Author Topic: Re: FOREX TUTORIALS+ADVANCED TRADING...................For everyone  (Read 912 times)

Offline donlucky

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Fundamental Vs.             Technical Analysis

Technical analysis and fundamental analysis are the two main schools of thought in the financial markets.             As we've mentioned, technical analysis looks at the price movement of a security and uses this data to predict its future price movements.             Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals.             Let's get into the details of how these two approaches differ, the criticisms against technical analysis and how technical and fundamental analysis can be used together to analyze securities.             
 

The Differences

At the most basic level, a technical analyst approaches a markets from the charts, while a fundamental analyst focuses on the economic factors.           

Technical traders, on the other hand, believe there is no reason to analyze a market's fundamentals because these are all accounted for in the pair's price.             Technicians believe that all the information they need about an instrument can be found in its charts.             

Time Horizon

Fundamental analysis takes a relatively long-term approach to analyzing the market compared to technical analysis.             While technical analysis can be used on a timeframe of weeks, days or even minutes, fundamental analysis often looks at data over a number of years.           

Trading Versus Investing


Not only is technical analysis more short term in nature that fundamental analysis, but the goals of a purchase (or sale) of a pair are usually different for each approach.             In general, technical analysis is most used for a trade, whereas fundamental analysis is most used to make an investment dicisions.             Investors buys or sell instruments they believe can increase in increase/decrease in price value over a long period, while traders buy/sell pairs they believe that fetch them greater price.             The line between a trade and an investment can be blurry, but it does characterize a difference between the two schools.           

Can They Co-Exist?

Although technical analysis and fundamental analysis are seen by many as polar opposites - the oil and water of trading - many market participants have experienced great success by combining the two.             For example, some fundamental analysts use technical analysis techniques to figure out the best time to enter into an undervalued/overvalued markets.             Oftentimes, this situation occurs when the market is severely oversold/overbought.             By timing entry into a market, the gains on the investment can be greatly improved.             



Alternatively, some technical traders might look at fundamentals to add strength to a technical signal.             For example, if a sell signal is given through technical patterns and indicators, a technical trader might look to reaffirm his or her decision by looking at some key fundamental data.             Oftentimes, having both the fundamentals and technicals on your side can provide the best-case scenario for a trade.             

While mixing some of the components of technical and fundamental analysis is not well received by the most devoted groups in each school, there are certainly benefits to at least understanding both schools of thought.             

In the following sections, we'll take a more detailed look at technical analysis.           

Post Merge: December 25, 2008, 12:29:26 PM
One of the most important concepts in technical analysis is that of trend.            The meaning in finance isn't all that different from the general definition of the term - a trend is really nothing more than the general direction in which a security or market is headed.            Take a look at the charts below:

No.           1

No.           2

No.           3



Post Merge: December 25, 2008, 12:30:15 PM
A More Formal Definition

Unfortunately, trends are not always easy to see.           In other words, defining a trend goes well beyond the obvious.           In any given chart, you will probably notice that prices do not tend to move in a straight line in any direction, but rather in a series of highs and lows.           In technical analysis, it is the movement of the highs and lows that constitutes a trend.           For example, an uptrend is classified as a series of higher highs and higher lows, while a downtrend is one of lower lows and lower highs.         

The Importance of Trend

It is important to be able to understand and identify trends so that you can trade with rather than against them.           Two important sayings in technical analysis are "the trend is your friend" and "don't buck the trend," illustrating how important trend analysis is for technical traders.         

Post Merge: December 25, 2008, 12:31:14 PM
Support And Resistance

Once you understand the concept of a trend, the next major concept is that of support and resistance.          You'll often hear technical analysts talk about the ongoing battle between the bulls and the bears, or the struggle between buyers (demand) and sellers (supply).          This is revealed by the prices a market moves, either above (resistance) or below (support).         

As you can see in picture below, Support is a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below.          Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line.          A support level penetrated becomes a resistance.          The chart below is an example of a support line.          While a Resistance is a term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above.          Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.          A resistance level penetrated becomes a support.         
The chart below is an example of a resistance and support lines.         




Post Merge: December 25, 2008, 12:31:57 PM
Why Does it Happen?

These support and resistance levels are seen as important in terms of market psychology and supply and demand.         Support and resistance levels are the levels at which a lot of traders are willing to buy the instrument (in the case of a support) or sell it (in the case of resistance).         When these trendlines are broken, the supply and demand and the psychology behind the market's movements is thought to have shifted, in which case new levels of support and resistance will likely be established.       



Post Merge: December 25, 2008, 12:32:43 PM
For example,if you click on the small picture above,you will see the dotted line is shown as a level of resistance that has prevented the price from heading higher on two previous occasions (Points 1 and 2).        However, once the resistance is broken, it becomes a level of support (shown by Points 3 and 4) by propping up the price and preventing it from heading lower again.       

Many traders who begin using technical analysis find this concept hard to believe and don't realize that this phenomenon occurs rather frequently, even with some of the most well-known markets.       

Post Merge: December 25, 2008, 12:33:23 PM
In almost every case, a market will have both a level of support and a level of resistance and will trade in this range as it bounces between these levels.       This is most often seen when a market is trading in a generally sideways (range bound) manner as the price moves through successive peaks and troughs, testing resistance and support.       

