As soon as you cross the boundary to step into the Forex trading world, two things clearly stick out: the need to identify trends while reading forex charts by utilizing forex technical analysis and the importance of anticipating a trend as early as possible so as to make the most of it.
While the forex exchange market has been considered to be a very strong entity for a long time, it has shown a tendency to experience sharp upward and downward swings lasting for a small period of time. Such a volatile tendency is what makes it the perfect place to utilize technical analysis in an effective manner.
But it is always crucial to keep in mind that these indicators are not revealing anything about future currency price movements with 100% certainty, they merely describe the market behavior in terms of high probability or chances. Certainty is an illusion created within the minds of misguided traders.
If your aim is to transform yourself into a successful forex trader online, you can go about achieving it in one of two ways:
1. Utilize the maximum number of technical indicators available to you, or
2. Utilize a combination of indicators to form your very own secret trading strategy.
Regardless of the path you choose, the overall objective here is for you to anticipate or identify a trend as accurately as possible. The secret of numerous successful forex traders is to anticipate the respective short-term, medium-range and long-term major trends. This information is then used to form trades by keeping in mind the rules which will give them enough room to hold a particular position for a necessary period of time.
Since the forex market is dynamic and changes momentum rapidly, you should also develop a flexible decision making process when it comes to picking your technical indicators. In a dynamic market, various relevant indicator combinations are necessary to arrive at the most probable, and accurate, prediction of currency price movements in the future.
If the market is providing hints that your decision is correct, then it is time for you to go about making the maximum possible profit on each and every trade. You should undertake this only once you are clear about the equity management concept regarding risk & reward. On a bad day when things are not going according to plan, a smart trader will take whatever he has and make his way out of a particular trade. If prices are moving within a narrow range and the market is dull, there is no point trying make things happen by trying to predict the next wild movement.
To conclude, always keep your mind open about utilizing various indicators to make sure that you are in sync with the dynamic market. This is bound to leave you as a profitable or successful trader by the end of the day.
The PBF indicators
After downloading the indicators and incorporating them into your trading platform, either MetaTrader 4 or 5, you will find about 8 new indicators on your platform. Here’s what they represent:
• PBF_2EMA_Colour – a type of exponential moving average (EMA) with a larger period time gap used to identify longer trends
• PBF_Fast_3MAs – another moving average, this one with a smaller period length that is used to detect smaller and immediate trends, ideal for the scalper
Together, these two moving averages help the trader establish trends in the market and decide on when to enter or exit the trade.
• PBF_iTunnel – although it looks like another moving average, it’s not, but it has the same purpose. This indicator changes colour from blue on an uptrend to red on a downtrend
• PBF_OSOB – this indicator appears below the price charts on the indicator window as an oscillating line with varying colours and dots. The varying colours on the line indicate when the market has been overbought or oversold presenting an opportunity to sell or buy respectively. The dots at the crests and valleys represent market sentiment, where red dots show a bearish sentiment, the green dots a bullish sentiment and the yellow dots indecision in the market
• PBF_SCALPER_SHOW_ME – this one can be added both in the main window or the indicator window. On the main window, it presents as yellow dots showing points at which the trend turns around. In the indicator window, it shows the levels at which the market normally ranges, above or below these points is a sign the market has been overbought or oversold
• PBF_PB_Direction – it changes the colour of the bars from not only the default green and white but blue, yellow and red. Blue candlesticks show an uptrend, red for a downtrend and yellow for a possible reversal in the trend
• PBF_SQUEEZE – it is very similar to the MACD indicator, but instead of just showing bullish or bearish market sentiment, this indicator also shows the strength of the market sentiment by changing colour
• PBF_Trend_Bars_v2 – these are 3 horizontal lines coloured red and green. When a single colour can be found on all 3 bars, it is a sign of strong market sentiment either bearish or bullish.
When all these indicators are added to the Forex charts, the chart now looks something like this.
It really looks messy right now, and it’s not advisable to have such a cluttered work space, but the advantage is that you don’t have to add all the indicators offered along this PBF system.
Just choose a few which favour your trading style and add those, only use the others to compliment your decision.
Using these indicators
When using the PBF system on shorter time frames, you want all indicators to have the same colour and the candle close above or below the moving average.
Take the example below for the GBP/USD pair on the M5 chart, the candle at point A has just entered the ‘green zone’ on the PBF_Squeeze indicator and closed above both the fast and slow moving averages. The trader who had placed a buy order at this point made a lot of pips on that trade. The yellow dots provided by the PBF_SCALPER_SHOW_ME indicator provide information of where to place the stop loss just in case the trend turns.
Later on at point B, the candles break below the fast moving average, PBF_Fast_3MAs, but not the slower moving average, PBF_2EMA_Colour or the PBF_iTunnel, so you should not close the trade just yet. And indeed what happened, the uptrend kept going.
