2Bull Forex Blog

The first M in the technical analysis concept is known as mathematical representations which are used by forex brokers to graph the result of trend indicators that affect the forex currency as a whole. The second one is the moving averages which are helpful keys for the trader to use. They show the clients of existing trends, future trends and trends which are about to reverse. These are just two of the concepts that need to be elaborated as an aspect of forex currency. Both of these key terms have three types each.

Bar charts. This is a type of mathematical representation used by forex brokers to represent price changes. The bar may signify the time period by which changes in the market price take place. It may show transitions for each minute, each hour, each day, each week, each month and believe it or not it may even represent trends in as long as several years. Technical analysis dictates that the bar chart show distinct patterns in market prices.

Point and figure charts. This graph as drawn by forex brokers are similar to bar charts by nature of the point and figure patterns used. The only difference is the use of the Xs and Os to signify changes in price directions. As per technical analysis, the point and figure charts do not make use of time to point out actions of prices in the financial market.

Candlestick charts. This graphic representation shows more of the other aspects of the stock market. It virtually shows the opening, closing and the highs and lows as gathered for technical analysis at a particular time. It provides a more visual appreciation on the part of the forex brokers.

Simple moving average. Forex brokers use simple moving averages in order to weigh points equally under a specified period. The trader usually defines all the aspects of the price system from high, low, opening and closing points and averages the total of the four to be able to draw a line graph.

Weighted moving average. This particular technical analysis under the second M gives importance to the latest gathered data. It actually draws a curve by considering the recent prices in the market. Forex brokers give a big deal to the responsiveness of the average to important details of the prices.

Exponential moving average. Should we compare the situation in the mathematical sense, this particular type of moving average could be tackled in algebra. Forex brokers consider both old prices as well as the new prices in the market. A percentage of the recent price is usually multiplied with the average price of the last period.

These two MS of technical analysis provide better understanding of the entire forex system. It helps us see a visual representation of the real deal in the market. We can use the data plotted in the lines, bars and curves to compute for moving averages. The end result would be a deeper analysis of the pairs that we will use in the trade.

Bad moments in trading are inevitable. Whether you got blindsided by some bad news or you just lost when you were rather confident you were going to win or you just feel generally unsettled because you have too much weighing on you, there are bound to be a great many bad moments. Sometimes a day is so littered with bad moments that we call it a bad day. Either way, the longer you opt to linger in a bad moment the more damage you choose to allow it to do to your day.

You can’t help how you feel? While that is debatable, there are things you can do to change your time around quickly and lose very little time in the process. The longer you hang out in your bad trading day the longer you are making sure you aren’t moving forward.

We are all our own greatest enemy and we all have a negative self talk CD skipping around in our minds. When we start to suffer the consequences of a bad decision or a bad trading day starts to creep in, we have the option of going directly to the end game. Going to the end game often includes negative self talk in the global sense.

Telling yourself things like you are failing, listening to the criticism you received when you first decided to trade, and wondering what the point is since you just can’t do this anyway is all defeating the end game way before you ever get there. There is no point in such negative self talk. If you are interested in making sure that you are failing, this is a great way to proceed. If there is even a tiny part of you that wants to be successful then you really need to reevaluate the thoughts in your head.

No matter what we do in this life, we all need to develop coping skills. Some are healthy while others are not quite so healthy. Whatever your coping skills, develop a few that can bring you back into a reasonable mind frame if not a positive one. Some days, reasonable is the best we get. Some traders take a moment to meditate or daydream, focusing on what they want out of life first before returning to their trades. Ten minutes of playing in your mind can give you the boost you need to tell yourself that it is time to crawl back up on the horse and get on with it.

Other traders take five minutes and write it out, determining exactly what trade it was that put them in a foul mood (or the personal event or whatever trigger started the process) and then return with a more positive outlook. Others hold onto a memento because it brings them back to their own reality of what they want out of this whole deal. Whatever works for you is fine, provided it doesn’t involve self harm, self destruction, or the harm of someone else, as long as it puts you back on the right track.

Getting back on the right track can be difficult. It can seem easier to sit there in your world of self pity and self resentment. When we are miserable about something, we are often miserable to the core and changing our state of mind feels like too much effort. Is it too much effort to fabricate about $5,000 out of thin air? Traders in a depressed or pessimistic state of mind lose about (on average) $5,000 per trade made in such a state of mind. If that doesn’t help to motivate you into putting your own effort into getting yourself back on the right track, then perhaps you can find another motivator. But we all need a reason to do something risky, hard, or profitable.

Picking yourself up from a bad moment will get easier over time provided that you stick with a coping skill that works well for you. You can’t trade well when you are pessimistic. Your negative self talk is costing you a fortune. Fortunately, you are the only one who can change the things you tell yourself.

Over last few years we have witnessed historic drop in US dollar. Many currencies found themselves in a prolonged up trend, some of them reaching dizzying levels. Most notable has been Euro, which moved into all time high of over 1.6000. Canadian dollar also visited never before seen levels. Most remaining major currencies staged very impressive runs of their own. One of them was New Zealand dollar.

NZD, also known as “Kiwi” experienced perhaps the most telling rally of them all. Between 2001 and early 2008 it moved 0.4000 to 0.8200, effectively doubling in value against USD. We don’t see something like this often, certainly not among currencies of major, established economies. Very impressive.

Earlier this year USD started to regain some strength. While eventually dollar gained ground on all currencies, NZD was the first one to exhibit weakness and turn. This happened in spite of having the highest interest rates in the developed world. According to some, they were the leading reason in Kiwi’s earlier rise. By the time Reserve Bank of New Zealand cut rates for the first time in 5 years, NZD-USD had already lost 700 pips. That was in July.

