Forex Strategies

Article Summary: Elite performers in all competitive fields study the past to help improve their ability in the future. The same goes for elite traders. Learn 3 reasons why you should keep a Forex trading journal.

You’ve most likely heard it before that journaling can be used to improve your trading, but for whatever reason may not have tried it before. Maybe it was too tedious or too time consuming? Regardless of your rationale against journaling, I do think you should reconsider.

A good parallel to this is the world of professional sports. You have athletes that have physically trained their whole lives to be the best at what they do, but a large part of their routine is reviewing past matches, games, and learning their opponents. They look for weaknesses in their game in order to improve themselves and look for weaknesses in their opponents to exploit them. This is the exact same attitude a professional trader should have when they review past trades. Consider the following 3 reasons to begin adding a journal to your trading routine.

Reason #1 – Journals Increase Trading Consistency

The most basic use of a trading journal is to increase consistency. This is done by detecting errors made on your previous trades and making sure you do not make the same mistakes again. You will want to review each setup and review your rules to make sure that you are following them correctly.
Some obvious errors would be reading indicators incorrectly or setting stops and limits at wrong prices due to misclicking or entering the digits off by a one decimal place (these things happen.) Some harder to detect mistakes might be opening a trade too early without letting a setup to fully develop. In our DailyFX strategy sessions, we always speak of the importance of letting the most recent candle close to confirm a valid signal from any technical indicator. Was each signal still valid after the candle closed for each of your trades? Or did you get faked out on false signal?

Marketscope has a great built in tool to save each of your charts after you place a trade. I recommend creating a dedicated folder on your Desktop for your trade journal. See the image below:

Learn Forex: Saving Charts to Review Later




By saving each of your setups, you will be able to see exactly when and where you opened your positions and ensure that no mistakes were made. Ideally you would like to see these previous charts and have no regrets on the trade placed. Setups so clear that if they were on live charts, you would still place the same trade. That’s consistency. To assist in remembering these trades, you can also keep a formal journal like Walker England recommended in an earlier article about trade journals.

Reason #2 – Journals Keep You Accountable

Depending on the route you take, trade journals will keep you accountable in one of two ways. Either you will keep your trade journal private and review it on your own, or allow other traders to take a look at it and give feedback. Both methods are effective and will help keep you accountable.
If you go the personal journal route, it’s probably easiest to keep your thoughts and screenshots inside a Word doc (although a physical notebook could work to simply jot down your thoughts.)
If you go with more of a public journal, you will probably want to record your trades and thoughts on an online blog or forum. This will allow traders from anywhere in the world to see your trades win, lose or draw. A great place to start an online journal would be our DailyFX’s My Trading Journal forum.
Whether you are reviewing your journal yourself or allowing people online to review it, this gives you extra incentive to place clear, valid trades on your account and make it more difficult to deviate from your strategy. You will know in the back of your mind that you will have to face your decisions later on in your journal and possibly have to face others if your journal is public. This will help you become more aware of times when you let emotions dictate your decisions rather than your strategy’s logic or when you decide to “get creative” and place a rogue trade without a strong basis for it.
It’s good to have accountability. Many traders can fool themselves into thinking they are rationally making trading decisions only to find out later that they didn’t follow their strategy at all.

Learn Forex: DailyFX’s My Trading Journal Forum




Reason #3 – Journals Help You Improve Your Trading Technique

Diligently looking at your trades over and over againis what separates ‘minor league’ traders from the professionals. Seeing how each trade plays out you may discover tweaks that can be made to further improve your strategy. Getting better every day is what it’s all about, and having a journal to go back and review can certainly do that.

Here are a few examples of ways your strategy could be improved:
Trade Like a Professional Athlete

Trading is hard and it’s competitive. It is clear who the winners and losers are and in order to be the best you need to emulate what the best do. It takes a little bit of extra time to journal, but it could make all the difference. Create a journal to increase your consistency, increase accountability and improve your trading technique.

