Reflections of a Trader

I must admit I love trading. I have loved it all my life. When I was about 8 years old I learned what the stock market was, I don't remember how I first learned of it. I do remember asking my Uncle about it all the time. I suppose he may have introduced it to me. He showed me how to interpret the stock prices, that were published in the newspaper daily. No internet back then.

Apparently, I must have made an impression on him, because for my ninth birthday he bought me one share of Mead Paper Company. My first share of stock, he explained to me, that this meant that I owned a small piece of the company. That was it, a fire was lit in me that burns to this day.

My Uncle passed away in 1988, at the young age of 37. By this time I was 18, I had not talked to him in a few years about the markets. He moved around alot, and he was in failing health the last three years of his life. Back then, I thought his knowledge of the stock market was boundless. Looking back today, I realize that wasn't the case. He he did have dreams, and those dreams still live today through me. I am grateful that he took the time to pass them on.

Today, I trade E-minis and Currencies. I truly think that for some folks, this is the best job on the planet. I know it is for myself. I have'nt become Peter Lynch or Warren Buffet, heck I'm probably closer to Jimmy Buffett. One thing is still true, I am as passionate about trading today as I was 30 Years ago.

One thing has changed now though, I feel stronger about introducing others to trading, than I do about actually trading for myself. Looking back, that may have been my Uncles' passion also. Not the trading, but the sharing.

A Guide to FOREX Trading

The foreign exchange (FOREX) market is the purchase or sale of a currency against sale or purchase of another. The object in Forex is to exchange one currency for another in the expectation that the price will change so that the currency you bought will increase in value compared to the one you sold. Through Forex education and training it is possible to speculate the direction of the market and receive a good return on your investment.

The major participants in the FOREX include commercial and investment banks and central banks. Other participants include corporations, hedge funds, and millions of speculation traders like you. Some of the top banks in the world such as Bank of American, Credit Suisse, and Morgan Stanley are major players when it comes to the FOREX. In order to make money within this realm, you will be competing against all of the major banks as well as individual traders.

When beginning in the FOREX, it’s important to select a reputable broker. After all, the broker is going to be the one paying you when it’s time to cash out. A broker acts as a middle man between you and the FOREX. When you place a trade in the FOREX, your position is filled by the broker and the broker sends the order off to the banks. When it’s time to be paid, your money is with the broker and they need to be able to cover your positions in the market. Most brokers offer a 3 to 5 pip spread on all the major currencies pairs, such as the ERU/USD, GBP/USD and the USD/JPY. A 3 to 5 pip spread basically means that the FOREX must move 3 to 5 pips before your trade is in profit. One pip can be worth any amount, depending on how much money you’re willing to risk per trade.

There are two types of traders, fundamentalist and technical traders. Fundamentalist study the cause of market movement, whereas technicians study the effect. Most traders identify themselves as both a technician and fundamentalist. Most fundamentalist will have knowledge of charts, indicators and chart analysis. Similarly most technicians are aware of the fundamentals. However, the problem is that the charts and fundamentals are often in conflict one another. It’s usually a wise decision to have a bit of training in both fundamentals and technical analysis.

One of the most important factors in the FOREX is learning to manage your money. Traders will experience losses in the FOREX; therefore it is essential that a trader utilizes proper money management. In many cases money management is a simple concept, yet to practice money management consistently is very challenging. Generally speaking money management is knowing when to cut your losses. For each trade, a trader should be looking to make three times the amount they plan to lose. This way a trader only has to be right 33% of the time in order to be in profit.

Pivot Point Prophet

Pivot points have been used by floor traders for years, they are a commonly used indicator of support and resistance areas. A few years back I began to experiment with pivot points. After I got comfortable with them, I began to really like trading with them as an additional indicator.

Now pivot points are not your run of the mill indicator for market price action. This is one of the few indicators that is also used as a stand alone trading system, there are traders who have made entire careers by only trading this indicator. I do not and will not ever endorse using any one indicator as your sole indicator.

I use pivot points, along with other indicators to find areas which present low risk trades. If I am watching to make a trade on a crossover of the 5 and 10 period moving averages. I will watch for cross over just after the moving averages have moved past a pivot point. I definitely do not take a trade that has a pivot point that the price may reverse off of. I have seen plenty of trades be whipsawed (A sudden reversal of price direction) by making this error in judgement.