On longer time frames, though, you can’t wait for all signals to line up because then it might be too late and you get in on the trade when the trend has already been trending for some time. On these higher time frames, like the GBP/USD chart below on the H1 time frame, although price was above the moving average at point A, the PBF_OSOB indicator showed that the market had been overbought, so a sell order would have been more appropriate here. By point B, there were signs the trend was reversing, and this would be a good place to buy the pair.
This PBF system can also be used to show times when you should not enter the markets, such as when the bars on the PBF_Squeeze indicator are so small they appear as dots. This often happens a short while before a major news announcement, and is a sign that players in the market are unsure of the trend and waiting to see what happens. From the picture below, you can see that other indicators like the PBF_OSOB are not showing signs of an overbought/oversold market, or the PBF_iTunnel changing colour. It is not advisable to get into a trade at such a time because the next move could be significant.
What’s so special about this system
By now you must appreciate the various uses of this system, but you’re still not sure why it costs $2,000. Here’s why:
1. The ability to trade any financial instrument – most 3rd party indicators and expert advisors are created by individual traders for a specific purpose, one that the trader is very good at. So, for a Forex trader, they might create a system that makes Forex trading easier, but it won’t work on, say, stocks or commodities. The PBF system, though, works for all financial instruments, and is not limited to the Forex market, which means that a trader can diversify their portfolio just by learning this system.
2. User friendliness – after installing the PBF indicators and loading them onto your trading platform, you won’t notice too much of a difference on your Forex charts. Most indicators fill up your work space with data, lines and colours, but the PBF system only alters the colours of your candlesticks without changing them too much. This unique feature makes it possible for any trader to learn how to use this system and make money off it.
3. Versatility – again, because indicators are created based on an individual trader’s style, these indicators are only effective in specific time frames and trading styles. Not so for the PBF system, which can be used by scalpers, day traders, swing traders and it can still work effectively on all time frames without any restrictions. Such versatility makes the point bar Forex system somewhat like a Swiss Army knife for a Forex trader.
Some of you might have often have heard that the forex market is a huge market and it offers an extreme level of profit potential to the right candidate. The expert traders at Saxo are trading the live assets with an extreme level of precision and making a decent income at the end of the month. If you look at the professional traders then you will notice that every single one of them is following a simple trading strategy to trade the market. If you are new in the trading community then it’s true that the basic of the forex market will be extremely difficult for you but with your hard labor, sincerity, and dedication you can easily master the art of trading. In this article, we will discuss three easy steps which will make you a profitable trader in the financial market.
Three major types of market analysis: Most of the novice traders in the financial market look for technical trading signals in their trading platform to execute the trades in the market. But there are three major types of analysis in the forex market. If you look at the expert in the financial market then you will notice that most of them are executing the trades in the market based on the fundamental and technical analysis. Unlike the professional traders, the novice trader’s always ignored the fundamental factors of the market. In the eyes of expert traders, fundamental analysis is often considered to be the most powerful price driving catalyst in the forex market. So if you truly want to master the art of trading then make sure that you learn all the three basic market analysis.
Long-term trend: Every single expert traders in the financial market knows very precisely that how important it is to trade in favor of the long-term prevailing trend in the market. Most of the novice traders tend to look for trend reversal signal in their trading platform and ultimately loses money in trading. In order to become a profitable trader in the financial market, you must always execute the trades in favor of the long-term trend since it will greatly reduce the risk exposure in trading. The expert in the financial market always uses the daily and the weekly time frame to identify the existing trend in the market. So always make sure that you do the trend identification in the higher time frame since it will greatly enhance your trading performance.
Risk tolerance level in trading: Every single individual has different risk tolerance level in trading. So when you look for trading signals in your trading platform make sure that you know your risk tolerance level in the market. The expert in the financial market easily execute high lot size trade in the market with tight stop loss and makes a decent profit. So if you think that you will become a full-time trader in the forex market then make sure that you look for the possible trading signals in your platform with low-risk exposure.
Those who truly want to become a profitable trader in the financial market should strictly follow these trading rules in the market. It’s true that maintaining a strict trading discipline will be extremely difficult for you at the initial stage but if you trade with patience then you can easily secure the best possible trades in the market. And always remember to follow money management to survive the extreme level of volatility of the market.
When you are in the Forex market, you cannot rely on your intuitions. It is not like a match that you can sense that the market will go down and the market will go up. You may have guessed sometimes right, but most of the time, Forex market will prove you wrong. Here we are going to talk about why you should build a trading strategy in Forex. There are many master and gurus available on the internet that is eager to help you, but in this trading profession, you should build your own strategy. Thousands of people follow these strategies of the Forex masters and only a few are making money. These few traders are the one who builds their own strategy.
Why should you develop your own strategy?
