FOREX, A Trending Market.

The Forex market is widely known by its high liquidity and high volume of transactions
occurring during most of its long trading week. These characteristics highly contribute
to make the Forex market a very trendy market with few trend-less periods during the
whole trading period.

But what does this mean to the Forex trader? Mainly this trendy characteristic of the
currency markets means that there will be plenty of opportunities for the trader to find
profitable trades during the day.

As you start analyzing forex charts you will realize that the market often display's some
very familiar patterns of price movement, this is; trends; and you will notice that once
a pattern is established, it becomes the most probable course of future price action until
the market changes. Giving you a good forecast of what comes next with the currency prices.

There are two types of markets which will become very important for you to identify and
understand; these are: trending and, the less frequent, trend-less markets. Each market
type has two specific patterns which you will also notice over time.

A Trending market is defined as a steady, elongated price movements with less than a 45
degree angle with occasional pauses, profit taking, or resting periods.

In a Trending market, you will notice two main and quite evident patterns:

Uptrends - A pattern of higher highs and higher lows.

Downtrends - A pattern of lower lows and lower highs.


There is also the less frequent kind of market, this is a Trend-less market with erratic
price movements which are often steep (greater than 45 -degree angle) and cannot sustain
and therefore must reverse. Although the movements can move many points in a short period
of time, they are constantly and rapidly oscillating with the consequence that they often
result in very little net price movement over time.

In a Trend-less market, you will find these main patterns:

Choppy - An erratic pattern of higher highs and lower lows.

Sideways - A narrow pattern of lower highs and higher lows.

While up-trend and down-trend periods will offer excellent trading results most of the time,
choppy markets often create stop outs, this is they activate your stops by constantly overshooting your projected resistance level but without never really crossing too far from this level; while sideways markets produce for little in either direction making them hard to trade and to make any profit during these periods.

As always in Forex, your main trading objective is to get into profitable trades most of
the time and a trending market is the perfect situation to find this profitable trades by
riding the trends until you make your target profit objective of the day.

Forex and Some Important Facts about Bollinger Bands.

Forex trading is nowadays one of the most looked after occupation for many persons of all ages around the world. This is due to its great advantages over other capital markets and its high profitability potential; among these advantages you will find that is extremely easy to access a trading platform from the best forex broker firms thanks to the internet; and also you will notice that Forex has a high liquidity along with a high leverage.

But having a good broker firm and great trading platform is only one part of what you need in order to make your forex trading career a winning and profitable one. You need to have the right knowledge and techniques in order to forecast with the best accuracy what the market will do next. One of the techniques used to predict the Forex market behavior is that based on Bollinger Bands.

These Bollinger Bands are what is called a technical trading tool and they are widely used in the capital markets (including Forex) and were created by John Bollinger in the early 1980s. These bands technique was formulated based on the need for adaptive trading bands and the discovery that the volatility of the markets was a dynamic phenomena, not a static one as was widely believed at the time.

Bollinger Bands consist of a chart of three curves drawn in relation to currency pairs prices. The band situated in the middle is a measure of the intermediate-term trend and is usually a simple moving average, that serves as the base for the upper and lower bands. The interval between the upper, lower and the middle bands is determined by the volatility of the market, typically the standard deviation of the same data that were used for the moving average. The default parameter is 20 periods and two standard deviations above and below the middle band; of course this may be adjusted to suit your needs.

In short, the purpose of Bollinger Bands is to provide a relative definition of high and low price. By definition prices are considered high when touching the upper band and low when they touch the lower band. This relative definition can be used by the Forex trader to compare price actions and as a very useful indicator when the purpose of the trader is to arrive at rigorous buy and sell decisions.

Forex Trading, What Hours Should I Be Ready For Trading?

Once you have decided to enter the Forex trading world you will find that FX trading has many advantages over other capital markets. Including among others; very low margins, free trading platforms, high leverage and around-the-clock trading.

It is my main concern in this article to let you know what hours you should be ready and focus for start trading, so you can expect the highest profits in your trades, and not just consider that around-the-clock trading means you should randomly trade through out the day.

In short, it is important to know what the best hours to trade are because if you want to find an appreciable number of profitable trades you need to enter the forex market at the best period of time, i.e., when the activity, the volume of transactions, is the highest.

At any given time; somebody, somewhere in the world is buying and selling currencies. As one market closes,
another market opens. Business hours overlap, and the exchange continues as day becomes
night and night becomes day. Giving you 5.5 entire potential trading days.

Forex Trading begins in New Zealand at Sunday 5pm EST, and then is followed by Australia, Asia, the
Middle East, Europe, and America in this order and through out the day and through out the week until
Friday 4pm EST when the American market closes.

Other important facts every Forex trader should know are: the US & UK markets account for more than 50%
of the forex market transactions; Forex major markets are: London, New York and Tokyo. Nearly two-thirds
of NY activity occurs in the morning hours while European markets are open. And maybe one of the
most important characteristics; Forex Trading activity is heaviest when major markets overlap.

So, the answer to the question; “What hours should I be trading?” is dictated by this last characteristic,
you should trade when the major markets overlap. Now, when do they overlap?.

