How to Trade on the Forex Market? Vol.2 - HYIP’s

How to Trade on the Forex Market? Vol.2

In the first volume we discussed personal qualities of the Forex trader and his first steps in the trade on the Forex market. In the second volume of the article “How to trade on the Forex market?” we make technical analysis and graphs of Forex trading.

 
It is very advisable to study the 8-hour or 4-hour graphs of bars and to look for patterns and the 20-period average on the graphs daily within several months. In this way you will understand what the accumulation and the distribution for the short-term transactions on the Forex market meant in the volume 1 of this article. These processes are suited for the market so you can always decide what tactics must be used in this time period. The rest is the matter of capital control, discipline, and certainly experience.
 
Speaking about the technical side of trading, the first necessary action is to determine the trend in the given time scale and to select a commercial strategy for this trend. Some traders hold positions within many months while the others do this less than one hour or one day. The daily fluctuations can be only harmless for the trader who holds a position within a few months, while the same daily fluctuation can become a monstrous event for day traders.
 
According to many experienced Forex traders, it is better to keep the technical analysis of any pair of currencies as simple as possible to see how it is possible to use a situation in their interests. The strategy is to determine “the range of a transaction”. The intermediate-term turns can be proved by only the monthly, weekly and day graphs. Reading a graph cannot predict the apex or the bottom of a motion but it can confirm a trend change to undertake a right strategy for this new trend.
 
It is not bad to use very primitive graphic methods. You can look at the eight-hour graphs EUR/GBP between 20 and 40 MA and turn your attention to the round numbers and breakthroughs (then you understand that there is no more primitive method than this one but also very effective).
 
You should look at the weekly EUR/USD and USD/JPY with 10 RSI and the monthly AUD/USD with 10 RSI, observing “the patterns” but not the levels. In such way you learn the primitive work of things. The RSI is useful “only within the weekly and monthly time scale”. You can ignore the RSI within the short-term scales, as the RSI inventor RSI Wilder said us a long time ago.
If you deal inside the day the 30-minute and 15-minute graphs of spark plugs in the combination with MACD and MA can be more usefully than the hour-long or even daily graphs. Do not pass especially the long parts of spark plugs as the confirmation of the change of a short-term trend.
 
It is important to use races and gold. EUR/GBP and GBP/JPY have a property of the leading indicators of the USD/JPY and EUR/USD motion. EUR/CHF is like EUR/GBP in the value forecast.
Speaking briefly, EUR/GBP and GBP/CHF are the anticipating indicators for EUR/USD and USD/CHF. Furthermore, GBP/JPY, EUR/JPY and CHF/JPY are anticipating indicators for USD/JPY. EUR/JPY is very important to EUR/USD while GBP/JPY plays the same role for GBP/USD.
 
For example, the yesterday's weakness EUR/USD began from the sales of EUR/JPY that sent EUR/USD and USD/JPY downward. According to the rule of “the thumb”, if EUR/USD does not move and EUR/GBP begins to move this is a good indicator that someone will bring EUR/USD in the same direction more lately. And when EUR/USD moves and EUR/GBP does not move, it is very probable that the EUR/USD motion will be brief soon. USD/JPY makes the same motions in the relation with EUR/JPY and GBP/JPY.
 
Gold is the mirror of the dollar for hedging purposes, and their correlation is excellent. Sometimes when there is too much information for checking, which change every hour, it is enough only to control gold. The graph of gold is one of the main schedules which you must always observe by the trade on the Forex.
 
The graph EUR/GBP and the graph EUR/JPY are also an excellent mirror for the direction of EUR/USD for the large part of time. The graphs of gold, EUR/GBP and EUR/JPY make the history of market with the fact that gold and EUR/GBP conduct the rest part of the Forex most frequently.
 
There are some pieces of advice of the USD/JPY trade. One of the most foolish rules of “the thumb” in the trade of USD/JPY is that it rarely walks to 700-800 pips by contract without the correction to 200 or more pips in the middle of a motion. Moreover, the trade of USD/JPY almost always rolls to 350 points back from its start moving of 700-800 pips. All this is because of the problem of liquidity on the Yen market.
 
The position traders hold the yen positions till several hundred pips. The more adroit approach is required for the intra-day transactions. As the position trader of yen, never buy below falling day 20 MA and never sell above growing day 20 MA regardless of the fact how attractive the situation is. Begin to buy only when the day’s 20 MA begins to rise from any level because this is not only safe but also checked method to make money, although it appears so simply.
What reaction to the news should the Forex trader have? The market always read the news or the data to the side of the predominant mood of market. Data can show the state of market well. If the data are poor and the price rises or does not react, the bull market must be if the strategy of purchase on the bottom will be the best choice.
 
On the contrary, if the data are good but the price does not grow or even falls this is the descending trend if the sale on the rebound will be the best strategy. It will be the significant point whether poor or good news does not influence the price as before. Changes of the mood of market are usually accompanied by this reaction on the news.

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