Stochastic Indicator – The Ultimate Timing Indicator For Huge Gains!

While basic chart analysis will tell you the trend, the stochastic offers something more when used as a filter, it helps you time your trades with better accuracy and greater profits.

Its real value is that at significant chart points where you are looking for a top or bottom, it will help you enter or exit your trades for greater long term profits.

For long term trader’s day traders or swing traders it’s the ultimate timing filter, in currencies or any ther market.

An Introduction

George Lane, who developed the indicator, postulated that in an upwardly-trending market, prices tend to close near their high, and in a downwardly-trending market, prices tend to close near their low.

As an upward trend takes its course, prices tend to close further away from the high, and as a downward trend develops, price tends to close away from the low.

As a timing indicator

The theory of the stochastic is based upon these are the catalyists which indicate the beginning of a trend reversal.

The stochastic indicator defined:

1. Is a momentum oscillator that can warn of strength or weakness in the market, often well ahead of turning points.

2. Is based upon the assumption that when a financial instrument is rising it tends to closer to the high than when it is falling, where it tends to close near its lows.

How the indicator is plotted

The stochastic is plotted as two lines %K, a fast line and %D, a slow line.

The %K line is more sensitive than %D

The %D line is a moving average of %K.

The %D line triggers the trading signals.

Although this sounds very complicated, it is actually very similar to the way a moving average is plotted.

Think of %K as a fast moving average and %D as a slow moving average.

Don’t worry

You don’t need to know how an internal combustion engine works to drive a car and stochastics are the same.

Their plotted on most major chart services, take a look at futuresource.com as an example and there are many others.

All you need to do is look at the set up, all the maths is done for you

The lines are plotted on a 1 to 100-scale. "Trigger" lines are normally drawn on stochastics charts at the 80% and 20% levels.

A signal is generated when the lines cross. The zones above and below these two lines are referred to as stochastic bands.

Overbought and oversold levels

The 80% value is used as an overbought signal, and the 20% is used as an oversold signal.

The Stochastic Oscillator generates signals in three main ways:

1.Extreme values

When the 20% and 80% trigger lines are crossed.

Buy when the stochastic falls below 20% and then rises above that level.

Sell when the stochastic rises above 80% and then falls below that level.

The pattern of the stochastic is also important; when it stays below 40-50% for a period and then swings above, the market is then shifting from an overbought scenario and giving a buy signal and vice versa when it stays above 50-60% level for a period of time.

Part-time Trading – Making the Most of Your Time

It seems like I am always answering the question as to whether trading can be done meaningfully on a part-time basis. My answer is always the same – “Absolutely!”

Somehow people have been convinced that you have to spend hour upon hour in front of computer watching the markets in order to have a chance at success. That is simply just not true. Part-time trading can be extremely worthwhile – in some cases even more so than trading more actively. I am proof of that. Even though I sometimes do have the opportunity to trade more frequently, my best trades always seem to be the ones I do on a more part-time basis – the ones that only require an occasional check of the markets.

This may sound strange coming from someone who used to be a professional analyst and really does enjoy the markets, but I really have no desire to spend all day in front of the trading screens. It’s a grind, and I have a lot of other things I enjoy doing a whole lot more than watching price quotes tick up and down. I’m sure you could say the same.

Effective part-time trading is simply a matter of maximizing the time you have available. That might be an hour a night, or maybe a couple hours on the weekend. Maybe it’s even less than that. It doesn’t matter. If you make the most of what you have, you can do good things trading part-time. Doing so is a matter of developing a method for your work and applying it consistently.

I’ll use myself as an example.

My schedule is somewhat convoluted. I travel frequently and my activities have a seasonal nature to them. There are points in the year when I have almost no time to devote to the markets. At other times I can maybe put in an hour each morning. Then there are also times when things are more open and I can be a bit more active.

Regardless of my time availability, though, I always do the same thing. I scan the charts for the markets I’m interested in trading and look for something specific. If I don’t see it, I move on to the next. If I don’t see anything good, I don’t trade. It’s as simple as that.

