Need a Solid Online Forex Trading Strategy | ForexGen

You need to develop an online Forex trading strategy and run with it. As you know, in Forex, you are not buying the corporeal currency; you are laying money on the movement of this currency. If the value of the currency rises or falls you will either make or lose money. In the world of Forex, this is known as spread trading, meaning you are placing a bet that a certain currency price will move in the way you want it to move in.Every day new traders enter the market and every day traders fail to make money. There are three main reasons why people fail to make money in trading the Forex. First, they don't set a budget for each trade and end up losing way more than they can pay for to lose. Second, they don't have a solid Forex trading strategy. Third, they lack the discipline it takes to be a trader. Most people fail in all three of these areas, but even failing in one area can destroy a trader.Before you begin trading, you need to sit down and figure out what you can spend on each trade you make. You need to know exactly how much money you can afford to lose and how much you wish to gain on each trade. If by some chance a trade happens to go against you and you start losing money, you shouldn't close out of a trade until you reach your losing marker. When a trader enters the market, they enter with high expectations and don't expect to lose money. When they start to trade and something goes wrong, they panic and bail out. In turn, they miss out on the chance that their odds will turn and they might make some money on that trade. This is why it is so important to have a game plan before trading.

Bollinger Bands and Breaks | ForexGen

Bollinger Bands and Breaks - Forex Trading, Currency Forecast

The (FX) market follows a steady cycle of oscillating between a range bound and trending environment, on a long and short term basis. During range bound markets, the buying and selling forces remain more or less equal, and therefore compress the market into a sideways trading pattern such as the triangle consolidation pattern shown below. Once the market reaches a critical point, either the buyers or sellers overtake the opposing side, and force the market into a new trend; to the upside or downside. However detecting these breakouts can be quite tricky as the market has the tendency to trade to slightly new high or low prices, only to return inside its previous trading range. Therefore we must employ a filter that will hopefully help us avoid these false breakouts, and preserve our trading capital for only those 'true' breaks in the range. With that said, we can see as the market eventually broke out of its trading range, the break was marked by the first candlestick to close below the lower Bollinger Band as well as below its current support level. Once this occurred the market quickly began a new trend to the downside. For this reason, we should always consider the market's activity more relevant when studying the 'closing' prices, and not simply the highs and lows.

Getting Creative with Support and Resistance | ForexGen

Getting Creative with Support and Resistance - Forex Trading

When the basic applications of technical indicator fail to explain the current market climate, we can experiment with a new and fresh look at the charts. The following (1-hour) chart shows a steady downtrend, with its expected support and resistance levels. Since the trend is to the downside, we should place more emphasize on our current resistance level; which is drawn by connecting the two most significant high prices. Our anticipated support line may emerge as a parallel line (or our resistance line) dragged down to our most significant low price on the chart. Notice the red line measuring the entire length of the trend can be duplicated, and does a fine job at projecting our new potential support level, which may be an opportune time (and price) to take profits. This phenomenon may be explained in the fact that the ratio or discrepancy of net buyers to sellers may not change very often as the market continues to take 2.8 steps forward, and 1.3 steps back, just as an example…

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Contrarian Signs in Dollar Sentiment - Forex Trading

The market rewards those on the side of surprise. Traders, particularly in Forex, try to avoid surprises. This is not in itself surprising because joining the crowd, is a defensive action that occurs everywhere in nature. A swarm of bees, a flock of birds, and a herd of sheep, provide individual members protection by being part of the larger group. As we enter the last month of 2005 the Forex crowd around the US Dollar is large- but is it stable? Perhaps it's time to look beyond the comfort of the crowd.
Here are the contrarian signs of the beginning of the end of the US Dollar bull crowd.
1) Gold patterns - Gold is reaching new highs and while profit taking will occur what is significant is not the price point but how it is getting there. In the current scenario Gold's move is not a flight to safety from the dollar, but one that reflects investment demand for alternative assets and a reallocation away from currencies. The precious metals have been attracting significant fund and commodity-related purchases. Buying Gold is a way of shorting currencies. The following Gold vs. Yen chart demonstrates this inverse relationship.
The current bull sentiment for Gold may very well be a fundamental source of non-dollar sentiment. It may be the early sign of a non-dollar assets becoming more attractive.
2) US Dollar Index``. The USDX, after reaching highs of this year, just over 92, is now retracing toward its 50 day moving average. A direct probe of this Moving Average may be a precursor to a further retracement of the dollar.
3) Price Sensitivity to Weak Dollar News
If the USD bull is getting tired, the first sign we will see is when economic news comes out and the immediate reaction to that news. On Monday we saw the dollar decline to a 4 week low on news that existing home sales fell 2.7% to a slower-than-expected annual rate of 7.09 million in October. The reaction was a flow of funds away from the dollar to move the EURUSD nearly 200 pips. Of course, much of this move has been given back. This is showing increase in the volatility of sentiment focused on these news releases and that the crowd around the dollar bull is becoming looser.
4) Wall Street Journal vs. Financial Times
In the past week we have had two contrasting editorials. The Wall Street Journal printed an editorial "The Go-Go Greenback" in honor of the bullish dollar. The editorial remarks that the "US prospers with a dollar that has surprised the markets with its relative strength". But the Financial Times, just yesterday entitled its editorial- Entering the neutral interest rate zone. "It is not the end, but it is the beginning of the end. The latest minutes show that the Federal Reserve has entered what it expects to be the final phase of the interest rate tightening cycle that began in June 2004."
There are elements of value in each editorial. But they contrast each other in another respect. The Wall Street Journal's editorial is looking backward, while the FT is looking ahead. Yes, it has been a great year for the dollar. It can be argued, however, whether the markets were "surprised". Basic trend analysis of USDX confirmed in April that the dollar was in a Bullish sentiment. After the April FOMC rate increase, the USDX bounced off its 50 day Moving Average and proceeded to form this great bull trend that defined this year. But of greater interest to us now is why this editorial appears at all. Perhaps it's an indicator that the dollar is peaking when its praises can be sung on the editorial pages. The very fact that this editorial appeared may be a sign that the Wall Street Journal may be too late to the party.
5) Thirty Minute Ranges are tradable.
What should the Forex Trader conclude? How can we tactically benefit from the current turbulence on dollar sentiment? During periods of transition, where fundamental forces such as interest rate differentials are changing, shorter time frames to judge sentiment provide adequate opportunities to trade. The Forex Trader should be ready to take on moments of opportunity. In the Forex markets the 30 min patterns are demonstrating wider ranges and trading opportunities. It is worth looking at as a trading platform.

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Buy the Strongest, Sell the Weakest - Forex Trading

One of the best technical tools we can use in our analysis is the status other currency pairs. If you of the opinion that because of fundamental reasons the US Dollar will weaken, your next step would be to find the currency pair that gives you the best chance for a profitable trade.
Instead of automatically picking a pair like the EUR/USD and placing a buy, you might want to take a look at some of the crosses to see which currency is currently the strongest and play that one instead. An example would be to first check the chart of the EUR/GBP. If this pair is rising, that means that the EUR is currently stronger than the GBP and buying the EUR/USD would be preferred. However, if the EUR/GBP is falling, then the GBP is stronger than the EUR and buying the GBP/USD would be preferred. You can also add the CHF into the equation by first checking the EUR/CHF and the GBP/CHF. You should get a good idea of which of the European currencies is the strongest of the three and trade that currency against the weakening USD. The idea is to buy the strongest currency against the weakest to increase your chance of success.