- - Written by Rob Pasche


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Article Summary: Many traders learn to use the indicators that are based on past price action to develop a trading plan. While many of these indictors have their place, there are other indicators that help you see where price is likely to stop before the time arrives. Naturally, this can be a very useful tool in your trading.

“If past history was all there was to the game, the richest people would be librarians.”
-Warren Buffet

When a new trader decides to incorporate charting into their trading, they often don’t know where to start. Most often, a quick search of how to find opportunities on the charts will lead you to the more popular indicators like a moving average, relative strength index or RSI, the moving average convergence divergence or MACD, or a Stochastic type indicator that shows you how markets oscillate up and down. The common thread of these types indicators is that they use a recent close of past price candles to hopefully anticipate immediate action to follow.

Looking Backwards

There is nothing wrong with looking at the last several periods in the market to determine aspects like whether the markets are trending or ranging. That is the often the best method to get the context for what is most likely the current state of the market. However, entering trades may be better done through price reacting to a leading indicator.

Learn Forex: Moving Averages Can Give Context But Aren’t Predictive By Their Nature





Leading Indicators

There are a handful of leading indicators that could not be given their due justice here. However, it’s important to know of the popular ones so that you can find one that works well with your current form of analysis. The basic function of a leading indicator is to help you see how price could unfold.

Pivot Points

Pivot points are a personal favorite because they are the most objective of leading indicators. Pivot points are taken from critical past price points and then a calculation is plotted on the chart to give you three key levels. The pivot point sits in the middle of the calculations with resistance points or profit targets for buy trades above the pivot point and support or profit targets on sell trades. Therefore, if you believe EURUSD is likely to move higher you could target the green resistance levels and put a stop below the lower support level that matches your risk management rules.

Learn Forex: Pivots give you objective points to target with your trade.





Elliott Wave

Elliott Wave is a theory about the market in how trends and corrections unfold. The main arguments are that a trend subdivides into 5 waves with each wave displaying distinct characteristics. The leading nature of Elliott Wave comes in its use of Fibonacci ratios. If you’re unfamiliar with how to trade Fibonacci relationships, you can register for this FREE online course HERE. One common ratio that is used to define a profit target is that wave 5 often travels 61.8% of the distance covered in waves 1-3.

Learn Forex: Elliott Wave is very helpful for gathering context of the market




Sentiment

Trading with sentiment may seem counter intuitive at first. That is because a trading signal comes from reading sentiment by taking a trade in the direction of the trend but is opposite against the majority of traders or investors. Therefore, if there is a strong uptrend but the majority of traders are short or selling, then you would look to enter against the majority and trade in the direction of the trend.

Learn Forex: Don’t Fight the Trend & Don’t Follow the Herd



The reason that sentiment is considered a leading indicator is that it is used on the premise that all things being equal, a trend will continue and traders who are fighting the trend will only prolong its existence as they exit their trades against the trends to prevent themselves from losing more capital.

LearnForex: The DailyFX Speculative Sentiment Index Is our Sentiment Tool of Choice



The Speculative Sentiment Index or SSI is updated twice a day for FXCM or DailyFX Plus account holders. Otherwise, it is updated once a week. This information can be very helpful in giving you an edge during a strong trend.

Closing Thoughts

There are no perfect indicators. By their nature, an indicator will help you see likely outcomes; however, you shouldn’t seek certainty because it does not exist within indicators. Leading indicators can be a helpful addition once you know how to use them to capture an edge in your trading and hopefully this article has made you more comfortable in accessing these great options.
Happy Trading!

-Written by Tyler Yell, Trading Instructor


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Article Summary:Creating a Forex trading strategy does not have to be a difficult process. Today we will review a simple MACD strategy for trending markets.
It can be extremely difficult for new traders to finalize a trading strategy for trading the Forex market. The options for market entry are virtually unlimited, and it is often good to have a simple strategy on standby. Today we are going to review the basics of a simple MACD strategy, based on finding the trend then utilizing an indicator for execution.

So let’s get started!

Find the Trend
The first step to trading any successful trend based strategy is to find the trend! One of easiest ways to find the trend is through the drawing of a trendline. Traders can connect the lows in an uptrend and find a clear area of where price is supported. Below we can find an ascending trendline on the EURCAD.