My available trading time will dictate which timeframe charts I look at when doing my scan. If I’m at a point where I can be more active, I’ll perhaps look at the hourly charts. If I can only check in on things once or twice a week, I’ll look to the daily and/or weekly charts to find possible trades with longer holding periods. In that way, I can choose the best timeframe for me to operate in for my schedule at that point.

What is more, I don’t ever have to trade. That’s a major advantage for part-time traders. Unlike our full-time peers who are under pressure to produce results every day, we can pick our spots and only go after trades likely to be big winners. I’ll take that relaxed approach any day!

Let’s face it. Full-time trading is a commitment most of us will either never be able to or never be willing to make. That doesn’t mean we cannot make excellent use of the markets to better our financial situation. Part-time trading can certainly provide the opportunity to do just that.

Forex Trading Pivot Points

Many traders and novices are looking to make money in Forex, however only 5% of Forex traders ever make a dime. The question then becomes what are the 5% that are making money in Forex doing that the other 95% are not.

The truth is anyone can make money in Forex as long as they educate themselves and learn how the market reacts. Trades can use key support and resistance zones for entry and exits within the market, however there is another key component that will help determine price movement and that is pivot points. Pivot points help determine where price is going as well as reversals in trends.

If one knew the range parameters used by floor traders then one may have a handle on significant areas where off floor and position traders may take over the market. Determining key support and resistance zones coupled with pivot points is essential to forecasting price movement in the Forex. Even if you are not a day trader, knowing the key pivot point, support and resistance points can help the short term trader and intermediate positional trader to identify potential entry points and stop loss levels.

Getting into a trade near key support and resistance zones is a double edged sword. Pivot points can be seen as both dangerous and a great opportunity to enter a trade. Stop orders to enter at pivot points are readily whipsawed by the local market and noise, meaning price may bounce up and down around pivot points before heading in one direction. The question then becomes how are pivot points used to determine a good entry and exit point in the market?

Pivot points can be used in two ways. The first way is for determining overall market trend: if the pivot point price is broken in an upward movement, then the market is bullish, and vice versa. Keep in mind, however, that pivot points are short-term trend indicators, useful for only one day until they need to be recalculated. The second method is to use pivot point price levels to enter and exit the markets. For example, a trader might put in a limit order to buy 100 shares if the price breaks a resistance level. Alternatively, a trader might set a stop-loss for his active trade if a support level is broken.

Calculating pivot points is not an easy task. There are some really great training courses online that will train you on how to trade using pivot points as well as calculate them for you and teach you how to use them in a real-time.

Currency Trading Success - The SIMPLE Reason Why Most Traders Lose!

The reason most traders lose and never achieve currency trading success is often seen as a lack of discipline, however this is not the major reason, it’s only a minor part of the problem.

The major reason is a lack of “concentrated focus”, this takes some explaining (as most traders are unaware of it) so let’s look at it in more detail.

What is concentrated focus?

If you want to achieve currency trading success you need “concentrated focus” and this means focusing on how and why markets really work and what you have to do to win.

Most traders simply don’t do this and lose.

Let’s look at what it involves and how if you apply it, you can achieve currency trading success.

1. Work smart not hard

In many industries to achieve success the more you put in the more you get out in terms of rewards, this is not true in currency trading.

What you need to learn is that to achieve currency trading success involves working smart, not hard and using a simple system that should take very little time to apply for profit.

You can achieve currency trading success in under an hour a day and make triple digit annual gains! Simplicity is the key to achieving currency trading success.

To repeat work smart not hard, don’t create work for yourself!

2. Trade with probability

Today, there is a huge industry that tells us predictive theories work and you can pick market bottoms and tops with scientific accuracy – no you can’t, so don’t try!

The other big myth is day trading.

You can try as hard as you want but the odds are not in your favour in day trading, as you will never have enough profits (or big enough profits) to cover your inevitable losses.