Many newbie traders think that the strategy of Forex is very simple. How to read the market correctly and make money. Well, in one sense it is ok. Forex is all about making money. But making money is Forex is not like your office work. In your office work, it does not matter how much you work. Even if you work every day overnight, you will get a little bonus on your basic salary. But Forex is different. How much you are working on this trading profession will give you how much money you should have made. If you work less, you will get a less money and loses most of it. If you work hard and develop your own strategy, you will make a consistent amount of money. If you want to leave all other jobs and start living your dream life that you have always wanted in your life, you should build and develop a strategy of your own in
Price action trading
Price action trading is considered to be one of the most profitable trading strategies in the world. If you look at the professional trader then you will notice that every single one of them is trading the key support and resistance level in the market using the price action trading signal. It’s true that trading the market with price action confirmation signal will be a little bit difficult for you at the beginning but if you learn the basic candlestick pattern in the market you can easily master the art of trading the live assets. If you truly want to become professional traders in the financial market then make sure that you look for the best IB broker deposit conditions since your trading cost will be greatly reduced in the forex market.
Integrating risk management factor: Most of the novice traders in the forex market fails to make money in forex trading since they don’t integrate the risk management factors with their trading system. If you look at the novice trader then you will notice that most of them are more concern about best IB broker deposit conditions rather than risk management factors. But if you trade the live assets in the market it’s very obvious that you will often have some losing orders in the market. As a professional trader, you need to learn how t manage your trade by reducing the risk exposure level.
Your trading strategy is your money machine
When you have entered the Forex market, you knew that only a few traders are successful in this market to get home with a profit. Imagine, if the Forex master or gurus were really so helpful, why this number is not increasing? It has remained the same. These few traders are only those traders who have built their own strategy. If you really want to make money, build your Forex strategy.
However, when you start trading the financial instrument make sure that you chose the best IB broker in the forex market since trading the with the professional broker will give you access to the robust trading platform. Most importantly if you look at the professional trader in the forex market then you will notice that every single one of them are more concern about the best IB broker deposit conditions since they provide excellent pricing policy structure for the retail traders in the forex market.
When it comes to making money, do not think that other people will give an idea how you can make money. There is nothing free in this world and you should work hard in this market to develop a strategy of your own to bring profit back home.
Thе саndlеѕtiсk сhаrt iѕ one of thе mоѕt uѕеd charts in trаding nowadays. It is thought to have bееn dеvеlореd in thе 18th сеnturу bу a Jараnеѕе riсе trаdеr Munhiѕа Hоmmа. Hе diѕсоvеrеd thаt by drawing thе price movements as a “candlestick”, hе will hаvе mоrе information thаt can bе uѕеd in trаding. In timе аnаlуѕtѕ аnd statisticians hаvе diѕсоvеrеd раttеrnѕ which indicate with a сеrtаin prоbаbilitу a соntinuаtiоn оr a reversal in thе рriсе action оf a сеrtаin instrument.
Lеt uѕ ѕее how a candle iѕ fоrmеd аnd whаt itѕ characteristics are:
A bar ѕhоwѕ thе ореn price, for a раrtiсulаr timе frаmе, thе high аnd thе lоw of the ѕеѕѕiоn аnd thе сlоѕing рriсе оf thаt time intеrvаl. In the imаgе, уоu can ѕее thаt the ореn рriсе is оn thе left аnd close рriсе on the right. Bесаuѕе the close price iѕ higher thаn thе ореn price, wе соnѕidеr it to be an ascending саndlе.
If wе аrе to drаw a right horizontal line at thе open рriсе and a lеft hоrizоntаl line аt thе сlоѕе рriсе, like in the еxаmрlе above, аftеrwаrdѕ fill thе ѕесtiоn with grееn, wе will hаvе an ascending саndlеѕtiсk. Thiѕ tуре of representation is considered tо offer more infоrmаtiоn аbоut what hарреnеd in the trading session. A candlestick is fоrmеd оf a bоdу аnd uрреr/lоwеr wiсk оr shadow. The bоdу is a specific еlеmеnt vеrу imроrtаnt fоr trаdеrѕ.
In thе сurrеnt еxаmрlеѕ, I have uѕеd thе сuѕtоm соlоrѕ fоr ѕhоwing аѕсеnding and dеѕсеnding соlоrѕ. Grееn usually rерrеѕеntѕ a rise in thе price, whilе red rерrеѕеntѕ a fall аnd characterizes thе bеаrѕ. Dоn’t bе limited tо these соlоrѕ. You will find thаt white (riѕе) and black (fаll) аrе also uѕеd, оr уоu саn еvеn customize them tо fit уоur character аnd nееdѕ.
