Tag: ADX

Currency Swing Trading For Success

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If you are new to forex trading the best way to get started is swing trading – its simple to learn requires very little discipline and can soon be making you huge profits. Let’s look at currency swing trading in more detail.

The Objective

Is to capture moves which will typically last between a couple of days and around a week and will trade short term moves within support and resistance levels – normally from overbought or oversold levels.

Why It Does Not Require Much Discipline

Most traders fail because of lack of discipline. They can’t run big profits and trend follow because it takes tremendous patience to wait for the right opportunities and great willpower to hold long term trends if open equity dips.

In forex swing trading, you get a lot of trades and you know if you are right or wrong quickly, it therefore is ideal for novice traders.

Building a Swing Trading System in 2 Simple Steps

If you are learning currency trading and a trading system regardless of time period you need to incorporate two facets into it

1.Support and resistance

You need to look and find areas of support and resistance where prices are likely to hold or break and then move to market timing to confirm the move on your forex chart.

2.Confirmation

If you simply try and swing trade into a level of support and resistance without some indication it will hold you are effectively hoping or guessing and you will lose.

Traders who predict on forex charts lose – it’s as simple as that.

You need to act on confirmation and here you need to incorporate momentum oscillators into your forex technical analysis – if you don’t know what they are, its time to learn. Good ones to start with are the stochastic, RSI, ADX and MACD. These are plotted on most good forex chart services and are visual ( you don’t need to know the calculation) and you will soon be spotting the correct set ups.

They will allow you to check changes in price momentum and indicate whether support or resistance will hold or break. We have discussed these fully in our other articles so look them up.

Once you have confirmation you can execute your trading signal

A few other points you need to keep in mind when currency swing trading are:

Always take your profit early – before the next support or resistance level is hit as prices can soon turn around and wipe out your open profit.

Also you can trade breakouts – this is where levels of support or resistance break and prices go to new lows or highs. It’s a fact that breakout trades offer some of the best risk to reward trades you are going to get and if you catch them you can enjoy currency trading success.

With stops place it straightaway as you enter the market and don’t exit on a stop exit on a profit taking signal.

You can learn to swing trade and put together a robust simple swing trading system in a few weeks and soon be making some great FX profits.

Currency swing trading as we have said is – simple and easy to learn and can be very profitable, so try it and you will soon be getting some great trades and great profits.

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For free 2 x trading Pdf’s with 90 of pages of essential info and more on Currency Swing Trading visit our website at: http://www.learncurrencytradingonline.com

Power Of Bollinger Bands Strategies In Forex Trading

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Bollinger bands are good when the market is not trending but can give an early indication of emerging trends. many times we just have Bollinger Bands on our trading charts even if we are not using these for our primary source of trading signals.

Bollinger bands can provide some good winning signals if used with other indicators/oscillators like Stochastic. let’s see how to work with these combinations and what we should look for.

Its always advisable to keep a track of the changing volatility and that’s what Bollinger bands indicate. The change in the volatility may indicate some major moves or breakouts and in such cases it is always better to be prepared to enter the market before it is too late.

What we need to look for in Bollinger bands is as follows:

1) Are the bands widening?: Widening of the Bollinger bands indicate that the market volatility in increasing. This indicates possibilities of further move in the ongoing direction. But before we take a position we should have confirmation of the current direction.

2) Are the bands tightening?: tightening of Bollinger bands indicate that the volatility is decreasing in the market. Is it the silence before the storm and is a major breakout on the way? If a major breakout is on the way then we need to check the possible direction of the breakout.

1-a) Bullish widening Bollinger Bands:

– The bands are widening with the upper band moving sharply upwards and the lower and moving sharply downwards.
– The price-action is moving upwards above the middle band.
– The recent candle sticks are longer than the previous candlesticks

Action:
– Check if RSI (Relative Strength Index) is in the range of 30 to 50 and rising.
– You may also check if ADX is rising towards 25 and/or beyond 25 and +DI line is crossing -DI line.
– Also check if Slow Stochastic is crossing the stochastic signal line upwards.
– With all the above taking place, we can expect a further upward movement. It will better to wait for 2 or 3 more candles to confirm the trend and then take a long (buy) position. There is always a possibility that before a further upward move, a downward correction may take place. The wait of 2 or 3 candles may help in increasing our profits if we can take a position during that correction and market moves as we expected. In case the market does not behave the way we expected and moves opposite, this wait will help in reducing the loss.