You need to trade longer term – this is where the probability of success is highest and the ONLY Way you will achieve currency trading success.

The lesson here is don’t spent time with theories that will never make you money they may be clever and cute but you wont make money.

3. Ego problems

This is a major problem and traders who have ego’s get killed.

The problem is, many traders think their smarter or bigger than the market and can impose their will on it and make money by being clever.

Of course, the reality is, the market is always right and only you can be wrong.

Many trades can’t accept this and the harder they try to beat the market by being clever the more they lose.

A trader with an ego or who thinks their smart will never achieve currency trading success.

4. Cut losses but also accept huge gains

This is a well known phrase and it’s true.

The easy part is cutting losses (simply set your stop before you enter your trade) the harder part is running your profits and this is why the majority of traders never achieve currency trading success.

No matter how hard they try they can never hold a profit. They either get stopped out or bank a profit early.

The ONLY way you will achieve big profits is by focusing on the long term and not the short term swings of equity against you.

It’s hard to sit on a profit for months or years but that’s what you have to do. Most traders can’t do this. They move stops too quickly or snatch profits.

If you want to achieve currency trading success you can’t bank early – You need to hold and focus on the long term.

Pattern of Continuation: Bullish Flag

Bullish Flag is occurred when market moves upward followed by a pause or sideways to lower trading for a few price bars/candlesticks, then market continues to move upward. The flag is usually too short in duration to actually have reaction highs and lows, the price action just needs to be contained within two parallel trend lines.

Draw bullish trend line on chart. It is located just before the flag pattern. Then identify the long candlestick which is similar to a pole. Usually market price moves higher and creates at least the same length as pole’s length.

When market price reach the same lenght as pole's (after flag pattern) then it is the right time for us to exit from market.

Some forex book might recommend you to use this pattern to determine buy signals. But I don't. Since this technique is not that accurate. But this technique helps a lot when I already have open position.

That means when I buy a certain pair and I found Bullish Flag pattern, I’ll hold the order to exit after market price creates the same length with the pole’s length.

Click here to read more about this article and see some examples related to the topic.

Forex Software Packages

If you plan to start trading FOREX online you will of course be using a software system. This system will make it easy for you to get information quickly about market prices and make trades. There are two types of FOREX software available, client based and web based.

As the FOREX market is a fast moving market and you will need up to the minute information to make informed transactions, it is up to you to see you have a high speed internet connection. Dial up internet access will absolutely not work for this. Another consideration could be the location of the servers used by your broker. If your broker's servers are located quite a distance from you, say in another country, this could potentially slow down your transmissions. If you plan to trade online you will need a modern computer and high speed internet connection.

The next consideration would be which type of software, client based or web based? Web based software is housed on your brokers website. You will not have to install any software on your own computer. A web based software program will allow you to log in from any computer that has an internet connection. A client based software program, or one that you download into your own computer will limit you to transactions only on the computer it is downloaded on. Web based software programs are preferred by most brokers who think they are more safe and reliable. Web based software tends to be less vulnerable to attack from viruses and hackers during transmissions than client based software.

Any FOREX software should offer you real-time quotes and offer means to quickly enter and exit the market. These are minimal requirements of any trading software. Upgraded software packages are usually offered at an extra monthly fee by brokers.

Generally brokers will have client information housed on two severs kept in two different locations. This is to guarantee client data is kept as safe as possible. If there is a power failure or a problem with one server the data is sent back and forth from the second secure server and you will not notice an interruption. Regular back ups of these servers is another way that brokers keep financial data safe in case of server failure.

Planning For Contingencies

No one likes to think about the worst-case scenario, or to make a detailed plan to recover should it happen. It's just one strategy for learning how to trade in a relaxed but focused way so that, should you ever face a severe financial setback, you can recover from it. Trading requires intense concentration and focus, and it's difficult to maintain this posture when the pressure is on you to perform. Therefore, you have to do whatever you can to minimize any expected or even unexpected psychological pressure.