The Importance of Support and Resistance

Support and resistance analysis is an important part of trends because it can be used to make trading decisions and identify when a trend is reversing.       For example, if a trader identifies an important level of resistance that has been tested several times but never broken, he or she may decide to take profits as the market moves toward this points because it is unlikely that it will move past this level.       

Support and resistance levels both test and confirm trends and need to be monitored by anyone who uses technical analysis.       As long as the price of the market remains between these levels of support and resistance, the trend is likely to continue.       It is important to note, however, that a break beyond a level of support or resistance does not always have to be a reversal.       For example, if prices moved above the resistance levels of an upward trending channel, the trend has accelerated, not reversed.       This means that the price appreciation is expected to be faster than it was in the channel because the obstacle bedeviling it's movement has been broken.       

Being aware of these important support and resistance points should affect the way that you trade Forex.       

Note: Traders should avoid placing orders at these major points, as the area around them is usually marked by a lot of volatility.       If you feel confident about making a trade near a support or resistance level, it is important that you follow this simple rule: do not place orders directly at the support or resistance level.       This is because in many cases, the price never actually reaches the real point, but flirts with it instead.       So if you're bullish on a pair that is moving toward an important support level, do not place the trade at the support level.       Instead, place it above the support level, but within a few points.       On the other hand, if you are placing stops or short orders, set up your trade price at or below the level of support.      (For more info on R-S, watchout for the FX book tittled: FOREXplus+ -written by Mtthew Lucky)

Post Merge: December 25, 2008, 12:34:27 PM
TYPES OF ORDER

In FX market, for a trader to be able to deal on the market he must initiate an order to his broker before his market could be bought or sold, we have different kinds of order but we are going to take a look at some that are frequently used by most FX brokers and they are listed below:

Market Oreder
Limit or Pending Order
O.     C.     O (One cancel the Other) Order
Stop Order



Market Order

An order to buy or sell an instrument immediately at the best available current price.      A market order is sometimes referred to as an "unrestricted order".     

For example, if a trader spots an entery signal and decides to enter immidiately, he is advised to use the market orders.     

Limit or Pending Order

An order placed with a broker to buy or sell at a specified or prefered price.      Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.     
limit orders are beneficial because when the trade goes through, traders get the specified purchase or sell price.     

O.     C.     O (One cancel the Other) Order

An OCO (one cancel the other) Order is a special type of order where a stop order and a limit order are present.      With an OCO order, the execution of one of the two linked orders result in the cancellation of the other order.     

Stop Order

An order to buy or sell a when a price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit.      Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.     

Also referred to as a "stop" and/or "stop-loss order".     

traders commonly use a stop order before leaving for holidays or entering a situation where they are unable to monitor their portfolio for an extended period.     

Stops are not a 100% guarantee of getting the desired entry/exit points.      For instance, if a trade gaps down, the trader's stop order will be triggered (or filled), but most cases the trader's stop orders are not reached.     

Traders who use technical analysis will place stop orders below major moving averages, trendlines, or other key support or resistance levels.     

Post Merge: December 25, 2008, 12:36:41 PM
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Post Merge: December 25, 2008, 12:37:38 PM
GETTING STARTED

A lot of us have been hearing so much about forex and how so many hyip and over exaggerate it; some say they even double or triple their capital in just a day, that is outrageously high and it attracts the highest level of risk you can ever think of in any business.    A true professional Forex trader should know how much percentage he?s investing per trade; he should also know how to manage his/her risk in FX market.    Forex market is very volatile hence we should know the maximum percentage we ought to expose from our capital per trade to avoid fear and obtain peace of mind each time a trade is placed.    Forex trading is a profitable business for those that knows the rules of the market and adheres strictly to them.    Get it, it is not a get-rich-quick affair as so many sees it; it?s a business one can actually earn a better living from, it?s a business that pays more than any other investment vehicle if you trade it in a compounded mode like it should be.   
I made an analysis on how a not too experience trader or investor can build wealth trading Forex with just a strict adherence to the laws of risk management, I was shocked by the result I got.    I did a return on investment (RIO) for just 100,000 for the period of 5yars in the Forex market with a modest return of 5%, 7% and 10% per month.   

The table bellow shows how an investment of just 100,000 will amass at a various rates of monthly ROI.    From my years of experience in Forex trading and tutoring, I know that an amateurish with just a disciplinary attitude of Forex trading can return over 10% monthly comfortably.    No matter how low his risk exposure may be, 10% ROI monthly is very obtainable.   

Click on the link below to see the projection table.   



Post Merge: December 25, 2008, 12:38:10 PM
Wow!! Are these figures real? Yes it is, the figures you see above are5%, 7% and 10% return on investment for the period of 5years with an investment capital of just $100,000.   The dollar sign there is just an ordinary currency sign; it can be in a different currency sign like Nigerian Naira or European euro, but the figures remains the same. 
I know some of us must have been wondering if the figures are real; it is real and achievable if you adhere strictly to the laws guiding the Forex market plus your tight risk management. 





Post Merge: December 25, 2008, 12:38:51 PM
Wow!! Are these figures real? Yes it is, the figures you see above are5%, 7% and 10% return on investment for the period of 5years with an investment capital of just $100,000.  The dollar sign there is just an ordinary currency sign; it can be in a different currency sign like Nigerian Naira or European euro, but the figures remains the same.
I know some of us must have been wondering if the figures are real; it is real and achievable if you adhere strictly to the laws guiding the Forex market plus your tight risk management.



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« Last Edit: December 25, 2008, 08:38:51 PM by donlucky »
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