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Category Archives: trading tutorial
Do You Know Forex Basics? When a trader writes, many times we forget that not everyone has a deep understanding of trading and all that it entails. The amount of eyes I see glaze over when I start talking about pips, bid/ask, NFP or the influence of interest rate on the value of a currency, is beyond count. Over the next few blog postings of mine, I want to take a rudimentary look at the Forex market and get many of the newbies up to speed on the basics. This is not going to be a full -fledged trading course but just enough to give you a “birds eye view” of this lucrative opportunity. Let’s define the Forex market Quite simply, the FX market is where the currencies of the world are traded. Think of it as trading one currency for another the way you do when exchanging currency for …
As a trader, there are a few ways you can enter a trade and which one you use can actually make a difference in the outcome of a trade. Certain orders, depending on when used, can cause your position to suffer from slippage. This essentially means that your order will get filled at a price different than what you expected. For the most part though, retail Forex traders don’t suffer too much from this unless they trade around news releases. For the most part, the slippage is small, if any, in normal market conditions. It really all depends on what happens between pressing the order button and the order getting filled. Market Order: This is the basic way of entering a trade. When you click the buy/sell/close button on your platform, you are requesting a transaction at the best available market price. The issue with there are that the bid/ask …
Fundamentally, trading really is a simple game, yet it requires a great deal of thought, effort and persistence to succeed. In poker the saying often goes that it “takes five minutes to learn and a lifetime to master”. Trading is similar in many respects and yet if it’s approached in the right way, competence can be achieved much more quickly than most people realize. There’s nothing complicated. There’s no magic formula, no holy grail and no silver bullet. Just simple, well thought out and carefully ordered common sense. Here are my six keys to trading success: Technique and Market Knowledge This is the one which most new traders spend the vast majority of their time on and yet actually it only equates to a small part of trading success. Still, it’s important to have a good knowledge of the various facets of the market, your chosen strategy and the products …
The Basics of Kagi Charts Introduction Several years ago we started using range and Renko charts with our systems here at NetPicks. This has piqued people’s interest in some of the other more esoteric chart types. In this article we’ll introduce you to Kagi charts. Kagi (rhymes with touchy) charts were developed in the 1870’s in Japan, and many of us in the US first learned about them from Steve Nison in his book Beyond Candlesticks. Like Renko charts, Kagi charts are independent of time and have the virtue of filtering out much of the market noise, thereby giving a clear indication of price trend. Basics Looking at a Kagi charts you might think you’re seeing a very long snake gradually weaving its way to the right. There appear to be no distinct price bars as you’d see in time based, Renko or other charts, but that’s simply due to …
Fibonacci and Moving Average In the last post, we covered two very popular methods that technical traders use to trade. Horizontal support and resistance along with trend lines are in almost every trading book you will ever pick up. Check out any forum on trading and you will also see these two talked about at length. Entire trading strategies are made up of these two ways to keep track of technical levels. This multi part article is not about a strategy though. We want to focus our efforts in finding the high probability areas to take trades off of. That is going to lead us to two more methods we can use to identify where the majority of traders may take trades from. Knowing this allows us to increase the probability that our trades will be winners. Does this sound too good to be true? Look at it this way. …
Part 1 One thing traders love to do is to always attempt to increase the probability of a successful trade. Why not? After all, who wants to enter a low probability trade? As a side note…kneejerk traders who fall victim to fear and greed are the low probability main culprits. One question that comes up when talking about probability of success is what constitutes a higher probability. That is what this article is going to look at. Regardless of your school of thought or method of trading, it is humans that move the market. Sure, you may be using a blackbox strategy or an expert advisor such as Eurorise but the bottom line is these were programmed by humans. The whole idea behind the strategy came from the thoughts of a trader. When several factors are in play at the same time, does it not increase the chances of a …
What Traders Need to Know to Assess their Trade Plans and Track Their Trading Progress I recently ran into a neighbor at the local grocery store who knows that I have been trading full time for a number of years now. He has a full time job at the Pentagon, but like a lot of people, also has a stock portfolio that he manages for himself. He often asks me what I think about particular stocks, or what direction I think the market is going, but this time the first question he asked me was “what is your win rate”? Now, I usually tell him that my opinion about particular stocks or the direction of the market is of little importance (even to me), and that no one should be taking stock trading advice or tips from anyone without first having their own solid back tested trading plan. But this …
Identifying Chop with the ADX The last few articles in this series have focused on identifying chop in the market. We started out with an overview, listing several technical analysis indicators that can help in the process, next we focused on the Bollinger Band Squeeze to identify consolidations, and finally we looked at a noise filter to highlight noise, or choppy price action, in the market. In this article we’ll take a look at the ADX (Average Directional Index). What Is It? The ADX was developed by Welles Wilder to identify periods of trending price action. The calculations for the indicator are based on changes in consecutive bar highs (+DI) and consecutive lows (-DI). DI stands for Directional Indicator. These values are combined and smoothed to yield the ADX. The exact calculations are too complex for this article, but you can find the details on line. As originally designed by …
Today is a new day right, so why should I bother looking at yesterday? Is there any use at all in looking at what the market did and where, during the previous day? YES! Markets constantly shift from balance to imbalance, consolidation ranges to directional exploration. The most relevant and new information we have about the possible acceptance of price is by comparing the open and the market’s reaction to yesterday’s range. So the question is what constitutes acceptance. Depending on which methods you use to analyze the markets, the answer to this may vary. Broadly speaking, it is persistent trading of a market at the same prices as were previously traded. So if the market spends a reasonable amount of time at these prices without encountering any major activity to move it to new prices, this can be considered acceptance to some degree. This doesn’t necessarily mean that price …
Are there really ‘secrets’ to successful trading? In our 25+ years of personal trading experience and our 16 years of investment education, we can tell in all honesty that there really *are* key secrets to trading success. Whether you trade Forex, Futures, Stocks or Options – these secrets cross all boundaries and apply to every trader (us included). So take a listen below and see if you’ve got what it takes…