Given the information above, traders should look to buy the EURCAD as long as it remains supported. If the trend continues, expectations are that price will remain above support and new highs will be created.

Learn Forex –EURCAD Trendline




MACD Entry

Once a trendline is drawn, and a trading bias has been established traders will begin looking for areas to enter new positions. One of the easiest ways to find a technical trigger is through the use of an indicator. Below we can see the EURCAD daily graph, this time with MACD added. Since we have identified the EURCAD in an uptrend traders will look to buy when the MACD when momentum returns to the underlying currency pair. This occurs whenthe Red MACD line to crossover the Blue Signal line, prior to executing their orders.

Below you will find several examples of past MACD crossoverson the EURCAD. Note how only buy positions are to be taken on bullish crossovers as the uptrend continues.

Learn Forex – EURUSD & CCI




Manage Risk

When trading markets, there will always be a degree of risk. When trading trends, it is important to know that they will eventually come to an end. In an uptrend like the EURCAD, traders may place stops under the established line of trendline support. In the event that price breaks under support, traders will wish to exit any existing positions and look for other opportunities.

---Written by Walker England, Trading Instructor



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Article Summary:Trendlines are a staple for technical Forex traders that can be used on any currency pair and on any time frame. Follow these 3 easy steps to drawing trend lines which is a powerful tool to time entries and exits of a trade.
A trendline is probably the most basic tool in the technical trader’s toolbox. They are easy to understand and can be used in combination with any other tools you might already be using. By definition, a trendline is a line connecting two or more lows or two or more highs, with the lines projected out into the future.Ideally, traders look at these extended lines and trade on prices reacting around them, either trading a bounce of the trendline.

So, what can we do to make sure the trendlines that we've drawn are sound?

Tip #1 – Connect Swing Lows to Swing Lows (or Swing Highs to Swing Highs)

We want to draw a line connecting either two (or more) swing lows or two (or more) swing highs. For those unfamiliar with the term swing highs/lows, we simply mean the peaks and valleys created with zig zagging prices. Once we connect peaks with other peaks or valleys with other valleys, we want to see the line not being broken by any candle between those two points. Take the examples below.

Learn Forex: Draw Unbroken Trendlines




In the first image, you will find that we successfully drew a line connecting two swing lows. But, between those two points, the price broke through the line that we drew. This invalidates the trendline.

What we want is what we see in the second image, two swing lows connected together by a line unbroken by price. This is a valid trendline that is ready to be projected out into the future.

Next time price gets near this trendline, we will want to look for a bounce. A convenient way of trading this type of setup is using Entry orders. Entry orders can be set to get you into a trade at a specific price.
I like to set my Entry orders several pips above a support trendline or several pips below a resistance trendline. That way if the price reacts before getting to the trendline, I still have a chance at getting into a trade. You have to remember that if there are many traders looking at the same price to act as support/resistance, there is a chance that orders will be stacked around these levels. If there are enough orders keeping the price from getting to the trendline, the price might not get to you order if it’s placed directly on it.

Tip #2 – The More Connecting Points, the Better

You've probably noticed that I have referenced two or morehighs/lows make up a trendline. The reason I mention "or more" is because trendlines can continue to be relevant far out into the future and can be bounced off of several times. As a general rule of thumb, the more times a trendline has been hit and respected with a bounce, the more important the market believes that it is. Like anything, however, trendlines cannot last forever. So after a multitude of bounces, one has to expect a break to eventually occur.

The first reason this is true is that you can draw a line connecting any two points on a chart. Just because there were two distinct highs in the last 50 bars and you drew a line between them doesn't actually mean the line is a valid trendline. What you would have is a potential trendline.

To truly validate a trendline, you need to see the price actually react from a line projected from a trendline drawn based off of two prior points. Essentially, a third high/low is needed to truly solidify a trendline. Once you have this, you can then feel better about looking for opportunities to exploit the market when price reaches the trendline again. While having a third high/low is recommended before looking for a trade, it is not required. Aiming for an entry on point #3 below could work out just fine.