By using the pivot points to keep you out of whipsaw zones you can improve your odds by about 9-12% to have a profitable trade.

Their are several ways people figure the pivot points for any given day, I personally get mine from another online trader, his pivot points are the most accurate I have seen. Pivot points are a great tool for traders, I use them everyday but always remember the most important part of trading is your money management.

What is Forex?

The first forex firm appeared in 1927, in Stockholm, in a barber shop. Since then it is developed and the IT techniques are making it a global market.

In 1927, a Swedish firm has begun its activity as a currency exchange service for travelers. The society’s siege was at the Central Station in Stockholm. According to the legend, the owner of Gyllenspet’s Barber Shop in Stockholm observed that his some of his clients were tourists in need of currency for their excursions. He has the idea to save major currencies and keep it on hand.

The firm was acquired by the Swedish Railways, and then it was sold to Rolf Friberg in 1965. This firm had a unique status, being the only licensed to conduct currency exchange, apart the banks.

The family Friberg still owns the company, expanded in Denmark, Norway and Finland, having over 50 shops. Like at begin, the shops are located in train stations and airports.

The Euro apparition led to an important decrease of Forex business, and the firm opened new directions, like applying for banking license or realizing regular transactions, similar to the postal service.

The firm has a very attractive slogan: make more money for your money! What more attractive for anybody than the word money?!

The main firm’s concept is still the same: to offer travelers from all over the world the appropriate currencies at the best rates, at the lowest service charges, at any hours and from well situated locations.

Forex still have many locations all over the world, with a turnover in 2004 of more than 22 billion SEK from the branch offices in Sweden, Norway, Finland, and Denmark. It is the world’s biggest foreign exchange bureaus. The main firm’s plan is to open more subsidiaries in new locations and develop the existing ones.

Forex is also the name often used for foreign exchange; all over the world, foreign currencies is bought and sold. The currency traders are making a profit from buying and selling currencies as their value is fluctuating. This fluctuation is based on daily variability in the global market, the supply and demand in international commerce and domestic stocks.

The exchange rate between two currencies is how much one currency is worth in terms of other currency; it is called also forex rate. There is not a bigger market in the world than the foreign exchange market.

There are two currency types: direct quotation (home currency – foreign currency) and indirect quotation (foreign currency – home currency). Every one of us is daily updated with the direct and indirect quotations; if a unit currency is strengthening (appreciation, the currency becomes more valuable) or inverse (depreciation).

Usually, investors are speculating on daily currency fluctuations and this is a constant profit source; this forex business profit mechanism. There are some online forex trading, having real time prices, dealing in currencies and global equity prices. The software is allowing evaluating the exchange process and realizing it online.

The firms working online are usually commission free, with the industry’s margin requirements. The acquire the customers confidence, the online forex trading firms is offering some advantages never founded in banks: 24x7 forex trading, room services with limit order deals and day trading.

How You Can Be Sabotaging Your Trading - And Not Even Know It!

Whilst trading routinely involves decision making, there are no more important decisions you have to make than when to close positions. Quite a few traders often overlook this part of trading or underestimate how important that it is. It is selling that impacts directly on whether or not you make any money trading. Buying shares is simply a means of putting yourself in a position to make money from trading.

There is a typical experiment which is conducted in Economic and similar classes, which relates well to selling shares. It involves dividing a room of people into two groups. Everybody in the first group is handed an imaginary coffee mug. People in the second group receive nothing.

Everybody in the first group is asked to write down on a piece of paper how much they would be prepared to sell their coffee mug for. Everybody in the second group is asked to write down on a piece of paper how much they would be prepared to buy the coffee mug for.

The amounts from all people within each group are compiled and an average calculated for each group. Generally speaking the average amount from the owners of the coffee mugs is double that of the average amount from the potential buyers of the coffee mugs. This observation supports the Endowment Theory.

The Endowment Theory suggests that people who own something place a greater value on it than those who do not have it. This is applicable in the sharemarket, and can affect your decision making when deciding to sell shares that you should be selling. Often you will find yourself owning shares and believing that they are worth more than what the present share price is. The only unfortunate thing about that is the real price is what it is presently trading for on the market and not what you think they should be worth.

