CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.97% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Click here to read full risk warning

Gaining an Edge

There are numerous scientific studies alleging that forecasting market movements is practically impossible. In 2013, Eugene Fama, Lars Peter Hansen and Robert Shiller got the Nobel Prize in Economic Sciences for a study that questioned our abilities to accurately forecast short-term asset price changes.  This raises the question of how traders can gain an edge in the market and consistently profit. 

I personally use technical analysis (the study of price action) to identify trading opportunities.  I think it is important to distinguish what we are doing as traders - as a technical analyst however, at no time do I attempt to forecast – I think this should be left to economists

Read More

Introduction to the Candlestick Pattern – Marubozu

Technical analysis is the study of actual movements in the price of a financial product.  However in my opinion, technical analysis is less about trading and more about the study of mass psychology.  We study the way people react in certain situations in the market, which is quite prevalent when identifying and trading using chart patterns. 

Read More

Developing Your Trading Strategy

One of the most common questions I am asked is how you can develop a trading strategy to use in the foreign exchange markets.  Like trading any product, there is a time-tested process to work through to develop a trading strategy or plan that you will be able to implement with confidence.  As simple as it sounds, you need to work out what will and won’t work in the market as you look to develop some trading rules. 

Read More

How to Use Forex Pattern Recognition Software

Pattern recognition software is a broad name for programs that use mathematical algorithms and artificial intelligence to identify specific graphic patterns in price movement. This type of software is used by traders in tandem with charting software to inform their trading strategy, timing, and position. Using AI, pattern recognition software scans price action charts for specific breakout patterns that are commonly understood as indicators of market change, thereby alerting traders to possible profit opportunities and helping them manage risk.

Read More

One of My Favourite Candlestick Patterns – the Doji

Technical analysis is the study of actual movements in the price of a financial product.  However in my opinion, technical analysis is less about trading and more about the study of mass psychology.  We study the way people react in certain situations in the market, which is quite prevalent when identifying and trading using chart patterns.

Read More

How to Calculate Margin for Forex Trades

Margin and margin requirements are something that no forex trader can afford to ignore. Margin has often been labeled a “good faith deposit” to open a position.

Margin is usually presented as a percentage amount of the full position—0.25%, 0.5%, 1%, 2%, and so on. You can calculate the maximum leverage you can use with your trading account based on the margin required by your broker.

Read More

Trading Forex with Consistency is Underrated

Determining precisely when to initiate a trade may be one of the most difficult decisions foreign exchange (forex) investors face. It is what is referred to as the entry signal and figuring out a consistent way of entering and exiting a position is an extremely important trait for all traders to have.

I believe that most people trade forex randomly, indiscriminately, and without any process or methodology. These people will stare at a chart to see if something jumps out at them. Even if they must stare at it for a few minutes, they will keep on looking until they find something

Read More

Determining Overbought and Oversold Conditions Using Indicators

As a trader, being able to identify overbought and oversold market conditions can help you determine when to enter and exit a trade, what position to take, and when a trend reversal may be imminent. This insight allows you to manage risk and make more informed trading decisions.

The most popular indicators used to identify overbought and oversold conditions are the Relative Strength Index (RSI) and the Stochastic Oscillator. Both tools are momentum indicators and are plotted on a separate graph adjacent to that of price action. They are also banded oscillators, and as such, have a set graphic range between zero and 100. Overbought and oversold readings bookend the upper and lower bands, or extremes, of this range.

Read More

Using the ADX Indicator for Forex Trading: A How To Guide

In forex trading, there’s ample reason behind the rhyme “the trend is your friend.” Trading in the direction of a strong trend both minimizes risk and increases your potential for profit.

The average directional index, or ADX, was designed to help traders identify trending markets and determine trend strength to remain on the optimal side of a trade. Developed in 1978 by prolific engineer-turned-analyst J. Welles Wilder Jr., this trend indicator has earned its place as a staple in analytical trading strategies for forty years.

Read More

Analyzing a Parabolic SAR: How to Spot a Buy Signal

The parabolic stop and reverse indicator (PSAR) was developed to help traders locate buy and sell signals for current trends and determine when to enter and exit trades based on an asset’s momentum. It was created by J. Welles Wilder Jr., a prolific mechanical-engineer-turned-analyst who pioneered a variety of the technical analysis tools that financial traders still rely on today. His other feats include the relative strength index (RSI), the average directional index (ADX), and average true range.

Read More