How To Create Best chart trading strategies in forex market...1
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HOW TO USE MACD INDICATOR TO SPOT CHANGES ?
What Does MACD Do?
One thing that the FOREX market does have in common with other markets is that you will start to see trends that occur as the result of anything from changes within a particular country’s economy to behavioral changes with investors, such as them becoming more optimistic or pessimistic about buying a particular currency. However, the tricky part is figuring out a way to spot the trend before it actually happens, so you are one of the first to either buy or sell the currency, which means you will be the one making the greatest amount of money possible based on how much you have invested.
MACD stands for Moving Average Convergence Divergence, and it is essentially designed to show you how the currency has averaged out over a given period of time. Rather than just averaging a bunch of numbers together over a given time frame, say three months, it actually shows you how much the average has changed at different intervals during the larger time frame. This allows you to get a much better, and more realistic, outlook regarding when the right time to buy and sell might be.
Components of a MACD Chart
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The MACD charts looks confusing to many investors, but it actually uses three simple components, which are expressed in numbers. The first number expresses the number of periods that are used to calculate the faster moving average. The second number expresses the number of periods that are used to calculate the slower moving average. The third number, as you may have guessed based on the pattern, is used to calculate the difference in average between the first and second numbers. Typically, the first number, the faster moving average, will have a default setting of 12 periods. The second number will typically have a default setting of 26 periods. The third, and final, number will typically be set to 9 periods on default. These periods are usually expressed in days, so you would be looking at the moving average over 12 days, 26 days and 9 days respectively.
Using MACD to Trade
Now that you know more about the overall concept of MACD, you are likely wondering how you could actually use the data to better your odds of success in the FOREX market. To begin with, you should know that it is important to know look at how the currency’s value changes over different time intervals, the 12, 26 and 9-day periods previously mentioned, rather than just looking at the changes over a less-specific time frame. You will also be able to see proof that the faster moving average will change in value much faster than the slower moving average. This fact will cause the faster and slower to crossover. When this occurs, it will indicate the end of a current trend, but when the fast begins to pull back on top of the slower moving average, it will indicate the beginning of a new trend. If you can figure out the pattern, you will be able to get a great idea regarding when the best time to buy and sell is, and you will be ahead of the other investors. What does this mean for you? Higher profits and lessened odds of losing money in the market, but it takes time to get it right.
There are several indicators that you can use to look for these kinds of trends in the FOREX market, but many investors like the fact that the MACD hones in on three different moving averages opposed to looking at general data for a period of time. This is a formula that takes a while to figure out, and it does not guarantee success, but it is certainly worth looking into. We wish you the best of luck with all your ventures in the FOREX market, and hope that you give this indicator a shot to see just how effective it can be.
DIVERGENCE FOREX TRADING: IT’S ALL ABOUT TRENDS AND TIMING
Unlike traditional investments where you are essentially loaning money to a business or government entity (bonds) or where you are investing in a company (stocks), the FOREX market is a little more complex. You do not have as many resources to tell you what to invest in, and you cannot simply invest in companies that do business in an industry that is speculated to take off extremely fast in the next few years, which would obviously bring you a higher return. But, FOREX does reward you with even higher potential returns than virtually any other type of investment, but you have to figure out a strategy that has been proven effective, or you will likely drop out of the market due to a high level of frustration. Today, we will look at a great FOREX strategy, which is commonly referred to as divergence trading.
What is Divergence?
Divergence trading comes from the root word divergence, which essentially means changing directions. So, when you are dealing with the FOREX market, which obviously involves buying up currency and selling it, hopefully, for a profit, you have to be able to spot a change in direction. This means that not only do you need to research trends regarding what effects prices within the market, but you also need to be able to spot these occurrences that cause changes in price before they actually occur. Doing so will allow you to buy as close to the lowest price point possible while also selling as close to the highest possible point as possible.
Types of Divergence
There are also two types of divergence, which are known as regular and hidden divergence. Regular divergence is essentially when a trend appears to be changing-whether that means the price trend will oscillate (turn) to raise or lower the current prices in the near future . The other type of divergence is commonly referred to as hidden divergence. Hidden divergence essentially shows that a trend is going to continue- whether that means that prices will continue to climb or if they will keep dropping. Both of these can be charted using trend lines.
