2Bull Forex Blog

To learn Forex trading, you need to know the best technical indicators to incorporate in your Forex trading strategy.

Here we outline a toolbox of essential indicators – and give some tips on how to use them for big forex profits. Anyone serious about making profits should include them in their forex trading strategy, so here they are.

If you want to learn Forex trading, you need to spot trends and you need to confirm entry with price momentum in your favor.

1. Trend Confirmation

Trend lines are your first clue to important support and resistance, which is the basis of all good forex trading systems.

You need to know where important support or resistance is - and you can easily spot this by drawing trend lines.

Moving averages are another great indicator to identify trends, so moving averages combined with trend lines are all that you need.

Many traders simply like to buy into support - or sell into resistance and “hope” the trade is going to go their way, if you rely on “hope” you will lose you need confirmation.

2. Indicators for Entry and Exit

When you take a currency-trading signal, you should have short-term price momentum in your favour.

If short-term price momentum is not in your favour the odds of winning are dramatically reduced.

Two great indicators are RSI and Stochastic.

Both give an excellent visual picture of the strength of price.

You can learn how to visually spot price momentum changes easily and you don’t need to understand the equation behind them – just look at the visual set ups.

Many Forex traders use Bollinger bands and MACD for timing trade signals - this is wrong - they gauge volatility – so only use them for that purpose not executing trading signals.

3. Contrary Trading Tools

Do you want to get advance warning of every major trend change?

Of course you do! Then take a look at these indicators.

1. % Bullish
2. Net Traders Position Report

These two indicators are not commonly used by Forex traders – yet they give you advance warning of all the big trends and of course the big profits.

You need to gauge when to enter (use momentum indicators) – but the %

Bullish, and Net Traders Position Report will tell you when a big move is shaping up.

Consider this fact:

Currency markets have huge trend changes when the fundamental consensus is extremely bullish or bearish – and the % Bullish measures peoples view of the market.

In simple terms when the consensus is over 80%, then price is too bullish, on the other hand, when the consensus is under 20% then price is too bearish, a trend change is therefore on the cards.

After looking at the above tool you can confirm a trend change is due further by looking at Net Traders Positions, published bi weekly by the CFTC.

It relates to the futures markets, but movements in currencies tend to mirror the set ups.

You can track hedgers – these are the real pro traders.

These traders know the fair value of a currency – it’s their living. You then compare the hedger’s positions with the speculators - who always get the major turning points wrong and trade on the emotions of greed and fear.

If you’re trading online currencies and you see hedgers going the opposite way to speculators - and this is backed up by the % bullish being over bought or oversold - then a major trend change is on the way.

It’s then time to look at your charts – in order to time an entry opposite to the majority.

In Forex markets contrary trades offer you the biggest reward for the lowest risk - and the % Bullish and Net Traders Position Report will help act on these high profit opportunities.

So now you know the best tools, which when combined with your Forex education, could really make a big difference to your bottom line up Forex trading and their all easy to understand and use, so try them and see them help your currency trading success.

Do you want more and bigger consistent profits? Then this article will show you how to increase your currency trading profits.

There simple to learn, easy to apply and will ensure your forex trading strategy gets a welcome boost in profits.

Here we’re going to assume you already have a methodology, you are confident in and just need to get bigger FX profits so let’s look at the tips.

1. Accept Volatility and Risk

All successful Forex trading systems understand volatility and use volatility to their advantage.

You can’t have a profitable Forex trading system without taking calculated risks - and taking losses.

If you can’t accept risk, then don’t get involved in forex trading.

Many traders try to restrict risk so much, that they actually ensure they will lose
– they’re simply stopped out all the time by volatility.

To make profits, the secret is to take a risk at the right time risk as much as you can.

2. Patience

One of the best ways to make big gains in currency trading is to be patient and wait for the best opportunities.

Many traders trade frequently and always like to be in the market in case they miss a big trend.

Focus only on the longer term trends and these don’t come around every week.
There’s no connection between how often you trade, and how much money you’ll make.

3. Don’t Diversify Your Trading

Most Forex traders are generally investing small amounts of money - and diversifying simply dilutes gains, you wont make much if you don’t risk much.

If you see a trade and it looks good, then risk as much as you can.

4. Have courage

You hear a lot about how important risk control is in any Forex trading strategy - but having the courage and conviction to accept profits is just as important.

Do you really need courage to accept profits? Of course you do!

When a trader makes a profit they get excited – and the bigger the profit becomes, the more they’re tempted to bank it before it gets away, but this is a huge mistake.

As volatility causes dips in their open equity, the trader snatches a marginal profit.

In many cases however, if the trader had the courage to hold the trade for the longer term they could have made a huge profit.

Many traders lose - not because they were wrong in the direction of the market - they just were stopped out by a volatile counter move or simply banked early.

5. Money Management

Taking risks does not mean being rash - here are some Forex trading money management tips to keep in mind:

• Keep your stop in its original position - until the move is well underway and in profit, before moving your stop.

• If you’re trading a small Forex account, don’t diversify - concentrate on one trade only.

• If you are following the longer-term trends, don’t exit a trade until your Forex signals tell you to do so. Have the patience and discipline to hold on for the longer term.

To make big profits in currency trading, you only want to focus on the best moves.

Don’t be tempted to diversify too much - have the courage to hold on for the longer term big profits.