The most obvious way to relieve such pressure is to think in terms of probabilities and carefully manage risk. By that I mean avoid overtrading, fast markets, exceptional tick size—be careful just ahead of reports that might drastically affect price movement. Avoid illiquid markets, avoid adding new risk when it appears a trend or swing may be nearing its end. It's useful to remember that you may not win on any single trade, but after a series of trades, you will have enough winners to make a profit in the long run. It's also important to manage your risk. Determine your risk up-front and risk only a small amount of trading capital on a single trade. Doing that will ease a lot of the pressure, allowing you to be more open to see the opportunities that the market offers. Don't break under the pressure of a potentially fatal loss. Think about the possibility, and be ready to recover from it.

These days planning for contingencies must of necessity include short-term planning. Because the markets have changed so considerably in recent years from what they were many years ago, contingency planning has to include trading simple methods and scalping-type setups. We are in an era of thousands of traders jumping in and out of markets using extremely short time frames. Such trading has introduced an incredible amount of noise into the marketplace. No longer can the industry claim that speculators are there primarily for the purpose of providing liquidity to the market. I have to wonder why it is not plainly stated that trading from a 1-minute chart is simply gambling? In what manner can it be said that jumping into the market one minute and out of the market 3 minutes later is in any way providing liquidity for the hedger, whose sole purpose is the long-term protection of his position?

Short-term noise is a contingency that must be planned for. Erratic, jerky moves caused by scalping must be planned for. This includes having your own plan for making scalping trades if those suit your personality and comfort level.

Plan for sudden drastic moves in the market caused by stop-running. Increasingly, and especially in the stock market, I am seeing more and more of the sudden and unexpected price melt-down, or equally sudden and unexpected price explosion. You have to learn how to protect yourself from such moves, and you might even learn how to profit from such moves.

Part-time Trading – The Best Paying Side Job You Could Have

I’m going to tell you a little story.

In March of this year I was looking at the markets, reviewing the price charts to see if there was anything worth trading. In this particular instance it was the foreign exchange (forex) market I was scanning and I did come across an interesting development.

You see, the Euro was setting up to making what looked to be a big break higher against the Dollar. Based on my analysis, which took all of about two minutes, I saw a pattern forming which told me to prepare for an uptrend. Now I don’t want to imply that in two minutes I found a great trade. It probably took me 30 minutes to go through all the charts that day. Oh, and since I actually wrote up the analysis of the trading strategy for my report subscribers, you can add on maybe another 30 minutes. That makes an hour.

The strategy I devised that day had me buying the Euro against the Dollar at about $1.21 (meaning each Euro was worth $1.21). That was mid-March. About two months later I exited the position at around $1.28. If you are familiar with forex trading, you will know that’s a nice profit. If you don’t have forex experience, let me explain.

Let’s say that I bought 100,000 Euros against the Dollar. That’s a position size of about $121,000. Because forex is a leverage market, I would only need a margin deposit of maybe $2500 to put on that trade – potentially less. At the time I exited the trade, the 100,000 Euros had increased in value to approximately $128,000. That’s a gain of $7000, which is not a bad return at all on the initial $2500 deposit.

Now let’s say I checked on the trade once per day during the time I held it. That’s about eight weeks, which is forty trading days. If I spent five minutes each day looking at that trade - which is probably quite a generous figure – then I accumulated 200 minutes of trade monitoring time. Add that to the sixty minutes I used identifying the trade and creating a strategy and you have 260 minutes. Rounding that up, we’ll call it 4 1/2 hours.

So if I had put on a 100,000 Euro position I would have spent 4 1/2 hours to make $7000 - more than $1500 per hour. That’s one heck of a part-time job!

This story isn’t about telling you how great a trader I am. Rather, the point is that I was able to make those kinds of profits in the market without having to spend hour upon hour in front of the computer screen watching the charts and trying to interpret news events. This is something you can do as well.