This can affect you by convincing you not to sell shares when you may be best advised to sell them to stop any further potential loss. You may have bought shares for $4.00 and set a stop loss at $3.50 for example. A week later the shares are trading at $3.50 and you have received your cue to sell them. Thoughts enter you mind about how it was only a week ago that you paid $4.00 for them and how you think they are still worth that especially when you consider the report they released last week concerning future growth, for example.

These thoughts can paralyse you to take no action and not cut your losses and consequently have you breaking one of the most important time tested rules you can follow.

E-Gold Currency Exchanging: A Well Oiled Cash Machine

It’s a common situation to find yourself wanting more money. The fact is, it’s not easy finding a business you can start and profit from. One of the most common problems with any business is cashing in profits from the first months. I believe this is one of the reasons why most businesses fail within their first year. It takes a lot of work, time and dedication to run a business, and even then you’re not assured that you will make money.

Many people are afraid of failing so they will not invest their hard earned money into a new venture. They want comfort and they want the possibility of making money without having to risk loosing your house because of it. Most people want an opportunity to build their business while they work their job or maybe they just want to earn some money on the side.

Ok, so you say you’re lazy? So you say you don’t want to risk being homeless in order to start your second business? And you want your business to be risk free? Oh my God, this sounds like a lot. But is it really possible for you to make a lot of money while not working, not risking anything, not having any special knowledge and starting with a little bit of money? Surprinsingly enough, this is what E-Currency Exchanging is.

What E-Currency Exchanging offers is a chance to start your business without any risk, without investing huge amounts of money. This is one of the reasons why E-Currency Exchanging is such a hot business. It’s a business that has just recently been discovered. People quickly find themselves making money without having any special work and putting maybe an hour a week to build their business max. Can you imagine any other business that allows you to make money by just putting an hour a week?! It’s something almost unheard of that is breaking people’s boundaries of what they though was possible.

So you want to make more money with E-Currency Exchanging you say? If you want to find out more about this opportunity, you should check out some of the great training programs that teach you this system from A to Z. Maybe you’ll see what the fuzz is about with this hot opportunity ,and who knows, maybe someday you’ll find yourself realizing that it is possible to build your own business without having to risk loosing your shirt to make it profitable.

Dxinone: Train For The Basics

It’s quite normal for people to feel the desire to have more. Chances are, you want more money, more time, and maybe even working less for it. This is true for most people. The problem however, comes because although people may have this desires, these same people don’t know a proper vehicle to obtain these said desires. In a single sentence, what these people want could be described as: “A successful Business”

Starting a regular offline business isn’t easy. It takes time, it takes effort, it takes money, and of all the things I dread the most, it takes an inventory. In other words, offline businesses are tough, expensive, and they suck up your time. An online business on the other hand, requires no inventory, everything you set up is residual income, and you can start a profit producing business for less than $1,000.

There has now been a new breakthrough in terms of finding ways to make money online. The Dxinone Business is the cause of that breakthrough. People like Gary Jezorski and Warren Barnes teach how to use this system to make money without selling, without marketing, and by working just few minutes a day. In fact, The Dxinone Business is a system that is so automated, that sometimes you can go for days without having to work to make money. It’s very similar to credit card interest, but in this case you are the credit card and The Dxinone Business is the one paying you interests.

Once you have the e-currency exchange system setup, it’s as if you had your own credit card company making money for you nonstop. You are making daily interests over the money you “loaned” to the E-currency system, everyday. Your money is doing most of the work for you and all you are doubling your investment every two months by just kicking back, reinvesting your profits and taking them out of the system. It has started a revolution in many people’s lives. It’s very simple and it makes for a very profitable income source that you can setup with just half an hour a day or sometimes even less.

The best way to start making money with The Dxinone Business is by getting someone who will show you the way. Because of the “repetitive” nature of this system (which is a cool way of saying you just have to do the same thing over and over to make money) if you take a training program you will learn how it works within a week, and you’ll have your own money making system setup and working within the same week. It’s very cool to see an opportunity that has a very high success rate that everybody can profit from.