Considering the different time zones of the world and open and close times for Australian, New Zealand,
Japan, America and Europe markets. We can arrive to the conclusion that there are two major time gaps
when two of the major markets overlap during trading hours.

These hours are between 2 am and 4 am EST (Asian/European) and between 8 am to 12 pm EST
(European/N. American).

So if you want to catch the best trading opportunities of the day and you are in the American continent
you must be ready to wake up early or go to sleep late some times. Of course things change around
the world. What’s the best region where to trade from if you can’t wake up early?… Maybe the Ukraine.

What Is A Mini Forex Account?

Nowadays many people around the world is looking for entering the world of Forex trading due to its very high profitability potential and many other advantages the Forex market has over other capital markets.

But one of the main worries of the new trader is if he will need lots of money in order to be able to access this market and start placing trades.

The reality is that practically anyone can enter the forex markets and place trades. You don’t need to be super-rich or the owner of a big corporation. You just need a few dollars and the right strategy to start profiting from Forex trading.

In the Forex world there is something called a Mini Account, and it
uses a different leverage calculation than a regular (100k) account.
This means that instead of trading full-size currency lots (100,000 units),
you'll trade in lots that are just 1/10 the size (10,000 currency units),
which in turn greatly reduces the amount of money you risk in each trade you enter.
Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 value they
have in a regular account. The Mini Forex account offers up to a huge 200:1 leverage,
this means that just a $50 margin deposit will allow you to trade lots worth roughly
$10,000 , but the smaller lot sizes, with correspondingly smaller pip values, means
that you'll be profiting less from a successful trade and also losing less if the trade
goes bad . For example, while a 20-pip loss on a 100,000 USD/JPY position would be $200,
the same loss on a 10,000 USD/JPY position in a Mini account would amount to only $20. 

The following are the characteristics of a Forex Mini Account.

- Minimum required account deposit = $300

- Recommended required account deposit = $2,000

- Traded in 10,000-unit currency lots

- Default Margin: set at 0.5% ($50 per mini-lot)

- Leverage up to = 200:1

Contrary to what you may be tempted to think, there is no downside
to trading a Forex mini account, you will be enjoying all the benefits
that full-size FX account holders enjoy; including, same state-of-the
art trading software from your broker, charts, resources, and tools.
This mini accounts are ideal for a new Forex trader to develop a disciplined,
rational forex trading strategy and technique without excessively focusing on
the fear naturally arising from thinking too much about profits and losses.

One more great new for the starting forex trader is that there is no maximum trade volume when you use a mini account. Although the standard trade size is 10,000 units, you are not limited to trading one lot. For instance, you can trade 10,000 units or even 200,000 units. Allowing that, as you become more seasoned and build up your confidence you can slowly increase the size of your positions to maximize profits. This ability to customize the size of the trade will allow you to have a better risk management of your money.

What Is A Mini Forex Account?

Nowadays many people around the world is looking for entering the world of Forex trading due to its very high profitability potential and many other advantages the Forex market has over other capital markets.

But one of the main worries of the new trader is if he will need lots of money in order to be able to access this market and start placing trades.

The reality is that practically anyone can enter the forex markets and place trades. You don’t need to be super-rich or the owner of a big corporation. You just need a few dollars and the right strategy to start profiting from Forex trading.

In the Forex world there is something called a Mini Account, and it uses a different
leverage calculation than a regular (100k) account. This means that instead of
trading full-size currency lots (100,000 units), you'll trade in lots that are
just 1/10 the size (10,000 currency units), which in turn greatly reduces the amount
of money you risk in each trade you enter. Pips in a Mini Account are worth,
on average, $1 instead of the $8 to $10 value they have in a regular account.
The Mini Forex account offers up to a huge 200:1 leverage, this means that
just a $50 margin deposit will allow you to trade lots worth roughly $10,000,
but the smaller lot sizes, with correspondingly smaller pip values, means that
you'll be profiting less from a successful trade and also losing less if the
trade goes bad . For example, while a 20-pip loss on a 100,000 USD/JPY position
would be $200, the same loss on a 10,000 USD/JPY position in a Mini account would
amount to only $20.  

The following are the characteristics of a Forex Mini Account.

- Minimum required account deposit = $300

- Recommended required account deposit = $2,000

- Traded in 10,000-unit currency lots

- Default Margin: set at 0.5% ($50 per mini-lot)

- Leverage up to = 200:1

Contrary to what you may be tempted to think, there is no downside
to trading a Forex mini account, you will be enjoying all the
benefits that full-size FX account holders enjoy; including, same
state-of-the art trading software from your broker, charts, resources,
and tools. This mini accounts are ideal for a new Forex trader to
develop a disciplined, rational forex trading strategy and technique
without excessively focusing on the fear naturally arising from thinking
too much about profits and losses.

One more great new for the starting forex trader is that there is no maximum
trade volume when you use a mini account.
Although the standard trade size is 10,000 units, you are not limited
to trading one lot. For instance, you can trade 10,000 units or even 200,000 units.
Allowing that, as you become more seasoned and build up your
confidence you can slowly increase the size of your positions to maximize profits.
This ability to customize the size of the trade will allow you to have a better risk management of your money.