Learn Forex: Validate Trendlines




Each time you see the price bounce off the same line, the more likely it is that others are watching it too and are playing the same game you are. This could help you get several good entries in a row, but remember trendlines won't last forever. So you want to make sure you set proper stop losses to get you out quickly if the support/resistance trendline eventually fails.

Tip #3 – Buy Bullish Trendlines, Sell Bearish Trendlines

The trend is your friend! This steadfast rule also applies to trading trendlines. For experienced traders, this basically means we should only look to buy at bullish support lines and sell at bearish resistance lines. For traders not into trading jargon, let the following images below explain this to you.

Learn Forex: Buying Bullish Support Trendlines




An upward slanting (bullish) trendline means the price has been trending up, so we want to look for buying opportunities. Buying opportunities occur when the price drops down and comes close to the trendline that has caused upward bounces before.

Learn Forex: Selling Bearish Resistance Trendlines




A downward slanting (bearish) trendline means the price has been trending down, so we want to look for selling opportunities. Selling opportunities occur when the price moves up and comes close to the trendline that has caused downward bounces before.
Trading only in the direction of the trend well let us exploit potential trendline bounces as efficiently as possible. And while they won't always give us winning trades, the trades that are winners should give us more pips than had we been attempting to place trades against the trend.
(Note: There is also the potential to trade a break of a trendline rather than a bounce, but that is a more advanced technique. This is something to be covered in a future article.)
Connecting the Dots
Coming full circle, trendlines are a very simple tool to use. You are connecting dots on a chart. But hopefully the 3 tips above will help you take drawing trendlines to the next level. Make sure that the lines you draw are connecting two or more highs or two or more lows, but have not been broken by the price between those points. Remember to look for at a 3rd bounce to validate a trendline. Also, make sure you are taking advantage of trading with the trend by looking for buys in bullish markets and sells in bearish markets.

Overall, I hope this makes you more confident in drawing trendlines. Good trading!

---Written by Rob Pasche

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Article Summary: Finding reversals of momentum may prove difficult for Forex traders. Today we will review price action tips using the Bullish Morning Star candle pattern.

Understanding and interpreting candle patterns, is an important skill to master for Forex price action traders. While these patterns may seem foreign at first, their recognition can help aid in finding trend reversals and continuations. That is why, with a little practice you can work candle analysis into any active trading strategy. With this idea in mind, we will again continue this month’s focus on recognizing and trading easiest identifiable candle stick patterns. Today we will review the bearish evening star.

What is a bearish evening star?

A bearish evening star is similar to our previously discussed morning star pattern. These patterns are inverse from each other, with the bearish evening star normally found at the end of a period of bullish market pressure. Pictured above we can see the pattern itself which is alsocomprised of three completed candles. The first candle will depict a surge in priceon the underlying currency pair. The size of this first candle can vary, but it is important for this candle to close creating a higher high.
Next traders will look at the second candle of the pattern to identify a bearish evening star. Price should attempt to again breakout out to the upside here and create a slightly higher high relative to our first candle. However, any rallies seen in this position should be capped with a long candle wick with price trading back down toward the open price for the day. More often than not, a doji or inverted hammer can be seen in this position but the candle color is ultimately not important. This doji or long wick from an inverted hammer suggests that bullish price momentum is concluding .The last candle should show the beginning of fresh bearish momentum.

USDCHF with Bearish Morning Star




Uses in Trading

Once you are feel comfortable find the bearish evening star candle pattern, it can then readily be applied into virtually any trading strategy. Above is a great example of the pattern at work on a daily USDCHF chart in the confines of a downtrend. The USDCHF is seen retracing from the formation of a lower high, ending in the highlighted morning star. After the completion of the third candle in the pattern, traders can reasonably assume the trend has turned back to its primary direction while looking for fresh opportunities to sell the USDCHF.