Also understand and use money management techniques that will control risk - and at the same time, take into account the volatility that currency trading presents.

Currency trading involves risk - and you need to confront it and win and the above tips will help you do just that when you trade FX markets.

If you look at any Forex chart, you’ll see repetitive price trends. If you use technical analysis to act on these trends in your Forex trading strategy, turn them into big profits, if you do it the right way.

There are many misconceptions about using Forex charts and technical indicators - here we’ll provide some tips on using technical analysis for bigger profits from your forex trading.

Technical Analysis Defined.

Technical analysis is simply the study of price action to identify trends, in various time frames.

FOREX chart patterns repeat themselves because human nature repeats itself and remains constant in currency trading and ALL markets. Many traders think that simply studying Forex charts won’t work - because it doesn’t take into account the supply and demand situation or the fundamentals.

However it does work because: it does actually work.

Market Perception (human perception) + Fundamentals (supply & demand) = Price

Price action reflects all the fundamentals that are known - and more importantly, how the participants who determine price see them.

In today’s world of instant communications, the fundamentals show up in price action in seconds - so technical analysis simply assumes that all known fundamentals are discounted in the price. Some of the largest price moves in history have occurred with little or no change in the fundamentals.

These price moves were caused by human psychology with emotions to the Currency technical analysis is able to study this.

This gives you a huge advantage i your forex trading – when you accept that ultimately, it’s participants determine value.

The right price is of course the market price - so you see the reality, rather than listening to the opinions of others or letting your emotions get in the way.

Technical analysis of forex markets or any market assumes the following:

1. Markets Discount

All fundamentals show up quickly in the price. You are therefore seeing the impact of the fundamentals in the price action.

2. Trends Persist

In currency trading, you get great trends. Simply look at any currency chart and you’ll see long-term trends – lasting weeks, months or years.

History Repeats Itself

The basis of currency technical analysis is that what has happened in the past will happen again - as human psychology never changes ie our nature is constant.

As chart patterns reflect shifts in human psychology, certain patterns and trends will repeat.

Keep in mind that charting is an art.

While human behavior does repeat itself, humans can be unpredictable as well - so you’re trading the odds NOT a scientific theory.

The good news is that by using technical analysis of currencies, you can get the odds in your favor and win longer term.

Now, lets look at some tips on using technical analysis:

1. Longer term trends

Currencies tend to reflect the underlying health of the economy.

This creates longer-term trends that last for months or even years, by focusing on the these trends, you have the best odds and the best profit potential.

2. Use a simple system

If you want to develop an effective Forex trading system, keep it simple - support and resistance, and a few confirming indicators can make big gains.

In online currency trading, it’s a fact that simple systems work best.

Why?

There are fewer elements to break, in the real and brutal world of FX trading.

3. Isolate Yourself

This is a key factor that needs to be learned in ANY Forex trading education.

Don’t be influenced by the opinions of others, or the news!

You’ll hear convincing stories, but that’s NOT going to make you money, journalists are not traders!

If you follow the news, or let your emotions get involved then you will join the 90% of losing traders.

4. Be disciplined

Don’t trade all the time or for the sake of trading.

Only trade when your currency trading system generates trading signals, then follow the trade with discipline.

A Simple way to make Big Online Profits

Using Forex charts, the right way can make you a lot of money - as they represent the most time efficient and powerful way for any trader to get the odds on their side and win big in online forex trading.

The Foreign Exchange or Forex market as it is more commonly known is purely to allow people to trade one currency for another. In fact this is by far the largest trading market in the world for the value of the cash that passes from buyers and sellers of currencies. Many of the trades which take place on the Forex market occur between large banks, central banks, multinational corporations, Governments, currency speculators as well as all other types of financial institutions and markets.

Currently, the trades occurring in Forex markets across the globe is well more than $1.9 trillion each day on average. However, the individual or retail traders make up only a small part of this market, and they often trade through a third party such as a Forex broker or a bank. This means the market mostly includes sophisticated traders who know what they are doing.

In fact, when some individual investors begin trading in the Forex market it can all seem a bit daunting. The learning curve can be steep if you cannot master the fundamentals, and you can easily lose more money than you can afford if you are not careful. However, some people can learn fast and they can master the basics of the market quickly. If you are not one of the fast learners, you may have beginners luck and your first few trades can make you money. But you should not depend on luck to survive for more than your first few trades. You need a solid foundation to recoup your capital and make a decent income from your trades.

There are many financial instruments which you can use for trading on the currency market. These include forwards and futures, options and spread betting. All of which are similar to those used in equity markets. However, as these instruments maintain a minimum trade size to the base currencies, a margin is included with each trading account.

Volatility is the essence of the currency market. Values for individual currencies rise and fall with news and information happening around the world. Sometimes the fall in a currency can be swift and can help to wipe out your entire account before you can react. So you must prepare for risks if you decide to trade on the Forex market. The market can change suddenly all because of decisions made by some government or corporation in a distant part of the world. A terrorist attack such as that which occurred on 9/11 did not only affect the Forex market in the US but the world over.

Therefore, if you want to become a successful investor in the Forex market, you must learn the fundamentals about the market and the currencies you wish to trade. Also, read press releases and other financial and political news from around the world. You will do do well by learning how to read graphs and charts about these individual currencies, Finally, sign up for a demo account with a broker and learn how to trade without using real money.