Divergence Indicators
Now that you understand what divergence is and what the two forms are, you need to understand how to find divergence indicators. There are three types of indicators commonly used, which are known as RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence) and Stochastic. RSI tells you as the investor which currencies are either overbought or oversold, which, as common sense would tell you, indicates when the best time to buy and sell is. MACD informs you of the moving average of a given currency, which is essentially how the currency’s price is averaging out over a specific period of time during the current trend. We will discuss these trend indicators more in depth in a different article.
Benefits of Divergence Trading in FOREX
If you read the articles on using Elliott Waves, trend lines or support and resistant lines, you have a fairly decent idea on what a FOREX trading chart should look like. This will, in turn, help you to better understand the benefits of using divergence trading during your investing career in the FOREX market. The first benefit of divergence trading is that you will be better able to spot the lowest of lows, which means you will know when the currency is about to reach the price level that is best for buying (near the support). Another benefit is that you will also know when to sell as the price nears the highest of highs, which is essentially the resistance point. But, the greatest benefit of all is that you will have the added confidence of being able to see these trends occur over-and-over again, so you will know deep down that what you are witnessing is not simply a case of beginner's luck.
When it comes to buying and selling in the FOREX market, you will quickly find that there are several different strategies used by investors, and the divergence strategy happens to be just one of them. This strategy definitely works, but you may find that a different strategy ends up working out better for you personally, so do not hesitate to try out a few different strategies. The nice thing about the divergence strategy, however, is that it really allows you to narrow down your focus to spot changes or continuations of trends versus just looking at trends in general.
HOW TO MAXIMIZE BENEFITS USING FIBONACCI IN FOREX TRADING?
When it comes to Forex trading, numerous tools are used to research the same and predict market trends. Whether you are using a computer or paper to calculate, the Fibonacci lines or Fibonacci retracements come handy. These are useful Forex tools that actually help you gauge the market and make moves in order to earn profit.
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In the Forex market, there are many moves like reverse, resistance and support. The Fibonacci lines help both the newbie as well as the experienced trader in finding a foot in the forex market and earn profits. These are simple calculation methods that give you an in depth understanding of the market and what to expect out of it.
These methods are generally used throughout the trading hours to help you determine when to enter, reverse your move or exit the forex market. The best way to maximize and benefit using Fibonacci in Forex trading is by using the calculations to reaffirm that the moves you are making are aptly timed.
A Lot Can Be Done With Fibonacci
Fibonacci is actually a famous mathematical sequence. Here, the first 2 numbers in the series always adds up to the third number. The series, if formulated in a proper manner, would help you to predict many trends, whether in the forex market or otherwise. One example of a Fibonacci sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. After the calculations are made, the results are expressed in percentage form. That not all! For easy understanding, comprehensive and intensive charts are also drawn up to depict the Fibonacci series in the best possible manner. These charts are an eye opener for the forex traders. Easy to understand and implement, the traders can understand if the moves that they are making is in the right direction or not.
The best aspect of the Fibonacci series is that they can be used by one and all. Moreover, the fundamentals of the calculation also remain the same, so you can keep on using it to derive status for various moves. In short, the same method can be used time and again to calculate different aspects that will come handy in the Forex market while trading.
Fibonacci series and lines are a great way to boost your confidence in the forex market and help you to take the right steps in the forex trading world. Use them with care and see the difference for yourself.
What Does MACD Do?
One thing that the FOREX market does have in common with other markets is that you will start to see trends that occur as the result of anything from changes within a particular country’s economy to behavioral changes with investors, such as them becoming more optimistic or pessimistic about buying a particular currency. However, the tricky part is figuring out a way to spot the trend before it actually happens, so you are one of the first to either buy or sell the currency, which means you will be the one making the greatest amount of money possible based on how much you have invested.
MACD stands for Moving Average Convergence Divergence, and it is essentially designed to show you how the currency has averaged out over a given period of time. Rather than just averaging a bunch of numbers together over a given time frame, say three months, it actually shows you how much the average has changed at different intervals during the larger time frame. This allows you to get a much better, and more realistic, outlook regarding when the right time to buy and sell might be.
Components of a MACD Chart
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Using MACD to Trade
There are several indicators that you can use to look for these kinds of trends in the FOREX market, but many investors like the fact that the MACD hones in on three different moving averages opposed to looking at general data for a period of time. This is a formula that takes a while to figure out, and it does not guarantee success, but it is certainly worth looking into. We wish you the best of luck with all your ventures in the FOREX market, and hope that you give this indicator a shot to see just how effective it can be.