As you can see candle patterns are a great way to interpret price action. However, keep in mind reversal patterns may symbolize a change of direction but not necessarily suggest a complete trend reversal. Traders should keep an eye on the wick of the second candle of the Evening Star pattern. In the event this point is exceeded, it can denote future trend shift for a currency pair.

---Written by Walker England, Trading Instructor

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Article Summary: Breakouts occur when areas of support or resistance collapse. Today we will review trading tips for trendline breakouts.

Drawing a trendline can be an extremely useful technical tool for Forex traders. While traders initially will use a validated trendline to trade market swings with the primary trend, they can also be used for breakouts. So what exactly should a trader do in the event that price moves through an existing line of support or resistance? Today we will find out as we examine what to do in an instance where price breaks through an existing trendline.




Trading a Breakout

First, before a breakout strategy can be traded, traders need to establish a clear line of either support or resistance. Above we can see the GBPCAD on a 4hour chart with a validated trendline supporting its upward move. While there have been many opportunities to buy into the current uptrend, breakout traders will wait patiently for this line of support to collapse. In the event that price moves through these level, traders can reasonably assume the primary trend has ended and reconfigure their trading bias.

Breakout traders will look to take advantage of the first price swing a currency pair makes. In the instance of the GBPCAD uptrend, traders will set entries under the rising trendline. In the event price breaks our trendline orders will be triggered as traders attempt to then trade towards lower lows. Pictured below we can see this plan put into action with a potential entry to sell the GBPCAD on a breakout below 1.6319.Now all that is needed is a stop and limit to complete this trading plan.



Stops and Limits

To complete the trade idea, traders can look to limit their risk using a stop above the previous line of support. Traders can set their stop 1 ATR value above this line, so in the event of afalse breakout, traders will wish to exit any newly created short positions. Profit targets can be managed in a variety of ways as well. Traders may extrapolate their risk to find a positive Risk:Reward ratio or even employ a trailing stop to lock in profit as a new trend develops.

---Written by Walker England, Trading Instructor

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Article Summary: GBPUSD has spent much of the month above the Ichimoku Cloud signaling a Bullish Market for the pair.If price action tips its hat at trend continuation then here are the levels you can focus on to trade.

“If you trade Countertrend, you are gambling, and although you will often win and have fun, the math is against you, and you will slowly but surely go broke. Countertrend setups in strong trends almost always fail and become great With Trend setups..."
-Al Brooks, Trading Price Action Bar By Bar

Trading against the trend can be profitable. In fact, there are times when you catch a counter trend move that so big that you think you’re smarter than the market and that this is where the money is to be found. However, in the long run trading against the trend is often a losing game.

There Are Opportunities against the Trend, but Leave Them Alone

Ichimoku is a trading indicator that helps you see opportunities with the overall trend. That doesn’t mean that you won’t have losing trades and that doesn’t mean that Ichimoku guarantees profitability. It does mean though, that Ichimoku allows you to see counter trend trades as an opportunity for you to enter with the trend at a good price but not as a way to make a quick buck against the overall trend which has all the momentum. In other words, counter trend trading does offer opportunity but it should be seen as not worth the downside risks that come with it like the assumed trend resumption.

The Story of Speculative Sentiment Index

The Speculative Sentiment Index or SSI helps you see in a snapshot the number of traders who are trying to trade against the trend. Over the years, I’ve come to the conclusion that the majority of traders against the trend are often trading on hope rather than price action. The SSI tool shows you FXCM's trading book or what our clients are trading so that at a glance, you can see where traders are in the market and if there are large numbers of buyers or sellers and whether they are exiting or entering.

Learn Forex: Price Drops as Counter Trend Traders Get Hurt




The graph above is taken from our SSI data. The proper way to read it takes some training to get comfortable with using SSI as a trading tool but it is worth it in my opinion. Above you see that going back to late May, FXCM traders were net long AUDUSD and have stayed net long AUDUSD as price as shown by the green line has dropped 1,000 pips plus. There were assuredly a few counter trend traders that made money by buying AUDUSD at certain points along the way but the message is clear that the opportunity is with the trend and not against it.

