2Bull Forex Blog

In forex trading, perceptions are that more complications are involved along with the lucrative chance to make more profits. However, experts suggest that if one is able to analyze patterns and trends in the graphic representation of forex price movements, making money becomes easier.

Forex Trading involves buying foreign currencies at a certain rate and selling it at another rate making use of the difference in exchange rates of this currency in various markets. Profit is made when the selling rate exceeds the buying rate.

In order to make profits, it is essential that the trader adopts certain scientific and non-scientific strategies such as simple moving averages, resistance and support levels etc. Along with these strategies, the trader must also be able to understand and perceive certain signals in forex price movements. These are called Forex Trading Signals.

The Forex Trading Signals are important as they are regular patterns found in price movements recorded for a certain period of time. Analysts of price movements believe that fixed patterns are always followed by the prices until a reversal in trend occurs. Therefore it is also believed that these patterns themselves indicate the possible occurrence of fall or rise in prices, reversal of trends etc.

The Forex Trading Signals are usually aimed at novices or people who do not have time to do their own analysis in forex price movements. People who perform their own analysis also like to complement their research with external trading signals.

The first step in identifying Forex Trading Signals is to plot the price movements of foreign currencies over a certain period of time using various technical indicators. These indicators and their uses are detailed here and then the signals that can be perceived from these are explained.

The more number of indicators used in plotting price movements, the more reliable the signals would be. The most widely used indicator is the Japanese candle sticks which are again of different types as follows:

* Minute-by-minute candlestick charts
* Hourly candlestick charts
* Daily candlestick charts.

A candlestick is basically the Japanese method of recording the high, low, opening and closing prices of any commodity or currency for a day drawn over a period of time. The chart looks like a candle stick and hence the name. The body of the candle is denoted in white or green if the closing price is higher than the opening price for a particular day. Else it is denoted in black or red.

Other methods adopted are the Fibonacci charts, trend lines, support and resistance levels etc.

The bullish (positive) signals that arise from the above indicators are as follows:

* Candlesticks engulfing
* Trend line breaking upwards
* Positive divergences
* Crossovers of moving averages
* Strong, close support and weak, distant resistance levels.

The negative or bearish signals are:

* Trend line breaking downwards
* Negative divergences
* Strong, close resistance levels
* Weak, distant support levels.

One has to carefully look for these Forex Trading Signals.

Forex day trading simply doesn’t work and you will never find a trader with a track record of real time profits, however more novice traders try this method than any other type of trading. This is desite the fact it will never work, because you can’t get the odds in your favor.

If you are considering day trading then you should read this article.

First let’s look at why forex day trading doesn’t work.

The time period is too short!

Volatility in short time frames is random - PERIOD

This means daily support and resistance levels are meaningless and you can never get the odds on your side longer term.

Now let’s look at the illusion of profits.

The Marketing Illusion

You have seen them the headlines promising you 100% annual profits or a regular monthly income - all for just a few hundred dollars.

Of course the reality is they profits do not exist and it’s simply clever marketing copy.

Look at the facts and you will see no substantiation whatsoever to back up the claims.

You will of course get a hypothetical track record, done in hindsight but the key word to consider here is hindsight! The person presenting the track record knows the closing prices when they do the track record.

If I knew tomorrow’s closing price today, I would be a multi millionaire but that’s not the reality of forex trading.

The people who create the illusion you can make money forex day trading can never present a long term track record of real profits – that’s real dollars made in the market by them.

Why Create The Illusion?

These people are mostly failed brokers or marketing organizations that actually have the sense not to trade the system themselves.

Why?

Because they can make a guaranteed return selling the system to naive forex traders.

Patterns that don’t repeat

Many traders look at back data and see patterns.

They think they can trade themselves but this is a bit like roulette wheel patterns - there appears to be an order but the same sequence never repeat again – its an illusion, that fools many traders and when they try and trade for real they lose their equity.

Still Not Convinced Day Trading Doesn’t Work?

Here is a simple test you can do for yourself:

Ask anyone who claims they make money day trading, to produce to you a real time track record of profits, with supporting bank statements and trades.

You won’t get one.

Day trading does not make money, apart for the vendors who sell e-books and forex day trading systems and they cheerfully let you take the losses, while they bank a fee for their services thats guaranteed.

Don’t fall into the forex day trading can make you money trap! If you do you will lose your equity quickly.