E-currency Exchange: Learn Your ABC's

Are you making enough money? Do you want another stream of income? Would you like it if you didn’t have to work as hard? We know what you want. You want more money, less work and less stress. You know what I’m talking about, the good life. No more working hard, having fun is actually part of your schedule and you’re happy. This is what life is meant to be for you and me, the problem is many people don’t know how to get there.

Why do many people live the hard life? Why are they still working so hard for so little money? The answer to this question is so simple yet many people don’t know it. As a result they work hard everyday of their lives without even thinking they could be making much more money and working half the time. You are reading this, which means you are aware that you can work less and make more money with E-currency Exchange.

E-currency Exchange is a system that has broken all the rules. Imagine a system that allows you to make money without selling, marketing, without a website, without a downline and with very little work involved. It’s like having a bank account that pays 0.5% to 5% interests a day. The reason you don’t have to work as much is because your money is doing much of the work for you, so you have to do is manage it and reinvest it when the at the appropriate times. By simply following these steps many people are already making full time incomes.

Having your very own system makes you money everyday, but what other benefits can you enjoy from being an e-currency exchanger? Well, right of the top of my head I can tell you one of the benefits that makes a difference from E-currency Exchange from FOREX or stock trading: E-currency Exchange has No risk to make money. Yes, your heard me right, to this day, when you decide to make money with this system you can’t loose money. This may sound hard to believe depending of who you are but believe it or not this is why there are so many successful people making money with this system.

Because this system has such a low risk and is something you can reproduce exactly the same way they teach you, training program like Gary Jezorski’s even offer double money back Guarantee if you don’t make money. This gives you the confidence that you will make money. What I recommend is learning how the system works from a training program and you will learn a in a can formula to make big money with E-currency Exchange.

A Look Back At Forex Trading - 4/7/06

We will once again look to the super resistance level @ 1.7600, to protect our trades. We took an aggressive look last night, on split sentiment amongst ourselves, and as usual the less aggressive or more conservative traders won the day.

They won the day big, some of them captured 120 pips last night, while the more aggressive traders mostly took a 30 to 60 pip loss. Over the past six months, when we have a split sentiment, as we did last night the conservative traders have been right by a little more than a two to one ratio.

We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with our Elite Forex Trading Course or Forex Seminar.

What can we learn from this? The first thing is safer is better, in our program we preach to do what ever it takes to limit your losing days. It is more important to not lose pips than it is to gain pips. This is mainly due to our extensive compounding system.

Tonight we are trading around 1.7520, we have some minor resistance around 1.7550, but as out aggressive traders learned last night, it did not mean much, the second region of resistance goes fro 1.7575 to 1.7600, this is where will find entry and stop loss points.

As far as support for our potential profit target we will be following what happens to price action around the 1.7480 range. We must not forget that Friday will be a news intensive day.

The non-farm employment reports come out at 8:30, meaning you should be at your computer at 8:00 to watch what happens. Depending on your position you may need to manipulate your stops and or profit targets, or close your position. It all depends on where you are at that time.

To learn more about how to properly negotiate a news release or any of the other topics we discussed tonight you must take the steps necessary to attain a top notched Forex Trading Education.

The Function of Money and its Future

Originally exchange took place without the use of money, by barter. Long before money had come into the commercial world people exchanged goods for goods. This system of barter made it possible to satisfy many wants that would otherwise have gone unsatisfied. Barter raised the standard of living, but under such a system the exchange of goods was greatly hampered. To barter requires that both buyer and seller need each other's goods. Again, indivisible quantities hindered the exchange, since half a canoe or half a cow could not enter into barter. Nor was there under the barter system any standard of value. A ratio was expressed between canoes and arrows if they were traded for each other, but such an exchange gave no hint as to the ratio of bread to meet, or even of canoes to meet. Because of these disadvantages money was introduced into the commercial system as an intermediary, for which all goods could be sold and with which all goods could be bought. Thus money serves its first function, as a medium of exchange.

Money is a medium of exchange universally acceptable for goods and services. Originally the medium was the commodity most common in the trade of the time and place. Cattle served in Greece in the days of Homer. Grain, furs (in the Hudson Bay region), oil, salt, ivory, tea, wampum (among the American Indians), tobacco (in the colony of Virginia), and many other commodities served in various parts of the world as media of exchange. For them all things were sold; with them all things can be purchased. They were the money of the time. But gradually a tendency developed to use the metals, iron, copper, silver, and gold.