If the candle’s bоdу hаѕ a ѕресifiс shape, it соuld tеll the trader hоw роwеrful bullѕ оr bеаrѕ are. I will bring uр several tуреѕ оf саndlеѕ that usually show the mаrkеt direction аnd dеtеrminаtiоn.
Marubozu – It iѕ showing thе dirесtiоn оf thе mаrkеt and whiсh traders, bullѕ оr bears are in control. It is fоrmеd оnlу bу a bоdу with no shadow. It shows thаt thе market hаѕ ѕtrеngth in оnе оf the dirесtiоnѕ. Thiѕ interpretation саn аlѕо be аррliеd аt candles with long bоdiеѕ and vеrу ѕhоrt wiсkѕ.
Sрinning Tорѕ – Thеу ѕhоw a balance between buуеrѕ аnd sellers, and it is intеrрrеtеd аѕ indecision, a mаrkеt раuѕе. Thiѕ саndlе is сhаrасtеrizеd by a small bоdу аnd thе upper and lоwеr ѕhаdоw аlmоѕt еԛuаl. Indifferent thе color they have, it mеаnѕ the same thing.
Dоji – It shows indесiѕiоn аnd balance, аnd it hаѕ thе ѕаmе interpretation аѕ thе Sрinning Top, but thiѕ оnе is characterized by thе fасt the opening price is аѕ ѕаmе аѕ thе closing рriсе аnd the wicks are аlmоѕt equal.
It is important tо undеrѕtаnd thеѕе bаѕiс еlеmеntѕ аbоut thе саndlеѕtiсkѕ to bе able tо uѕе thеm tо their full роtеntiаl. It iѕ not enough tо juѕt take thеm аѕ they аrе аnd hope fоr thе best. In timе ѕtrаtеgiеѕ and раttеrnѕ have еmеrgеd whiсh riѕеѕ the probability fоr a winning trаdе bаѕеd on this tуре of сhаrt. In оur nеxt аrtiсlе about саndlеѕtiсk, wе will tаlk аbоut thеѕе раttеrnѕ and diѕсuѕѕ strategies thаt саn bе used in dау tо day trading on the Forex mаrkеt оr any оthеr finаnсiаl inѕtrumеnt.
The new traders don’t understand why they are losing money. They are so much biased with the profit factor, they always look for bigger gains. Unlike novice traders, professional traders are always considering things in an organized way. They never push themselves too hard in the retail trading business since they know trading is all about precision. You might have a huge amount of money but still, you can’t execute low-quality trades.
Did you that know only 5% of the retail traders are making a consistent profit? Most of the naïve traders don’t even know the associated mistakes in trading. Read this article carefully since we will highlight the key mistakes associated with a new trading system.
Trading the smaller time frame
Scalping the market is very risky. If you intend to trade the lower time frame, you must have proper knowledge of technical and fundamental parameters. Most of the time, the new traders start trading the lower time frame based on an aggressive trading strategy. Eventually, they lose most of the trades. If you look at the experienced traders, it won’t take much time to understand why they are trading the daily and weekly time frame. In the higher time frame, you will get much more accurate data and it will be easy to find quality trade setups.
Trading against the major trend
You need to find the long term market trend to ensure quality trade execution. Sadly, very few traders know the proper way to find the long term market trend. Most of the novice traders are losing money since they are trading the market against the major trend. To make a living out of options trading profession, you must find the overall market trend and trade with low risk. Try to act like professional Aussie traders. You might have the best trade setup but if it’s against the major trend, ignore the trade.
Using a complicated trading method
The naïve traders love to use the complicated trading method. They consider it as the best solution to trade the live market. But in reality, a complex trading strategy makes things worse in real life. Try to learn about the support and resistance level so that you can execute high-quality trades. Focus on the price action confirmation signal and you will eventually get better at trading. Forget about the aggression and trade the market with proper discipline.
Use a demo account
Without back testing a trading strategy, you should never trade the real market. Most of the time the new traders jump into the retail trading business without having a verified strategy. Eventually, they blow up their trading account. But if you use a demo account and trade the market with Saxo, it won’t take much time to understand how this market works. Take advantage of the demo account and try to develop your skills. Forget about the complex trading system and try to craft a balanced strategy.
Trade with a high-risk-reward ratio
You can’t survive in the trading profession by trading the market with 1:1 risk-reward ratio. You have to find a 1:4+ risk-reward ratio to make things easier. Some of you might think this is a very hard process but if you switch to the daily or weekly time frame, it won’t take much time to develop such a unique strategy. You have to understand the fact, knowledge is power. Try to educate yourself properly so that you can make the best decision at the complex market condition. Forget about the complicated trading strategy and focus on long term goals. If required, spend some money and enroll yourself on a professional course. Never trade the real market without having strong confidence. Demo trade the market for the first few months so that you can craft a perfect system without taking too many risks. Learn to play safe to become a successful trader.