If ADX does not move above 25 then the upward move may be limited and hence the profit taking will be limited

1-b) Bearish widening Bollinger Bands:

– The bands are widening with the upper band moving sharply upwards and the lower and moving sharply downwards.
– The price-action is moving downwards below the middle band.
– The recent candle sticks are longer than the previous candlesticks.

Action:
– Check if RSI (Relative Strength Index) is in the range of 55 to 75 and is falling.
– You may also check if ADX is rising towards 25/beyond 25 and -DI line crossing +DI line.
– Check if Slow Stochastic is crossing the signal line downwards.
– With all the above taking place, we can expect a further downward move. It will be safer and hence better to wait for 2 or 3 more candles for confirmation of the trend before taking a short position. It also happens that before a further downward move there may be some upward correction and to wait for 2 or 3 candles may help in increasing the profits or reducing the losses if we can enter during the correction, as mentioned in point 1-a.

If ADX does not move above 25 (market not trending) then the downward move may be short-lived and hence the profit taking will be also be limited.

2-a) Bullish tightening Bollinger bands:

The pattern happens with a prolonged sideways move with less volatility (short candlesticks)

– Check if there are minimum 2 continuous bullish candlesticks (green) which are longer than previous 2 to 3 candlesticks.
– Check if Relative Strength Index (RSI) is in the range of 30 to 50 and rising.
– You may also check if ADX is rising towards 25/beyond 25 and +DI crossing -DI.
– Check if Slow Stochastic is crossing the signal line upwards.
– If all above are taking place then we can expect an upward breakout. It will be safer and hence better to wait for 2 or 3 more candles for confirmation before taking a buy position with a red candle.

If ADX does not move above 25 (market not trending) then the upward move may be short-lived and hence the profit taking will also be limited

2-b) Bearish tightening Bollinger bands:

The pattern happens with an extended sideways move and also with volatility being less (short candlesticks).

– Check if there are minimum 2 continuous bearish candlesticks (red) which are longer than previous 2 to 3 candlesticks.
– Check if Relative Strength Index (RSI) is in the range of 40 to 60 and falling.
– You may also check if ADX is rising towards 25/beyond 25 and -DI crossing +DI.
– Check if Slow Stochastic is crossing the signal line downwards.
– If all above are taking place then we can expect a downward breakout. It will be safer and hence better to wait for 2 or 3 more candles for confirmation before taking a sell position with a red candle.

If ADX does not move above 25 then the upward move may be limited and hence the profit taking will be limited.

3-a) Continuation of uptrend after correction

During an ongoing uptrend the price may reverse to the middle band or even towards the lower band.
– Check if Relative Strength Index (RSI) is in the range of 30 to 50 and rising.
– We can also take a note of ADX to see if the ADX is above 25 and +DI line is over -DI line.
– Check if Slow Stochastic is over the signal which indicates a bullish configuration.
– With all the above we can expect the continuation of the ongoing uptrend. It is safer and better to wait for 2 or 3 more candles to have a confirmation that the recent opposite move was just a correction and then take a buy position

3-b) Continuation of downtrend after correction

During an ongoing downtrend the price may reverse to the middle band or even towards the upper band.

– Check if Relative Strength Index (RSI) is in the range of 55 to 75 and falling.
– We can also take a note of ADX to see if the ADX is above 25 and -DI line is above +DI line.
– Check if Slow Stochastic is below the signal line which indicates a bearish configuration.
– With all the above we can expect the continuation of the ongoing downtrend. It is safer and better to wait for 2 or 3 more candles to have a confirmation that the recent move in opposite direction was just a correction before taking a short position.

Have a good trading.

Ideas In Order To Create A Money-making Swing Trading Tactic

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Swing trading is a very popular style used by many forex traders all over the world. Exactly what is swing trading? When relating to forex market, swing trading is the practice of buying a currency pair at low prices and selling it later when its prices have appreciated to a higher level. To effectively do this, you have to watch the performance of one currency in relation to another. This strategy is long term and requires patience. As a newcomer in the forex market, you need to develop effective swing trading strategy for you to be profitable in the long term. Below are 4 guides to help you develop profitable strategies.

1. Make use of fundamental and technical analysis

At any time, analysis of your trading strategy is very important. To achieve success using the swing trading strategies, you must utilize both technical and fundamental analysis. You use just one of the analyses. Nevertheless, the majority of prosperous investor utilizes both the analyses together. Again, you will find that technical analysis is commonly used for swing trading strategy because it provide better entry and exit points. Unlike the fundamental analysis, technical analysis uses real market figures hence the chance of providing better results are great.