When first used the metal was not in the form of coins, but consisted of a certain weight. To guarantee the weight (and later the fineness) it became customary to stamp the metal with a government seal. We still have as the British standard coin, the pound, originally a pound of silver. But this stamp piece did not prevent "sweaters" from clipping off bits, and making the money short in weight. To prevent this, the seal or stamp was then affixed to both top and bottom of the piece. Sweaters then clipped the sides. Now coins are milled; that is, the sides are marked with corrugations to prevent clipping. Today money has come to consist of coins and cash that perform a function as a medium of exchange.

Under barter there is no standard of value, no least common denominator of values. With money we have a medium in which all values may be expressed, and money enters into its second function, to serve as a standard of value. Under a money regime we express all values in the commercial world in terms of a standard coin, in the United States in terms of dollars. With all goods related to one common standard, we know it wants the relation to one another of all commodities whose value is stated in money. If one product has its value stated as one dollar and the second as five dollars, we know that the ratio value of one to the other is one to five.

Money performs a further service. Borrowing and paying of debts has always constituted an important phase of commerce. The difficulty that we experience in using money as the standard of deferred payment is due to its instability and the change in its purchasing power. People are not interested in money, but in what it will buy. The purchasing power of money depends upon price level, which depending on government stability, changes drastically over periods of time.

The future for money in the global economy will enable quicker and more seamless transactions. Those with goods and services in countries worldwide will efficiently be able to process exchanges. As money continues to evolve so will its availability. The Internet is rapidly changing the face of money and with this change will come new opportunity to profit from it.

A Look Back At Forex Trading - 4/11/2006

It's nights like last night that make all the analysis worthwhile. Although, trading should be completely unemotional, I am sure that we all feel that little boost of confidence when we nail a trade perfectly.

Both our entry and exit were within 10 pips of the high and the low respectively. Feel free to surf the entire web and see how many traders can boast that type of success.

Certainly, there won't be many. As I mention below, most managed funds (you know, the ones that the pros handle) have been losing at a remarkable pace over the last month or so.

OK, so now to the trading.

We had another great trading night last night. Based on the resistance and support levels we discussed last night we entered our trades @ 1.7460, and we were able to close the trades for 120 pips @ 1.7420 and 1.7380.

Utilizing the proper money management and cushioning technique taught in the trading in Black and White trading course to we were able to pick a safe yet successful entry point, and a safe stop loss.

Then looking at support levels we chose perfect profit targets, exiting our large trade just two pips above the daily low. It is very hard to get better than that.

This has been an active region for trading the last couple of months as Cable continues to trade in the tight range from 1.7230 up to 1.7600 and back down again.

Tonight we are trading around 1.7425, just 15 pips below yesterdays close. We will once again look to the resistance range with around the 1.7470 level. This range goes all the way to 1.7500. As far as support for our potential profit target we will be following what happens to price action around the 1.7380 range again tonight. While most of the managed funds and signal services have been getting crushed over the past few weeks, we are starting off yet another winning week.

If you want to start experiencing winning weeks like the ones or traders have been having, take a look at our forex trading course.

We find these support and resistance levels using a set of technical indicators and other variables that we have found to be most successful for us. We use several other indicators and a variety of technical analysis techniques to enter and exit all of our trades. Every trader will have a different combination of indicators that makes the most sense to them. Learn how to develop your own successful Forex Trading style with our Elite Forex Trading Course.

A Brief Look at Forex Trading

Forex is the currency trading market which is the biggest and most quickly evolving markets in the world. Currently it has a daily turn over of of 2.5 trillion dollars which is actually one hundred times larger then the NASDAQ. Different markets are great ways to diversify your investments and trade different goods and services. The same is true with the Forex market in which the “goods” are actually currencies from around the world. Here you can buy Euros with American Dollars and sell Japanese yen for Swiss Francs. The profit is make in the difference between currencies values.