Let’s face it. There are a heck of a lot more people who trade part-time than full-time. The day traders, though, account for more of the noise and they have a great many people convinced that one has to be dedicated heart and soul to the markets to make good returns. That just simply isn’t true

Swing Trading Systems

Swing trading systems capitalize on the oscillations experienced in the stock prices. In this style of trading, the returns on a stock can be gained in few days or within a week or two. Traders employing this style can leverage on the short term stock movements without fearing any stiff competition from the big players in the market. Swing trading systems are best suited for the at-home or part time traders. These traders do not have enough time for constantly monitoring the stock prices like the day traders. They can only afford to watch over the market progress once in a day or week. They have to rely on the services of broker firms, who notify them about the price changes using email alerts and newsletters.

Large trading firms or agencies cannot trade their stocks at a rapid pace, owing to the bulk size of the holdings. They therefore do not adopt swing trading systems as their mainstay. Instead they utilize the trading system occasionally to earn small amounts of profit. Day traders also shy away from this style of trading because of their tendency of not holding onto a stock for more than a day. They trade their stocks within minutes or hours. The part time traders and the newcomers in the market mostly prefer swing-trading systems. The low risks and quick returns form an attractive combination for these traders.

Swing trading systems are best employed in a stable market. Here, the stock prices show a general pattern of variation, most of which can be predicted. Often these small variations are ignored by the day trader and the long term investors. A swing trader on the other hand sees loads of opportunities. He/she trades on stocks having minor fluctuations. In case of a bullish or bearish market, the stock prices tend to move in a single direction- either up or down. They do not fluctuate. Swing trading systems therefore cannot be employed in such markets. In the stable market, the best bet for the swing trader is the blue-chip stocks. These are the stocks that are actively traded in most exchanges. Stocks of big companies normally show major variations, which translate into greater profits for the swing trader.

Developing the "Holy Grail" Trading System

Before I get myself into trouble, let me point out that there is no "Holy Grail" trading system in the world - not yet anyway. If there is, please let me know. I don't mind paying a thousand bucks for it. However, a trading system close to the "Holy Grail" is indeed possible and I'll show you how to develop it.

But before we come to that, here's what we all know. Forex is the biggest financial market in the world, with its daily volume of transactions dwarfing the US stock markets by 10 to 1. Its sheer size also makes it the best market to trade in terms of (1) high liquidity - Forex trades are almost always instantly executed, thus minimizing slippage; and (2) open and fair - it is impossible for one to control or manipulate the market for any length of time, rendering "insider trading" impossible to carry out.

What moves Forex? Conventional thinking would imply economic fundamentals or factors such as the strength of a country's economy, which contributes to currency flows. Therefore, one would assume that everyone else would buy the US dollar against the British pound. Why not? The US economy is the largest in the world while that of Great Britain has fallen to fifth, behind the US, Japan, Germany and China.

The theory of "the bigger the economy is, the more attractive its currency will be" may be true but in reality, the sterling has advanced more against the dollar. Why is this so?

Let's dissect the market by taking a look at the players in the currency market. They are the financial institutions, commercial banks, insurance firms, pension funds, hedge funds, small funds, international businesses, private investors, retail traders and not forgetting, individuals. Each plays a part in determining the movement of a currency. We can divide them into two categories - "commercial" and "non-commercial".

An Introduction To Online Forex Trading

The concept of Foreign Exchange (FOREX) Trading has existed for centuries. Even before the emergence of the Internet, the method of trading was used. With the conception of Internet technology, one has a faster and more efficient method of trading. It allows traders to engage in transactions across the world anytime of the day as long as the market hours are open.

A basic consideration is the security measure that the company applies to their site. Things as simple as encryption should be available in the site you are trading on. With possibly millions of dollars changing hands in each transaction, you want to have some sort of assurance that the money you trade will be sent to the intended receiver. With many different attack methods emerging over the web everyday, you can never be too careful.

When looking for trading sites online, it is best to test out the capabilities of the site before register for membership. Most the different FOREX trading sites allow you a trial run before you make any commitments to employ their services. Different sites offer different services.