2. Watch the price curves closely

To achieve success along with swing trading strategy, you have to maintain a close watch at the price curves. The reason being price curves are very significant at indicating changes in prices, even by little margins. You dont need to be a real professional to accurately watch price curves. You only need to make use of your common sense to buy at low price and sell at high prices. However, you should watch out for signs of reversals and continuations.

3. Swing trading patterns

Trading patterns are extremely substantial to achieve success with swing trading strategy. To become a prosperous swing trader, you have to use trading patterns which will provide precise entry and close price. Again, the continuation patterns you use must confirm you are trading in the right side of the market. Or else you’ll just make deficits. It is worth spending more time to do pattern research.

4. Use momentum indicators to analyse the market

There are many momentum indicators you can use to see how the market is overbought. Some of the best momentum indicators include the RSI, MACD, stochastic and ADX indicators among others. All momentum indicators are very easy to learn and use since they are visual. If an indicator is overbought, choose a level of resistance slightly above the price. A momentum indicator that turns down signals an overbought market. Have patience and await greater odds to be successful.

In conclusion

To achieve success as well as make profits with swing trading, you have to place all of the 5 factors talked about in practice. If you’re a newbie, join the foreign exchange market open-minded prepared to learn each time. You’ll find it difficult to make profits should you not make use best strategies. Once again; you dont have to trade everyday for you to make more profits with forex market. Making money with forex market isn’t merely about buying and selling on the same day. Sticking to your swing trading strategy is the right way to make money with forex trade.

Forex Trading Signals Revealed – Trend Spotting To Make Money In Currency Trading

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Forex trading signals and learning how to interpret them are the key to the success of any trader that is making money in the forex market. Learning the ins and outs of trading trends takes a lot of time, but you don’t have to be an expert at it to be successful.

A more accomplished forex trader will spot the trend just as it begins and will see the slowing down and get out just as it is ready to decline. You don’t have to be that good, you can get in once the trend is under way and get out just after it starts to decline and still make money. You just have to be able to recognize which way it is going.

Some of the common forex indicators used in may forex trend systems that successful currency traders will use are the MACD and moving averages. When effectively used as crossover indicators, you will have the ability to recognize significant trends that will of course lead to profits.

When analyzing a short term trend against a long term trend, i.e. an EMA (5) crossing an EMA (20), you will see a positive trend developing that you should take advantage of. The same is true of a MACD crossover.

Another powerful forex indicator designed for trading trends is the TRIX or Triple Exponential Moving Average oscillator. The indicator will keep you in trends that are shorter or equal to the window period. While observing a recent day of trading, we noticed a TRIX (15,9) moving upwards on the 4 hour chart of the GPB/USD pairing. The result of this trend was actually a 100 point rise by the end of the day. If you had the experience to spot this trend, you would have made a killing!

While these are but two of the forex trend systems that you can use that you can use to generate good forex trading signals, there are many more models that are very successful. Examples of these are indicators like the Supertrend and the ADX.

The Supertrend is extremely effective as its’ sole design was to pinpoint trends in the currency market. You can only imagine by it’s name how successful this has been. If you are using the ADX, it may be a little more difficult to read the trends, but it is just as useful when you know what you are doing and define ranges of profitability. For instance, when there are crosses in the 17 to 23 levels, I know it is a go. Movement in the DI+ and the DI- will let you know which side of the market to get on.

While you will hear people preach the positives of each of these forex trading signals on their own, becoming familiar with all of them is a good idea. Look at it as arming yourself with more weapons to go into battle with. Make sure a trend spotting forex strategy is part of your arsenal. The more forex indicators that you see a positive trend in, the more likely you are in spotting a legitimate trend that you can take advantage of.

Forex Trading-complementing Strengths Of Adx And Rsi

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In this article we will see how the Average Directional Index (ADX) and Moving averages may indicate that we can take a trading position and Relative Strength Index (RSI) and MACD crossover to indicate the entry/exit point.

In Forex trading the volatility in general is quite high and the trends can change very dynamically. Uptrend to sideways move to downtrend to uptrend may take place even during one life cycle of a trade. Of course we are not talking about trades where we enter and close within hours.

Combining selected technical indicators comes in handy is such dynamically changing markets.

It is always better to combine the chosen technical indicators for the trading decisions. While we talk about combining we are not talking about selecting similar indicators to cross check on each other.

Before we take our trading decisions, we need to analyze the Trend situation:

– Is it a strong trend?
– Is the trend becoming stronger?
– Is the trend becoming weaker?
– Is the market running sideways without a clear trend
– It has been a trend but a reversal may be on the way
– A break out from the sideways movement is probable

Trend identification is one of the important starting points before taking a position.