To make a profit on the Forex market investors only need one rule – buy cheap and sell high. The profit comes from the fluctuations within the exchange market for currency. The great thing about the Forex market is that it has regular daily changes and a fluctuations of 1% is actually multiplied by 100. For example if the exchange rate of your pair of currencies increases by 0.7% in 5 hours, the profit you make will be 70% of your initial investment. This can happen within a single day or a single hour. Trading the Forex market is extremely secure because you can never lose more than your initial investment. This is low risk when compared to the unlimited profit you could potentially gain.

You can choose your pair of currencies and your volume whether the market is moving up or moving down – and still make a profit. You can decide to buy Euro and sell dollar or buy dollar and sell Euro. Additionally you do not have to physically have the currency you choose to buy and sell. The easiest way to get started in the Fored market is to find a Forex market site, open an account, deposit your money, and begin trading. Most companies provide you with training, support, and advice.

Once you have all the necessary research in hand you are ready to make your first trade. You need to first select the pair of currencies that you wish to trade. Then you select the volume or the amount of money you want trade. Then you must deposition the collateral needed for the whole deal, usually about 1%. Most companies allow for a brief freeze period in which the consumer can adjust or cancel their deal. While the deal is running you can monitor the status and check for additional trading tips online. You still have the ability to change the terms, or cash out the profit to minimize loss. Forex trading companies allow an automatic take profit option which allows the investor to preset the rate at which you want to see and it will do it for you. That way you do not have to stay constantly online to monitors your trade.

Forex is a great trading market for new investors. The specifics of the currency trade are fairly straight forward and easily accessible to the general public. There is a low initial investment that way new investors can begin small and as they feel comfortable and work their way up to larger trades.

Hot Commodities – Buy Copper For Huge Long Term Gains!

Buying copper as long term investment is one of the best ways of taking advantage of global economic growth.

Forget about the situation in individual countries, global demand is strong and this commodity is “hot” and long term gains are expected of 100% or more!

Triple digit gains per annum

100% annual gains are a strong possibility based upon past performance, in fact prices of copper have increased in price more than six-fold since late 2001.

This price rise has been driven by strong demand from China and India, general world economic growth, tight supply and fund buying.

The recent dip is NOT a trend change

Copper is a barometer for global industrial demand, but it lost ground last week on concerns that rising inflation could trigger higher interest rates and dampen economic growth.

The long term trend is still up!

Copper is still up about 54% since the end of last year, supported by historically low inventory levels and a series of threats to supply and firm demand.

This will continue as we have said forget individual countries global economic expansion is broad based and set to continue with China and India leading the way.

The technical view.

If we look at the technical picture, we can get a clear detached view of the trend.

The weekly chart

Here we can see the long term trend and it’s clearly up.

Prices have dropped to the centre of the Bollinger band ( which is an area of fair value ) but stochastic momentum has yet to provide short term momentum.

The daily chart

As you can see from a short term perspective prices have hammered out support at last weeks double bottom and the week before provides another triple bottom layer of support. These are the areas to key off for long positions.

Stochastic momentum has already turned up on the daily chart with bullish divergence and higher prices are expected.

On a strong open on Monday (with the stochastic indicator still firm) enter the market with stops below the triple bottom.

Keep in mind

All bull markets have dips and this is exactly what this is nothing more, just a normal correction in a bull market.

The dip now can provide you with an entry point to target 100% + profit potential annually!

You can trade the market in two ways

1. Use options that give you unlimited profit potential and limited risk. Keep in mind that you need to buy at, near, or in the money options with lots of time value. This will help you ride out short term volatility

2. Use intra market spreads. This simply involves using two contracts in the same commodity. Buy the nearby and sell a deferred ( check the spread strength first though) spreads are great giving you the advantage of lower margins and staying power.

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.

Stochastic Crossovers

Crossovers are very effective and work as follows.

Buy when the %K line rises above the %D line and sell when the %K line falls below the %D line. Beware of short-term crossovers that may generate false signals.

The preferred crossover is when the %K line intersects after the peak of the %D line ( known as aright-hand crossover).

Beware though, crossovers often provide choppy signals that need to be filtered with the use of other indicators.

Stochastic Divergences

Divergences between the stochastic and the underlying price trend also offer good signals to trade off.

For example, if prices are making a series of new highs and the stochastic is moving lower, you may have a warning sign of weakness in the market.