DIVERGENCE FOREX TRADING: IT’S ALL ABOUT TRENDS AND TIMING
Unlike traditional investments where you are essentially loaning money to a business or government entity (bonds) or where you are investing in a company (stocks), the FOREX market is a little more complex. You do not have as many resources to tell you what to invest in, and you cannot simply invest in companies that do business in an industry that is speculated to take off extremely fast in the next few years, which would obviously bring you a higher return. But, FOREX does reward you with even higher potential returns than virtually any other type of investment, but you have to figure out a strategy that has been proven effective, or you will likely drop out of the market due to a high level of frustration. Today, we will look at a great FOREX strategy, which is commonly referred to as divergence trading.
What is Divergence?
Types of Divergence
There are also two types of divergence, which are known as regular and hidden divergence. Regular divergence is essentially when a trend appears to be changing-whether that means the price trend will oscillate (turn) to raise or lower the current prices in the near future . The other type of divergence is commonly referred to as hidden divergence. Hidden divergence essentially shows that a trend is going to continue- whether that means that prices will continue to climb or if they will keep dropping. Both of these can be charted using trend lines.
Divergence Indicators
Now that you understand what divergence is and what the two forms are, you need to understand how to find divergence indicators. There are three types of indicators commonly used, which are known as RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence) and Stochastic. RSI tells you as the investor which currencies are either overbought or oversold, which, as common sense would tell you, indicates when the best time to buy and sell is. MACD informs you of the moving average of a given currency, which is essentially how the currency’s price is averaging out over a specific period of time during the current trend. We will discuss these trend indicators more in depth in a different article.
Benefits of Divergence Trading in FOREX
If you read the articles on using Elliott Waves, trend lines or support and resistant lines, you have a fairly decent idea on what a FOREX trading chart should look like. This will, in turn, help you to better understand the benefits of using divergence trading during your investing career in the FOREX market. The first benefit of divergence trading is that you will be better able to spot the lowest of lows, which means you will know when the currency is about to reach the price level that is best for buying (near the support). Another benefit is that you will also know when to sell as the price nears the highest of highs, which is essentially the resistance point. But, the greatest benefit of all is that you will have the added confidence of being able to see these trends occur over-and-over again, so you will know deep down that what you are witnessing is not simply a case of beginner's luck.
When it comes to buying and selling in the FOREX market, you will quickly find that there are several different strategies used by investors, and the divergence strategy happens to be just one of them. This strategy definitely works, but you may find that a different strategy ends up working out better for you personally, so do not hesitate to try out a few different strategies. The nice thing about the divergence strategy, however, is that it really allows you to narrow down your focus to spot changes or continuations of trends versus just looking at trends in general.
HOW TO MAXIMIZE BENEFITS USING FIBONACCI IN FOREX TRADING?
When it comes to Forex trading, numerous tools are used to research the same and predict market trends. Whether you are using a computer or paper to calculate, the Fibonacci lines or Fibonacci retracements come handy. These are useful Forex tools that actually help you gauge the market and make moves in order to earn profit.
.webp)
These methods are generally used throughout the trading hours to help you determine when to enter, reverse your move or exit the forex market. The best way to maximize and benefit using Fibonacci in Forex trading is by using the calculations to reaffirm that the moves you are making are aptly timed.
A Lot Can Be Done With Fibonacci
Fibonacci is actually a famous mathematical sequence. Here, the first 2 numbers in the series always adds up to the third number. The series, if formulated in a proper manner, would help you to predict many trends, whether in the forex market or otherwise. One example of a Fibonacci sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. After the calculations are made, the results are expressed in percentage form. That not all! For easy understanding, comprehensive and intensive charts are also drawn up to depict the Fibonacci series in the best possible manner. These charts are an eye opener for the forex traders. Easy to understand and implement, the traders can understand if the moves that they are making is in the right direction or not.
The best aspect of the Fibonacci series is that they can be used by one and all. Moreover, the fundamentals of the calculation also remain the same, so you can keep on using it to derive status for various moves. In short, the same method can be used time and again to calculate different aspects that will come handy in the Forex market while trading.
Fibonacci series and lines are a great way to boost your confidence in the forex market and help you to take the right steps in the forex trading world. Use them with care and see the difference for yourself.
About Kuldeep Nikam
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