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DeMarker Indicator
The DeMarker indicator is an indicator used in technical analysis that compares the most recent price to the previous candle's price, attempting to measure whether there is substantial demand for the currency pair.
http://youtu.be/Zky--lmMwXU
Bollinger bands - How To Master Bollinger Bands
Techniques for mastering Bollinger bands for maximum profit. 5 Bollinger bands set-ups and their variations that you must know if you want to use Bollinger bands effectively.
Bollinger bands are about the best indicator you will ever use to help identify high probability trades.
Bollinger bands measure a standard deviation from the mean or middle. Usually the "mean" or middle is a 21 day moving average of closing price.
So you would lay down a 21 day moving average and then a 2.0 standard deviation set of Bollinger bands and when price closed outside of either band it is said to have closed outside a 2 standard deviation band.
http://youtu.be/PONc9GkzFrA
Bollinger Bands and Forex
In this video I'll show you a set-up using Bollinger bands that you can use to make virtually unlimited profits with Bollinger bands.
All you have to do here is pay careful attention to swing structure and price actions failure to print a new swing high. In this case when the new high failed to print on the chart we ended up with nearly a double-top, which is equally as powerful but because the high was actually lower than the previous it wasn't quite a double top.
In this case it was a LOWER SWING HIGH.
When that happened we ended up with a consolidation, a pinching of the bands and then ultimately a nice Bollinger band expansion followed by a break of the lower support levels and a perfect low risk high profit entry into a move that collapsed down to a quick fast 400 pip profit in a total of 4 days.
http://youtu.be/Dge0Mjm4hrc
How to Trade Bollinger Bands - Stocks, Futures, Forex
text of this video :
Bollinger Bands are comprised of three bands which are referred to as the upper band, the lower band, and the center band. The middle band is a simple moving average which is normally set at 20 periods, and the upper band and lower band represent chart points that are two standard deviations away from that moving average.
Example of Bollinger Bands ...
Bollinger bands are designed to give traders a feel for what the volatility is in the market and how high or low prices are relative to the recent past. The basic premise of Bollinger bands is that price should normally fall within two standard deviations (represented by the upper and lower band) of the mean which is the center line moving average. If you are unfamiliar with what a standard deviation is you can read about it here As this is the case trend reversals often occur near the upper and lower bands. As the center line is a moving average which represents the trend in the market, it will also frequently act as support or resistance. The first way that traders use the indicator is to identify potential overbought and oversold places in the market. Although some traders will take a close outside the upper or lower bands as buy and sell signals, John Bollinger who developed the indicator recommends that this method should only be traded with the confirmation of other indicators. Outside of the fact that most traders would recommend confirming signals with more than one method, with Bollinger bands prices which stay outside or remain close to the upper or lower band can indicate a strong trend, a situation that you do not want to be trading reversals in. For this reason selling at the upper band and buying at the lower is a technique that is best served in range bound markets.
Example of Buying and Selling at the Upper and Lower Band ...
Large breakouts often occur after periods of low volatility when the bands contract. As this is the case traders will often position for a trend trade on a break of the upper or lower Bollinger band after a period of contraction or low volatility. Be careful when using this strategy as the first move is often a fake out.
http://youtu.be/XmE809RjzTQ
Forex Trading - How to Use the RSI Indicator
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RSI Indicator Forex Trading Strategy
Relative Strength Index or RSI is the most popular indicator used in Forex trading. It is an oscillator indicator which oscillates between 0 -100. The RSI is a trend following indicator. It indicates the strength of the trend, values above 50 indicate a bullish trend while values below 50 indicate bearish Forex trend.
The RSI measures momentum of a currency.
The centerline for the RSI is 50,crossover of the centerline indicate shifts from bullish to bearish and vice versa.
Above 50, the buyers have greater momentum than the sellers and price of a currency will keep going up as long as RSI stays above 50.
Below 50, the sellers have greater momentum than the buyers and price of a currency will keep going downwards as long as RSI stays below 50.
In the example above, when the RSI is below 50, the price kept moving in a downward trend. The price continues to move down as long as RSI was below 50. When the RSI moved above 50 it showed that the momentum had changed from sell to buy and that the downtrend had ended.
When the RSI moved to above 50 the price started to move upwards and the trend changed from bearish to bullish. The price continued to move upwards and the RSI remained above 50 afterwards.
