16 – RSI – Trading Divergence
In the previous forex education section, we introduced the Relative Strength Index (RSI) and buying and selling when the indicator crosses back from oversold and overbought. In this section we will move past the basics and introduce a more advanced concept: Divergence.
Divergence occurs when a forex currency pair makes...
15 – RSI – Basics
In the last section we looked at Moving Average crosses and using Moving Averages to determine the trend. In this section we will move on to a new type of indicator - the Oscillator. Unlike the MA, Oscillators tend to appear below your MT4 chart in a separate window....
14 – Moving Averages – Crossovers
In the last section we introduced Moving Averages or Mas. We used a single MA in isolation and let it guide us into possible buying and selling opportunities. We used the 100SMA (100 Period Simple Moving Average) on a 4 hour GBP/USD chart - this is a relatively 'slow'...
13 – Moving Averages – Basics
Moving Averages are by far the most widely used and easy to understand forex indicator. They display right on top of your chart and mechanics are very easy to understand - a moving average or MA - is quite simply the average price over a given period.
This is one...
12 – Technical Indicators Overview
We have previously discussed Price Action or Naked trading - not for you? In this chapter we are going to discuss the alternative, trading while wearing your pants… Just kidding! Of course we're talking about using indicators.
Indicators analyse price action for you and give clear entry and exit signals....
11 – Fibonacci
Fibonacci retracements are a quick and easy way of predicting support and resistance levels in Forex. The Fibonacci tool works on the principle that markets tend to 'retrace' a portion of a move prior to continuing the dominant trend. Traders use the Fibonacci tool on MT4 to connect the...
10 – Support and Resistance
In Forex trading, support and resistance refers to levels where price is likely to pause, bounce or even reverse. Support is a lower price point or zone where the currency pair is considered 'cheap', spurning buying interest. Resistance is an upper price point or zone where the pair is...
09 – Chart Patterns – Continuation
Ascending Triangle - Bullish Continuation Pattern:
The Ascending Triangle is one of the most reliable bullish continuation or accumulation patterns. It is characterized by a series of higher lows failing at a flat top - this means it is a 'terminal' pattern - eventually price will have to stop carving...
08 – Candle Patterns – Reversal
In this section we will cover chart patterns, these are patterns that are comprised of many candles and take considerably more time to form. Once again, there are multitudes of chart patterns to draw up on your MT4 platform, so we will try to only cover the more common...
07 – Candle Patterns
What is a Candle?
Candle Patterns
In this section we're going to take a look at trading off forex candles on your MT4 charts. There are many different forex candle patterns - we'll have a look at some of the more common and reliable ones here. Candle patterns often indicate a...
06 – Types of Forex Charts: Line Chart v Bar Chart v Candle Chart
Forex traders use charts to determine market direction and identify possible buying and selling opportunities. There are three types of charts commonly used in forex that you can flick between on MT4:
Line chart;
Bar chart;
Candlestick chart.
Line Chart:
These charts are handy for quickly determining the trend - only...
05 – Technical Analysis Overview
Technical Analysis is the use of charts, such as those found on the Vantage FX MetaTrader 4 (MT4) platform, to study historical price movement to determine the possible future direction of price. The idea behind technical analysis is that everything you need to know, has been reflected in price....
04 – Trading Event Risk: Trading Headlines
After going through the highly organised data releases and central bank decisions, there is one last piece of fundamental analysis that you need to be aware of. Event risk is anything that will move markets, but that you can't see coming.
News Headlines:
There are just so many different types...
03 – Trading Central Bank Decisions: Hawkish v Dovish Monetary Policy
To achieve certain economic mandates or goals, a country's most potent weapon is monetary policy. Monetary policy is determined by a country's central bank acting independent from government (unless you're China of course!).
Monetary Policy is the process of setting the interest rate and controlling the supply of money.
There are...
02 – Trading Economic Data Releases: News Trading
The biggest and most obvious part of fundamental analysis is trading economic data releases, or more simply as traders call it: News trading.
So that everyone in the market has a level playing field when it comes to market sensitive news, each economic data release has a set time and...