Weekly Ichimoku Trade: GBPUSD Buy Entry Based on Price & Lagging Line Trading Above the Cloud




Entry to Buy: 1.5625
Stop: 1.5525 (recent price support on long wick near bottom of the cloud)
-Long wicks provide a key price action signal that you can learn more about below.
Limit: 1.5785 (conservative with trend target near June high)
-Full Candle Bodies above the Kumo Cloud
-The trigger line (black) is above the base line (light blue) or is crossing below
-Lagging line is above price action from 26 periods ago (Bright green line)
-Kumo ahead of price is bullish and rising (blue cloud = bullish Kumo)
Ichimoku is a dynamic tool that can prevent you from needlessly trading against the trend. Even though trading against the trend can be exciting and even profitable on occasions, it should not be seen as the bread and butter for newer forex traders. On the chart above, the GBPUSD trend trade is looking for a move off recent support and if the trend continues we can benefit from a great buy trade at a good price in relation to our risk levels.

Happy Trading!

---Written by Tyler Yell, Trading Instructor

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Article Summary: Using this simple Forex technical analysis technique, determine the relative strength and weakness of a currency rather than a currency pair. This is an easy way for Forex beginners to identify stronger versus weaker currencies to trade. By using this simple analysis tip, we find the Swiss Franc (CHF) and Japanese Yen (JPY) remain 2 of the stronger currencies while commodity currencies New Zealand Dollar (NZD) and Australian Dollar (AUD) remain the weakest.

Gauging relative strength of currencies is a common method employed by traders of all skill levels. The analysis is fairly simple and straight forward as previously laid out in “Know the Strong and the Weak Currencies.” The process can take about 15-20 minutes and doesn’t need to happen but once or twice per week.
Currency trends can be long and strong. Current trends are no different as the Swiss Franc and Australian Dollar are current market examples. (To learn more about creating your own grid as noted below, see “Trading a Weak Australian Dollar.”)

As a matter of fact, when making a note of the tally of strong versus week this afternoon, we discovered that the Swiss Franc is above its 200 period Simple Moving Average against the other 7 main currencies. Likewise, the Aussie was down and weaker against 6 counterparts.



Notice in the chart above for FXCM’s Speculative Sentiment Index Analysis, the red boxed area represents those currencies that are being sold to buy the Greenback. Notice how the strongest currencies (CHF and JPY) are being sold while traders buy the Dollar.

Additionally, the AUD and NZD are the 2 weakest currencies yet the retail traders are buying them while selling the US Dollar. Clearly, the traders in these 4 currencies are fighting the trend. This chart in isolation would suggest current trends of strength and weakness may continue.

Placing a Strong or Weak Currency Trade

Generally speaking, there are 3 ways to trade a strong Forex trend. The first 2 methods pertain to matching a strong currency against a weak currency creating a currency pair. Using the chart above, a trader may look to buy the CHF while simultaneously selling a weak currency like the NZD or AUD. This is a very common method practiced by experienced traders who would sell the AUDCHF pair or the NZDCHF pair noting they are trading at levels not seen in the past 24 months and may consider using our 4 step guide to trading breakouts.

Another way to trade a strong (or weak) currency would be through a basket of currencies. There are several advantages to trading baskets with one of the most important advantages being diversification. By choosing a currency rather than a pair, you have your eggs spread across multiple buckets without being exposed solely to a specific currency pair. Diversification becomes especially important during high volatile market conditions including news events.

That way, if there is a surprise announcement by the Swiss National Bank where the AUDCHF actually strengthens which is contrary to our trend analysis above, then our account is not fully exposed to the surprise news.

Trading baskets can be handled in many different ways. You can create your own basket or use the Mirror Trader Platform to organize your trades. For example, let’s assume you normally trade a 100k position but you want to spread your trade across four Aussie pairs. Then, utilize a 25k position for each of the four pairs giving you a total exposure of 100k.
Bring a powerful basket approach to trading strong Forex trends. This simple analysis technique will help you identify a relative strong or relative weak currency to trade.
Good luck with your trading!