From the example above, when the trend was bullish sometimes the RSI would turn downwards but it would not go below 50, this shows that these temporary moves are just retracements because during all these time the price trend was generally upwards. As long as RSI does not move to below 50 the trend remains intact. This is the reason the 50 mark is used to demarcate the signal between bullish and bearish.
The RSI uses 14 day period as the default RSI period, this is the period recommended by J Welles Wilders when he introduced the RSI. Other common periods used by forex trader is the 9 and 25 day moving average.
The RSI period used depends on the time frame you are using, if you are using day time frame the RSI 14 will represent 14 days, while if you use 1 hour the RSI 14 will represent 14 hours. For our example we shall use 14 day moving average, but for your trading you can substitute the day period with the time frame you are trading.
To Calculate RSI:
- The number of days that a currency is up is compared to the number of days that the currency is down in a given time period.
- The numerator in the basic formula is an average of all the sessions that finished with an upward price change.
- The denominator is an average of all the down closes for that period.
- The average for the down days are calculated as absolute numbers.
- The Initial RS is then turned into an oscillator.
Sometimes very large up or down movement in price in a single price period may skew the calculation of the average and produce a false signal in the form of a spike.
Center-line: The center-line for RSI is 50. A value above 50 implies that a currency is in a bullish phase as average gains are greater than average losses. Values below 50 indicate a bearish phase.
Overbought and Oversold Levels:
Wilder set the levels at which currencies are overextended at 70 and 30
http://youtu.be/5_vQIa5MrqY
RSI = 100 - 100/[1 - (Average Upward Price Change / Average Downward Price Change)] this calculation means oscillating momentum.
Wilder suggests should be 14, though some traders prefer using a 28 period RSI
After a little information.
As my experience;
FOR TRADE ENTER or EXIT
Wilder recommended using 70 and 30 and overbought and oversold levels respectively.
U can use it for finding the way of market. When the buyer stop buying, when the sellers stop selling.
A position WHEN BASIC MOVES
Attachment 3297
Another way ND told is only at
B position WHEN COMPLEX MOVES
Attachment 3298
LETS HAVE A LOOK MAKET;
Attachment 3299
Also A cross over the centerline of RSI, can be use as confirmation with other indicators.
Trading With Technical Tools in Non-Trending Markets
In this video Head of Development & Risk Management of MahiFX, Simon Coulter will be discussing ways to tell if a market is trending or ranging, and importantly when one is changing to another. He will also be looking at the specific technical tools which assist in trading ranges and trading ranges off support and resistance, economic conditions and currency pairs that support the best range trading.
Breakouts with the ATR
An Easy and Advanced Way to Set Stops
Talking Points:
- Stops are a necessity because no trading strategy wins 100% of the time
- Traders can use ATR to calculate stop distances based on recent price activity
- Price Action can be used to set stops in trending, or ranging market environments
As traders, we know we need them, but it’s much like the advice of ‘get your annual checkup with a Doctor,’ where most of us simply don’t want to do it.
But in the field of trading, risk management isn’t just a preference; it’s a necessity.
And the reason for this is simple: Because you cannot tell the future. And this means that no matter how hard you try, or how great a trader you become, you will simply never be able to avoid losing entirely. And as a natural extension of that fact, since you will lose on some trades, having sloppy risk management means that one or two losers can wipe away the gains of many small winners.
I know this may sound too simplistic; but this is exactly what was found to be The Number One Mistake that Forex Traders Make: They often win more frequently than they lose - but they lose so much when they are wrong that it wipes away all of the gains from their winners and then some.
The first step to avoiding The Number One Mistake Forex Traders Make is to set a stop. This allows you to cap the risk on any one trade, so that if it doesn’t go in your direction, you can stem the bleeding before it becomes too unbearable.
Below, we’re going to look at two popular, yet different ways of setting stops. One easy way that is often employed by professional traders for the sake of simplicity; and another more advanced method that may suit certain trading styles more adequately.
The Easy Way
First off, just because this is an easier way of setting a stop does not make it any less valid. This is classified as ‘the easy way’ simply because most traders can pick this up right now, and begin using it instantly with a minimum of instruction.
Average True Range is a favorite indicator of many professional traders, and one of the great things about it is that it’s rather simple in its design. While many indicators wear multiple hats and try to do a few different things at once, ATR is just a measure of price movements over a specific period of time.
If those movements increase in value, ATR goes up. If those movements decrease, ATR goes down./ATR measures volatility, and this allows traders to set stops based actual market behavior.