A basic service for your site is receiving the rates for each currency everyday. Without proper information on the rate, you can never make an intelligent decision for your trade. You also want it to give you access to different traders worldwide. A luxury would be to have some sort of analysis tool or analytical report on the behavior of the currency you are trading in.

Energies Update – Breakout & a Huge Gain! More To Come

If you have followed our reports in crude and unleaded gas you will have taken this trade and made a huge profit already.

Here we will show you how to protect this profit, bank it when the time comes and look at another trade that has even bigger profit potential!

So lets look a crude and unleaded gas and how to maximise what you have.

Unleaded Gasoline

Unleaded gas is the leader of the pack and has punched its way out to new highs and crude is lagging but in firm up trend

Rule Of trading!

Breakouts either accelerate quickly or quickly fall away. This one has moved strongly away from the breakout point and odds favour continuation of the trend. To lock in profit put stop below Wednesday’s low

Another feature of these markets is traders like to buy them into the weekend, which could help the breakout even more

Now simply sit back and enjoy the ride

Note: Many traders did not catch the break to the upside they simply got nervous as market tried to breakout but stochastics supported the move and that’s why we have stayed in.

Any traders who have bought this breakout for fresh positions stop remains same

Natural Gas

Looks very weak and is factoring all the good news possible. Were fighting to hold lows but long term this contract is out and out bullish see our other articles on this for reasons why

When it does break 100% gains can be made or more in the next 6 months.

Online Futures Trading Brokers

The World Wide Web is filled with hundreds of online futures trading brokers who offer services to hedgers and speculators wishing to play the futures markets. To access these brokerages and have round-the-clock information at your fingertips, it is necessary to make sure that your computer has the right configuration in order to run the trading platforms that you will have to use in order to trade in futures.

The services vary depending upon the investor’s depth of knowledge and support he requires, as well. Most have a quiz that you can take in order for them to judge your level of knowledge and recommend the type of account or trading platform you should opt for. When choosing a trading platform, you will be asked about your trading experience, frequency of trades, estimated monthly volume of contracts, type of trade – either electronic futures or pit-traded futures -- and the amount of risk capital as well. The platforms that usually run on Java Applets will provide information such as single and multiple account trading functionalities, accessibility to multiple markets, and updated analysis on the markets. They will also have information from a number of stock exchanges incorporated into the platform.

If you wish to deal with pit-traded futures rather than electronic, another trading platform will be made available to you which will allow you direct access to your representative on the floor of the stock exchange.

All these services come along with the option of having a broker give you advice on the buying and selling of futures as well. You can choose the broker by filling out questionnaires available on the site. This will allow you to choose the broker you feel would fit your profile and understand your demands perfectly.

Thus, with the right amount of capital and knowledge of the futures market, plus the right brokerage, you will be able to turn in profits with just the click of a button!

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Copper - Makes Big Profits As Predicted! Now Use This Method In ANY Market for Big Profits!

Last week in our hot commodities we picked the commodity we thought would be great long term hold and copper as we thought has made great gains.

How do you take advantage of opportunities such as this one? Here we will outline how to take advantage of the commodity boom with a simple system.

The global boom in commodities

Global economic expansion is fuelling price rises in many commodities and copper is a great market to trade with huge increases in the new millennium already, with more to come.

Global economic expansion will keep prices firm

This increase has been fuelled by the emerging super economic powers of China and India as they compete with established industrialized nations such as the USA for raw commodities.

Trading the move

The first place to look for opportunities is on the weekly charts these give you the longer term trend and then move to the daily chart for timing.

The best way to get into the market is to identify chart support and use Bollinger bands for price targets and support and use stochastic momentum to time entry.

Once support had been established we waited to key off it and looked for upside momentum and it is here the stochastic indicator helps - it gets you in as the market gathers strength.

NEVER: Trade into weakness on the “hope” support will hold, always look for strength coming off the level you have targeted.