Since then NZD experience continued fall. Being one of the so called “commodities currencies”, it got under pressure when raw materials prices started to fall. After that economic news from coming from Auckland went from bad to worse: rising inflation and unemployment, huge slow down in house sales, loss of consumer confidence, etc,. List can go on and on.

By the time RBNZ was cutting rates again on September 11th, New Zealand dollar fell over 1700 to just under 0.6500. In a rather surprising move, the rates were lowered by 0.50% as opposed to expected 0.25%. Much to the surprise of trading public, this action failed to cause farther drop in NZD. There was a slide lasting couple of hours followed by a sharp rebound.

Is the worst over? While economy of New Zealand has not improved, news from other countries became much worse. It appears there is a world wide economic slow down, if not all out recession. From now on, most of the central banks are expected to be cutting rates. This means, that Kiwi will likely maintain large interest rate differential, making it an attractive instrument for investors seeking above average rates.

Looks like the recent low of 0.6500, will hold for some time. On technical bases, we can expected rally from current levels to perhaps as high as 0.7500. It is very unlikely we will see a very fast, strong move, but rather measured, steady appreciation in NZD-USD, lasting perhaps 6 months or so. Incidentally, that is not going to just against US dollar, but rather broader Kiwi strength.

It must be pointed out, that very long term charts, monthly, are still pointing to lower levels . That is in a little distant future. For now we can expect good size NZD rally, lasting long enough to present decent trading opportunity. In all likely hood, it has already started.

In share market, technical indicators in the stock market are quite worthwhile. Generally, they are classified into two categories; leading and lagging indicators. The first category is supposed to lead the price action, and the second one follows the price action. In reality, all the technical indicators are the lagging indicators, as they can’t start their process until the price action has been established.

The first thing to ensure in technical indicators is to figure out the psychology of traders. You must try to point out where they are going to sell, where and when they are going to purchase and evaluate when they are interested or uninterested.

There are a large number of technical indicators that tell us when to enter and when to exist. And, if you know the process of making a right time of entry and exist, you can make huge profits. That is why technical indicators hold the vital position in the stock market.

Technical indicator is the basis of technical analysis. Technical stock Analysis is a financial market technique that claims a future forecast in the direction of security. It uses the study of the post market data, price and volume. It is most commonly used among financial professionals and traders. Technical analysis works only on the assumption of price and volume that are its two most important factors determining the future and behavior of a particular stock.

The reason why volume and price are important aspects of stock technical indicators is because they are used in confirming chart patterns and trends. Price movement with relatively high volume indicates the large price movement. Therefore, you must examine the volume, if you are looking at a large price movement. Volume and price should move with the trend. There should be direct relationship between the volume and price. Like, if prices are increasing, then volume should also be increased. And, again if prices are falling, volume should decrease.

To assess a sign of weakness in the trend, you must see the relationship between the volume and the price movements. If it’s deteriorating it implies a clear cut sign of downtrend.

These days the strange behavior of the stock market is giving jitters to many investors and stock brokers. The majority of people want to know what made the price to pop up or go down drastically. They are tired of trying the complex chart and graphs of upward and downward movements of the share market. In this regard, technical indicators hold much significance. Even in the volatile stock market, market analysts bank on the technical analysts to go further.

However, it is not certain that all analysis made by the technical indicators are all correct. Therefore, it is not advisable to completely rely on the advice generated by the technical indicators. Marketing sentiments must also be given equal importance together with the technical analysis of the share market.

In the end, you should not blindly go for the technical analysis guidelines. Just because technical indicators are showing bright signs should not become an obvious choice of investing in them. A careful examination and going by the marketing sentiments is quite relevant.

Trading the forex spot market has been around for a long time. However, it is only in the last few years that it has become popular and accessible for the small independent trader. Most traders are used to mainly trading stocks and some trading futures. Most of the existing books on the subject of trading are geared towards these two markets simply because these two markets have been accessible to individual traders for a much longer time. Being this the case, not a lot of education exists regarding this new and exciting trading opportunity and thus arises the question which market provides better opportunities for the active trader.

Again, and as with many other issues related to trading that I write about, there is no black and white. I think it very much depends on the type of trader you are. However, in my opinion there are four important characteristics that might make forex trading more attractive to some traders.

First and most important, you have fewer markets to look at and analyze. The US stock market alone has around 10,000 actively traded stocks! This means you can concentrate on only a few currency pairs and you do not have to jump from one stock to another waiting for that good trading opportunity.

Second, the volatility and daily ranges. For a trader volatility and large daily ranges are what brings opportunity. The most active currency pairs, or as they are referred to in the industry “the majors”, have constant reliable volatility and large daily ranges. Not every single day of course, but with enough consistency as to make this a reliable factor to base your trades / trading system on. This is different with stocks. As a stock trader you constantly have to scan for opportunity. Naturally, this prevents you from being able to constantly rely on volatility and large daily ranges.

Third, many forex brokers will almost always guarantee your stop loss and limit orders. This is a great feature. Less slippage means better fills, more profit, and fewer headaches; specially if you are a day trader!

Fourth, when you trade US listed stocks you are bound by the up-tick rule when shorting. This can be a major problem causing you to suffer slippage in most cases. Not so in the forex market. Currency traders are not restricted by the up-tick rule. This means that when wanting to short, the price you see is the price you can get (of course, depending on how good your broker’s execution of orders is).

In conclusion, it seems that forex trading has brought some opportunities that are harder to find when trading stocks. I think that the above are very important issues to consider but again: it all depends what type of trader you are. That is the basis and the starting point. For example, some people don’t mind the fact that they have to constantly scan the market for good stock trading opportunities. For them, the more stocks the more probability for an opportunity that fits their stock trading system or systems. Trying, looking, testing and analyzing. That is our job as traders!