There are a few nuances of ATR that traders need to know before applying. We cover these, in depth in the article Managing Risk with ATR. The first is the format with which the indicator displays values. While it looks like an oscillator like RSI, and moves similar to an indicator like ADX; the real value of ATR is in its value. It will measure the ‘Average True Range’ of the last x periods, where x is the input you choose. The default, and most common input for ATR is 14 periods. The value of ATR will read in the price format of the currency pair being analyzed. So, for instance; if a value of .00760 is shown on EURUSD, that means 76 pips (4th place to the right of the decimal is a single pip in the quote).
There is a slightly easier option, and for traders that are using short-term techniques this can be extremely helpful. There is a custom indicator available for Trading Station desktop that automatically calculates, and displays ATR on the chart in a very easy-to-read format. This is completely free, and can be downloaded from the FXCM App Store at this link (link). As you can see below, not only does it display ATR, but it even rounds the ‘.6’ fractional pip as appropriate.
The Advanced Way
[/URL]Price Action can have a huge impact on a trader’s performance. Inclusion of price action into an approach will often take place regardless of the trader or type of trading being done. Price action can help traders read trends, find support and resistance, and perhaps most importantly - manage risks.
Because, after all - if prices are trending higher, and we’re seeing continuous higher-highs, and higher-lows, wouldn’t it be reasonable to consider closing the trade if the trend reversed? Remember, this is the number one mistake traders make, and this is the reason stops are so important. If the trend reverses, the trader’s best advice is often to close the trade and look for greener pasture elsewhere... because if the reversal continues against the trader, one loss can wipe away a lot of gains.
If traders are trading a trend, they can look to the previous opposing-side swing for stop placement. So, if an up-trend is being traded, we should be able to see higher-highs, and higher-lows. If we are buying to take part in the up-trend, we can look to place our stop below the prior swing-low (see picture).
On the other hand, if we’re selling in a down-trend, we would want to look to place our stop above the prior swing-high.
In How to Analyze and Trade Ranges with Price Action, we look at stop placement in
range-bound markets. If a range is being traded, the ‘peak-high’ and ‘peak-low’ should be identified.
Traders can look to place their stop just outside of the peak of the opposing side of their position. So, if buying, traders would look to place their stop just below the peak-low; and if selling just above the peak-high. This way, if the range turns into a breakout against the trader, the bleeding can be stopped before one loser wipes away the gains from a lot of winners.
If you’d like to become a better Price Action trader, we’ve put together the basics into a Brainshark curriculum. The link below will take you directly to the lesson, and after filling in a few pieces of information into the guestbook the session will begin.
http://youtu.be/fCVXbiUQcdg
Forex Channel Trading
A video on trading Forex Channels and how to discover where price is likely to break the channel.
Linear Regression Channel
Similar to the 200-day Moving Average, large institutions often look at long term Linear Regression Channels. A Linear Regression Channel consists of three parts:
- Linear Regression Line: A line that best fits all the data points of interest.
- Upper Channel Line: A line that runs parallel to the Linear Regression Line and is usually one to two standard deviations above the Linear Regression Line.
- Lower Channel Line: This line runs parallel to the Linear Regression Line and is usually one to two standard deviations below the Linear Regression Line.
The multi-year chart of the S&P 500 exchange traded fund (SPY) shows prices in a steady uptrend and maintaining in a tight one standard deviation Linear Regression Channel:
Attachment 3485
The upper and lower channel lines contain between themselves either 68% of all prices (if 1 standard deviation is used) or 95% of all prices (if 2 standard deviations are used). When prices break outside of the channels, either:
- Buy or sell opportunities are present.
- Or the prior trend could be ending.
Linear Regression Channel Buy Signal
When price falls below the lower channel line, a buy signal is usually triggered.
Linear Regression Channel Sell Signal
An opportunity for selling occurs when prices break above the upper channel line.
Other confirmation signs like prices closing back inside the linear regression channel could be used to initiate buy or sell orders. Also, other technical indicators should be used to confirm.
Trend Reversals
When price closes outside of the Linear Regression Channel for long periods of time, this is often interpreted as an early signal that the past price trend may be breaking and a significant reversal might be near.
Linear Regression Channels are quite useful technical analysis charting tools. In addition to identifying trends and trend direction, the use of standard deviation gives traders ideas as to when prices are becoming overbought or oversold relative to the long term trend.
http://youtu.be/CqTbv5K7PXg
Price Action Trading - Channel Breaks
A video on trading Forex Channels and Channel Breaks.
http://youtu.be/UzrwovWbflI
