somewhat established by whether the prices end up or down at the close of the time period candle.

Apr 27, 2012

The Williams Percentage Range (%R) indicator is a Momentum Indicator that helps to identify overbought and oversold conditions in a market that isn’t trending. It is named after its developer, Larry Williams who is a famous futures trader.

The Williams %R is read in a similar manner to the Stochastic Oscillator but is shown in an upside-down manner. The Williams indicator has no internal smoothing mechanism, unlike the Stochastic Oscillator. When the indicator is in the 0 to -20% range it shows that it is overbought, while if it is in the range of -80 to -100%, it shows that the pair is oversold. With the Williams %R, as with all momentum indicators, it is often wise to let price reversal before taking the reversal signal as true.

As the price continues to rise or fall, it is quite unusual for indicators to stay in a overbought or oversold condition for a long of time. Because it can take a while for price to reverse when overbought or oversold, it is unwise to take the signal when it first appears. The ability of the Williams %R indicator to anticipate a reversal in a pair is quite captivating, as it will usually has a fall and turns upwards a few periods before the pair’s price moves upwards. It will quite often do the opposite as well, as it turns lower a few candles before the price will. However, there is always the possibility that a pair will continue to run in a direction much farther than you are willing to have it go against you, so waiting for price confirmation is best.

The ability to use the Williams %R in a range bound market makes it a natural fit for those traders that like oscillators, and are looking for one to help with sideways markets — as many of the oscillators don’t function well in those conditions.

Apr 26, 2012

The Zig-Zag Indicator is in some ways part moving average, and part oscillator. The reason for this is that it simply tries to smooth out noise in the marketplace and allow a trader to see clear trends. It can also be used to help identify certain patterns as well, such as the head and shoulders technical pattern.

The indicator is simply a series of lines that are drawn on top of price, in an attempt to show the overall direction of price. It looks similar to a series of trend lines, and can help keep a trader on the right side of the market. As it smoothes out the rising and falling of prices, it works in the same way a moving average does – pointing the correct direction of the market over time.

One thing that makes this indicator different is that is measures percentage changes in this overall price of a currency pair. Quite often, a trader will set the lines to change direction after 3–5% price moves. In other words, a trend will still be intact until the price goes against it by whatever setting the trader chooses. This helps the trader differentiate between a simple pullback, and a dramatic trend change. By knowing the overall direction and the difference between pullbacks and trend changes, the trader can trade accordingly.

The Zig-Zag indicator is also very good at making patterns more visible as the lines are much more straightforward than candles can be at times. An errant bump in price won’t change the overall lines on the indicator, so it is much clearer in that way. Used with other indicators such as oscillators, you will be able to spot changes in trends in a very clear and concise way. It will also help you understand when a pullback is about to turn back in the trend’s favor by combining this indicator with others as well, such as the Stochastic Oscillator.