01 – Fundamental Analysis Overview
As you have already read, Fundamental analysis is studying the economic fundamentals of a currency, country, or economy. Economic fundamentals really is a very broad term and gives you a huge amount of information to draw upon when conducting your analysis.
But why are economic news releases of this type...
10 – Tips on Using Indicators
It's time to get serious! From here on out we're going to be concocting consistent trades, using the instruments seen in the past lessons.
Before we start our adventure, however, allow me to share some suggestions and ideas that have matured through years of experience.
The 80-20 rule applies more...
09 – Combining Fundamental and Technical Analysis
Technical Analysis definitely has a magnetic pull. It's difficult to resist the temptation to use the wide array of technical indicators available, creating masterpieces of modern art.
On the left: 4H chart of EUR/USD with various technical methods applied (source: Twitter)
On the right: Kandinsky horizontale (Source: Google Images)
Up to this...
08 – Momentum Indicators
If one thing is certain about Forex, it is that it trends. Not always and never forever, but market trends do definitely emerge, and do definitely continue - sometimes for months or years.
One currency will trend against another, as long as there are enough buyers (for an uptrend) or...
07 – Bands and Envelopes
Technical Analysis is a curious pursuit.
Charts attract all walks of life; not just those mathematically inclined.
Maybe the rhythmic patterns appeal to us on a deep level. The harmony of the price movements touches something primordial in us…
Perhaps we enjoy the puzzle. The interplay of indicators challenges us to master...
06 – Oscillators
The markets are said to trade within a range 70-80% of the time. Trends are the exception, and not the rule.
So what to do when the markets are flat?
The smart trader dons their range trading hat.
As a range trader, you are looking to enter near the top or bottom...
05 – Chart Patterns
To the uninitiated, a chart is just random noise. To a trader, it's a precise portrait of the past. By isolating and analysing chart patterns, we can use this "noise" to plan high probability trades.
No matter what currency pair you're observing, every pattern says something profound about the mood...
04 – Fibonacci Levels
You would not think that one of the most popular modern technical analysis tools would be named after a 13th century monk, but then stranger things have happened.
Fibonacci was an Italian mathematician born circa 1170, who introduced the golden ratio to European mathematics.
He also came up with a sequence...
03 – Moving Averages
Moving averages are a staple in the Forex trader's arsenal.
They help the discerning trader identify, and trade in alignment with, the trend. Both critical components of a winning trading plan.
There are a variety of ways to use moving averages, the most important of which we will cover today.
What is...
02 – Candlesticks
The development of the school of charting called Candlestick analysis is initially credited to a 17th century Japanese rice trader named Homma form the town of Sakata.
Over time, Candlesticks have evolved to become one of the predominant methods of technical analysis used universally across markets and cultures.
Candlesticks can be...
01 – Support and Resistance
For the bushy-tailed and bright-eyed newcomer, technical analysis of the Forex market often becomes an obsession.
I know for me it was.
Although you will learn there is much more to successful trading (such as trade management, position sizing and phycology) technical analysis is still the cornerstone of a solid trading...
14 – Developing Good Trading Habits
Most expert traders credit their success to good trading habits, which can be developed over time through a solid daily routine. Once these habits are ingrained in your processes, discipline and proper decision-making can become second nature.
As mentioned, habits take quite some time to develop. For instance, becoming a...
13 – How to Recover after Blowing Up Your Account
It's not unusual for beginner Forex traders to wind up completely wiping out an account through a series of losses or poor risk management. While this unfortunate scenario can be avoided with the right amount of trading knowledge and discipline, it would also help to have a battle plan...
12 – Keeping Your Focus with Volatility and Uncertainty
Some say that the only thing certain in the forex market is uncertainty. While there are ways to predict more probable price movements, there will always be that element of surprise from time to time, as unforeseen events or shifting market dynamics could play a larger role in determining...
11 – How to Deal with Forex Trading Stress
Given the fast-paced nature of the forex market and its potential to result in monetary losses, it is not surprising that a lot of traders suffer from stress. After all, the idea of losing real money in a forex trade can lead to frustration and in some cases, anger...