Caution

As with any technical indicator its does not work by itself, so make sure you have signals from the charts before adding the stochastic as a filter.

The ultimate trading filter

Used as a filter, it can warn of strength and weakness and get you into or out of the market, to maximize profits, or just as importantly help you minimize losses.

Pattern of Continuation: Descending Triangle Bearish

Descending Triangle Bearish occurs when sellers force buyers to hold their orders or to yield thus making breakout in market price.

Market price is trying to move downward but held by support level. Then highest prices are making descending pattern until market price could make breakout level to continue moving downward.

Well, some traders use this pattern to identify sell signals. They sell at the breakout level. But I don’t recommend you to do that. Most of the times would only bring you to false signals.

I only use this pattern to determine whether I want to keep my order or to exit from market. That means, when I sell a certain pair, and I found Descending Triangle Bearish Pattern then I will keep the order, assuming that price will make breakout at the support level and go downward just as we discuss here.

So the next important question would be “when do we exit from market?”

Draw short-term bearish trend line and notice the angle created between bullish trend line and horizontal line. Use the same angle to redraw bearish trend line after the breakout level. When market price crosses above the trend line then it's the right time for us to exit from market.

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.

FX Currency Trading

If you have ever traveled outside the United States, you have probably traded in a foreign currency. Every time you travel outside your home country, you have to exchange your country’s currency for the currency used in the country you are visiting. That’s why it is very important that you should know the exchange rate of various currencies used in the world. By this way, the average tourist uses foreign currency exchange. On the other hand, foreign currency traders trade much larger sums of money thousands of times a day.

The majority of trades take place in three main centers of currency trading- the United States, United Kingdom and Japan. The rest of the trading takes place primarily in Singapore, Switzerland, Hong Kong, France, Germany and Australia. The United Kingdom manages the largest share. The United States is second, followed by Japan.

FX currency trading is ongoing 24 hours a day, with some countries just getting started, as others are finishing up their business day. For example, when the trading day opens at 8 a.m. in London, the trading day is ending for Singapore and Hong Kong. When New York opens its trading doors, it’s already 1 p.m. in London. Thus, traders must be alert around the clock, because a major event at an off hour anywhere in the world can shake the markets at any time.

Individual trades in the range of $200 million to $500 million are not uncommon. In fact, the US Federal Reserve estimates that approximately $1.5 trillion dollars are traded every day, and that represents more than $200 every business day of the year for every man, woman and child living on the planet. That’s several times the daily turnover in US government securities, which is the world’s second-largest market. In fact, estimates indicate that quoted price changes occur as frequently as 20 times per minute, and the most active currency rates can change as many as 18,000 times in a single day according to the federal reserve.

Can We Believe the Reports the Government Puts Out?

Since I am not much of a fundamentals trader, I tend to stay away from government statistics. To me, they have very little value. As far as I can see, they are full of errors. Let me explain.

What’s wrong with traditional statistics? They fail to measure what is really going on in the economy because the measurements that are being taken today are completely out of synchronization with reality. In fact, it has become virtually impossible to measure some things, which if not measured, render a variety of economic conclusions virtually worthless. Let’s see what these “immeasurables” are.

Service Orientation

As some economies become service rather than production oriented, it becomes increasingly difficult to measure output. When a nation is primarily a producer of goods, it is relatively easy to measure work output in terms of tons of steel produced, number of automobiles manufactured, miles of road paved, board feet of lumber shipped, etc. But how do you measure the amount of information services provided? How do you measure the output of a think-tank? How do you measure the output of an accounting firm, a legal service, a bank, a financial adviser, or even a trader of futures, options, or shares? Does a trader have an output? Would you measure a trader’s output by the number of round turns he makes? What about the ones where he loses?

Technological Advances

New technology – leading to improvement in quality, quantity, or both, render it extremely difficult to measure productive output. Let me give you an example of what I mean. Forty years ago, Ford Motor Company employed 600 men at their plant just outside of Kansas City, Missouri. Today that plant is operated by just 6 men. What happened to 594 jobs? They have been taken over by robots. The use of robots has created a shorter but improved product cycle. A friend of mine, who is one of the 6 men who work in that plant, sits around doing nothing. He is bored stiff. He takes a notebook computer to work and plays games. But he has to be there in case one of the robots breaks down. The question is, how do you measure his productivity?