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education



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Article Summary: A Trading Checklist is a subpart of your trading plan or a condensed trading plan that you can reference when you’re on the edge of your seat about to jump in the market.

“In the market - time is not money - time is time and money is money.Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience.”
-Jesse Livermore, famous trader of the early 20th Century

Building a trading plan is a key part of every trader’s success. Whether you are an individual trading your risk capital or you are the head trader at a major institution, you likely have some type of indicator that alerts you to a trade potential. However, you will have a hard time being consistent if you don’t have a trading plan and an accessible trading checklist to refer to before entering every trade.




Trading Plan vs. Trading Checklist

Both are equally important. A trading plan encompasses which markets you will trade, how much capital you will trade with, what chart set ups you will devote your time to, how you will manage your risk and what underlying fundamentals should be present for you to put your money at risk in order to chase a profitable opportunity. In other words, a trading plan will describe the “edge” you have that allows you to comfortable trade your market.
Sadly, many amateur traders do not have a trading plan and so they’re chasing anything that is talked about on TV or that they hear someone else say they’re trading. If you don’t have a trading plan yet, then chances are you have trading regrets such as seeing a profit turn into a big loss or taking on too big of a trade size for your capital base. The good news is that with a few steps, you can turn those regrets into an effective strategy.

Developing Your Checklist

Here are the basic components that your checklist should cover. Most of these questions can be answered in a quick yes / no fashion so it should only take you a few seconds for each. After you go through the 5-8 questions, you should be on your way to making a higher probability trades.

Learn Forex: You Can Apply Your Checklist to the Chart You’re Looking to Trade




Here are some questions you can use to make up your checklist that correspond to the chart above:

Is the market trending or ranging?
Are the bulls or bears currently in control?
Are the indicators that I use confirming my trade?
Is there a significant level of support or resistance nearby?
Are there any significant new releases coming up that could impact the trade?
Where should the market not go if my edge is correct or where should i get out of the trade?
Am I utilizing no more than 5x leverage on my account?
Should I enter this trade based on the prior answers?

There is no need to worry about being a perfect trader who will never take a loss because it won’t happen. However, you can focus on taking trades that align with the set ups that you feel deserve your time and capital. A trading checklist like the one above is a tool you can use to make sure that you’re on the path to consistence trading.

Happy Trading!

-Written by Tyler Yell, Trading Instructor


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Article Summary: Identifying a currency pair for trading is an important task for Forex scalpers. Today we will examine the EURNZD to determine if its 949 pip trend is viable for trading.

Each week Forex scalpers are charged with a variety of important decisions to make. Probably one of the most difficult is finding which currency pairs are best suited for trading. Strong trends are preferable for scalping because one a trend is found, traders can decide their preference to buy or sell a specific currency pair. Today we will review how to simplify this determination by using a series of trend and momentum analysis techniques.

Learn Forex –EURNZD 4Hour Trend




Above we can see the strong uptrend being played out on the EURNZD. Over the past 10 days the pair has been easily cruising to higher highs, advancing over 949 pips from its monthly low at 1.6325. To identify the optimal trading scenario for uptrends like the EURCAD, traders can also look for a series of higher lows and higher highs on shorter term charts.
Below we can see the EURCAD divided into a series of trading blocks. These pricing blocks have been created using a 30min graph, using the techniques discussed in a previous Trend of the Day Article, The Midweek Trend Review. With both blocks heading higher this is normally a signal of a strong Forex trend. However, many traders may find themselves indecisive on the EURNZD with current price action declining during today’s trading. Which begs the question if scalpers should still be looking to buy the EURNZD.





One advantage of using the blocking method is that the previous highs and lows will have already been marked on your graph. Above we can see that price has yet to descend below the previous low at 1.6989. In the absence of new lows, traders can reasonably assume that a new downtrend is not developing.

With this in mind, traders can proceed to patiently look for momentum to return to the EURNZD before perusing fresh scalping opportunities. In the event price does decline under the previous low, this would be a strong signal that our trend has at least temporarily ended allowing traders to pursue other opportunities and currency pairs.

---Written by Walker England, Trading Instructor


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