Three Important Forex Concepts For New Traders.

As you enter the world of Forex you will find yourself learning and using many new concepts that you may not have used or heard before.

Three of this important concepts that you must understand are what “Pips” are, What “Volume” is and what you do when “Buying” and “Selling Short”. They may look more like four concepts but Buying and Selling are like the two faces on the same coin so we can consider them as a single concept.

Lets first introduce what Pips are. Maybe you have heard or read already how many pips a day you can make using some trading system. In short, currency pairs prices will go out to 4 significant digits. For example; if one currency pair is trading for 1.3451 then an increase to 1.3452 would be a “one-pip” increase in the price of this particular currency. This is an increase of one hundredth of a percent of the value of the currency pair you are trading. And depending the type of account you have, regular or mini, each pip will have a value of $10 or $1. So if you make 10 pips a day with a regular account you would have made $100 and with a mini-account $10.

Now we can talk about the Volume; trading Volume is a quantity that tells traders how much money is being traded at one particular moment. And the forex market is known by its high volume of trading during most of the time markets are open. Some times there can be spikes in the volume during some type of news breaks and during the time New York stock exchange is open. The volume of transactions in Forex, even in a slow day, will always be much higher than the volume traded in other large exchanges at their full capacity.

Now maybe the most obvious of the concepts. Buying refers to the acquisition of a particular currency pair to open a trade. Selling short refers to the selling of a particular currency to open a trade. When you Buy, you are expecting the price of the currency pair to increase with time, i.e., you buy cheap to sell high. In the case of Selling short, it looks a bit more complicated. Here the way to make money is to initially sell a currency pair that you think will lose value in a given period of time and then, once it happened, you will buy it back at the new price but now you can sell it at the previous greater price the currency had when you opened the trade, so you earn the difference in prices. I know it seems kind of tricky, but once you are in front of your trading station it will look much simpler.

Understand well these three concepts and you will start with solid steps your trading career.

Introduction to Bollinger Bands; A Great Help In FOREX Trading.

Forex trading has become one of the most looked after occupation for many persons around the world. This is due to its great advantages over other capital markets and its high potential profitability; among these advantages we can find its extremely easy accessibility thanks to the internet and its high liquidity and high leverage.

But in Forex as in all other speculative activities in the capital markets there is a major problem new and experienced traders will face every time they open their forex trading stations. This is how to predict the behavior of the Forex market over time in order to make the highest amount of profits and with the less risk possible.

One of the techniques used to predict the Forex market behavior is that based on Bollinger Bands.

These Bollinger Bands are what is called a technical trading tool used in the capital markets (including Forex) created by John Bollinger in the early 1980s. These technique was formulated based on the need for adaptive trading bands and the discovery that the volatility of the markets was a dynamic phenomena, not a static one as was widely believed at the time.

The first thing you should notice about Bollinger Bands is that they consist of a set of three curves drawn in a forex chart in relation to the currency prices. The middle band in the forex chart represents the intermediate-term trend, and it is usually a simple moving average, that serves as the reference base for the upper and lower bands. The interval separating the upper and lower bands from the middle band is calculated by using the volatility of the market; typically the standard deviation of the same data that were used for the average.

The default parameters used with these analysis technique is 20 periods for the average and two standard deviations for the gap between the bands. These parameters may be adjusted to suit your particular trading purposes.

In a future article I will talk about how these bands will give you a very good prediction on what the market will do next, based on the parameters and statistics built in the Bollinger Bands.

Short Introduction to Elliot Waves as a Resource in Forex Trading.

The Forex market has the largest volume of trades per day among all the capital markets you can trade. This characteristic together with it’s high leverage and around the clock trading schedule makes Forex very attractive for traders around the world.

Once you enter the world of forex trading you will realize that this market has strong trends that seem to follow a repetitive pattern in all the different time frames you can use to analyze the market conditions.

Ralph Nelson Elliot also observed this and after analyzing a great number of charts he discovered in the late 1920’s that the markets move in a repetitive manner that is far away from being a totally chaotic behavior. The markets move in cycles and they reflect the mass psychology of the active elements participating in them, with a characteristic ebb and flow that can be divided and analyzed as “waves” of this active elements psychology in their daily dealing with the markets.

But Elliot not only discovered the repetitive nature of the markets cycles but he also realized that this patterns had a fractal nature. This means that the patterns not only repeated with time but that in a given period of time the characteristic wave pattern would repeat at different scales (days, hours, minutes).

The Elliot wave pattern can be divided in five constitutive waves with the first of the waves called the impulsive wave. The fractal nature if this waves was evident to Elliot when he observed that in every impulsive wave, when observed at a smaller time scale he would find the characteristic five waves of the pattern he had found and if he now looked at the impulsive wave of the smaller impulsive waves in an even smaller scale he would find again five ways, etc.

Elliot waves are very important in Forex because he identified the specific patterns that you can observe when trading this market and considering the repetitive nature of this patterns you can make a pretty accurate forecast of what the markets will do next. Giving you a huge advantage in your daily encounters with the currency markets.