At the time I was born, it was common for women giving birth to stay in the hospital for ten days. Today they send women home after a day or two. I would consider that to be an advance in technology, and knowledge, wouldn’t you? Yet when a statistician looks at figures for hospital bed occupancy, he would see a decline.

I have another friend who operates a package delivery service. By careful use of a computer to monitor the amount of traffic on delivery routes at various times of day, his company has been able to increase the number of deliveries made while at the same time decrease the number of delivery vehicles and drivers needed to make those deliveries. Now I happen to think that’s a great improvement. Certainly it is making my friend a more wealthy and successful businessman. But his company’s productivity, as measured by delivery miles driven, would show a drop, and since he used fewer vehicles, that fact would show up as fewer vehicles sold, and less steel produced. Do you see where this is going? We are looking at a problem to which there is no solution. Our concept of a unit of output is all wrong, and there is no way to make it right. Technological advances, especially when they result in rapid quality improvements, are increasingly difficult to measure. Because of our inability to measure real output, our statistics will fail to reflect what is really happening in the economy.

Yet another problem created by technological advances is seen in the flood of new products and services being produced. Many jobs did not exist a few years ago. Neither did the products or services that produced those jobs.

If you are a trader, you probably have had first-hand experience with technological obsolescence. The computer you purchase for your trading is obsolete almost the day you purchase it. Within a year, the trading software you use has also become obsolete. Did you know that the average life of a computer model is now less than 12 months? And this is true for most consumer electronics. Thirty percent of sales are for products that did not exist a year earlier.

Years ago I gave up on the idea of buying a camera. No sooner did I obtain one than it became obsolete. The manufacturer came out with a new model that had more capabilities than the one I just purchased. It was maddening. It caused me great frustration. Worse than that, it irritated my lust gland (the lust gland shares a common duct with the greed gland). I wanted to buy a new camera at least once a year. The only cure was to not own a camera at all. I wonder what that does to the Gross Domestic Production figures. It is the same way today with software. I have had to learn two new operating systems in the past four years. I had to learn to use three different word processors in that same period of time. Is this progress?

Certainly I have made Microsoft Corporation’s output look better, but it has cost me a great deal of precious time to do it. I was able to write “Trading Optures and Futions” in just nine months, but it took me 1-1/2 years to produce it. Why? Because I had to simultaneously learn a new word processor and operating system to produce that manual. Both the operating system and the word processor are now considered obsolete. Is the struggle and fight to learn the quirks in software productive? My assistant and I have spent (wasted) numerous hours trying to get Microsoft Word to produce in a format we can live with. How do you measure all the lost time and money from the many conversions that have to be made because of the use of computers? In fact, many have questioned why all the billions of dollars invested in computers have failed to boost productivity and growth in the way they were supposed to. Does anyone really know the answer?

Online FX Trading

In online FX trading, traders look for a currency that offers the highest return with the lowest risk. For example, if a nation’s financial instruments, such as stocks and bonds, offer high rates of return with relatively low risk, then traders who are foreign to that nation want to buy that currency, thus increasing the demand. Currency is also in demand when its country is going through a growth segment in its business cycle, highlighted by stable prices and a whole range of goods and services for sale. Forex traders who speculate on the values of currencies to earn their keep look for specific signs to indicate when exchange rates may change.

Traders in online FX trading try to predict well in advance the factors like political instability, rising interest rates and economic reforms so that they can get in or out of a currency before others. Correctly guessing where a currency is going and taking a position in that currency at the beginning of the trend can mean huge profits for a trader.

Traders make money either by buying the currency at a lower price and then selling it later at a higher price, or by selling their holdings in currencies of other countries at higher prices before they have time to react negatively to improvements in the first currency. After the markets for their original holding fall, they simply reestablish positions in them at bargain prices.

When a trader purchases a large amount of a particular currency, then he or she is long on the currency. Conversely, when a trader sells a large amount of a currency, then he or she is short on the currency. The Forex market is dominated by four currencies, which account for 80 per cent of the market- the US dollar, the Euro, the Japanese Yen and the British pound.