How to identify the trend:

ADX: ADX above 25 and rising
EMA (for uptrend): The prices closing above Moving Average (say 5 to 20 periods for short term trading and 20 to 60 periods for medium term trades). So the price action is above the moving average line and we have a rising moving average line. And this shows a uptrend. ADX being the same if price action was below the MA line and if the moving average line was dropping then it would have indicated a downtrend.

Now once we identify the trend situation we need to decide on the entry and possible exit. Apart from entry we also need to think about stop-loss levels and targets for taking profit. Lets start with entry point.

As far as entry point is concerned we can use various crossover methods like cross over of MACD with signal line or shorter period SMA (simple moving average)or EMA (exponential moving average) crossover with longer period of the corresponding moving average line. But lets bring in RSI (Relative Strength Index) here. RSI indicates overbought (hence probable selling levels) and oversold (hence probable buying levels). But will overbought and oversold indications work when the trend is very strong? Well the answer would be “Not”. But if we apply RSI with the knowledge of the trend as mentioned above then we may be able to take better decisions.

So let’s see how to combine technical indicators. We are talking about combining the indicators which we have mentioned above i.e. ADX, Moving Averages and RSI.

Lets consider the following scenarios:

– Strong trend
– Trend becoming stronger
– Trend becoming weaker
– Market is running sideways
– A reversal may be on the way
– A break out from the sideways movement is probable

1) Strong trend:

ADX is above 30 and rising further. Price action is continuously over 20 periods EMA and EMA line is rising.

The above indicates a strong uptrend. We can not wait for oversold and overbought signals from oscillators such as RSI in strong trends as the price can be in overbought area for long in strong uptrend and vice versa. So how to go about entering the market in such situation?

1) Entry: Buy when RSI (Relative Strength Index) goes to the range of 68/71.

2) Exit: Exit the buy position i.e. take profit when ADX stops rising and/or RSI drops below 50 and/or price action closes below the 20 days EMA. The take-profit targets mentioned are indicative as the exit depends on market situation/volatility and the decisions need to be dynamic. In strong trends it is advisable to use trailing stop-losses and rising take-profit levels.

3) Stop-Loss: As mentioned above its is better to use trailing stop-losses. Stop-losses levels even with trailing levels would depend upon the volatility. if the price movement is quite volatile then the stop-loss margins would be wide. We may decide to put a stop loss a few pips below the previous candle’s low. We can also use SAR (stop and reverse) indicator to indicate the stop-loss levels. As mentioned if the market is very volatile then the stop-loss margin has to be more otherwise even if upward movement continues, the narrow stop-loss margin may close the position with a loss. .

2) Trend getting stronger:
(lets consider an uptrend)

ADX is above 25 and rising. Price is closing over 20 periods EMA and EMA line is rising. This gives an indication that its an uptrend and the trend may become stronger.

1) Entry: Buy when RSI (Relative Strength Index) goes below 50 mark.

2) Exit: Exit or take profit when ADX stops rising and/or RSI goes below 40/42 and/or price action closes below the 14 days EMA. The take-profit targets mentioned are indicative as the exit also depends on various factors and market situation/volatility and the decisions need to be dynamic.

3) Stop-Loss orders: Use trailing stop-losses. Stop-losses would depend upon the volatility. if the price action is very volatile then the stop-loss would be wide. It could be a few pips below the previous candle’s low. As mentioned if the market is very volatile then the stop-loss margin should not be very close to the entry level otherwise even if upward movement continues, the narrow stop-loss margin can close the position with a loss, if price takes some corrective action. Stop loss could be a few pips below the previous candle’s low. As mentioned in above example we can use SAR to indicate the stop-loss levels.

3) Trend getting weaker:

ADX is above 25 but not rising. The 20-period EMA is getting flatter.

1) Entry: Buy when RSI (Relative Strength Index) goes below 50.
2) Exit: Exit or take profit price closes below 14-period EMA. The take-profit targets mentioned are indicative as the exit also depends on various factors and market situation and volatility and the decisions need to be dynamic.
3) Stop-Loss orders: Use trailing stop-losses. Stop-losses would depend upon the volatility. if the price movement is quite volatile then the stop-loss would be wide. It could be a few pips below the previous candle’s low.

In the above examples we have considered an uptrend. During the downtrend we can take short-positions when the EMA line is dropping down and price action remains below EMA, which is opposite to uptrend. ADX readings should remain same as above example because ADX reading only indicates the strength of the trend but not the direction. And we can take short-position when RSI (Relative Strength Index) moves over 50 mark.

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