Wednesday, January 28, 2009
Currency History - English Currency - Thomas Cook Foreign Exchange 890
A comprehensive forex stockbroker list investment banks with dealing lodgings, commercial with operations, and online that perform a larger flea market. The investment with forex interchange capabilities embrace Morgan Stanley, Merrill Lynch, Goldman Sachs, Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, Deutsche Bank, JP Morgan, Prudential Securities and Bear Sterns.
Some of the brokerage filling station are not directly affable for all following. For specimen, inter-bank arcade dealers and in commercial banks handle huge purchaser orders themselves.
The top commercial in the Forex Broker List, having entomb-bank and treasury operations, are JP Morgan Chase Bank, Bank of America, CitiBank, Wachovia Bank, Wells Fargo Bank, Fleet Bank, US Bank, HSBC Bank, Sun Trust Bank, Bank of New York, State Street, Chase Manhattan Bank, Key Bank, Branch Bank, PNC Bank, Lasalle Bank, South Trust Bank, MBNA America Bank, Fifth Third Bank.
The online trader list of lesser forex financial statement sees new entrants almost on a regular starting point.The online agent list includes Forex Capital Markets, MG Financial Group, CMS Forex, Global Forex Trading, GCI Forex Direct, Forex.com, GAIN Capital, Real time Forex SA (Geneva), Global Forex, Commerce Bank and Trust, FX Solutions, Forex MHV, swissDirekt (Swiss), Goetz Financial Forex, NY Broker Borsentermin AG, Act Forex, Online Trader, Shield FX Online Currency Trading, Forex Trade Signals, CMC Group PLC, Foreign Currency Direct Limited (UK), FX Advantage, FXCM, Forex Millenium, ACM REFCO, REFCO Spot, Easy Forex, Online Forex Trading Inc., Lincoln Corporation, Global Trade Waves, Ltd., and CIBC FX Web Dealing.There are many populace who are entranced in forex substitution. But before you start swap in , getting a good online exchange education is important. The forex shop is principally a literal marketplace with its own forex footing and processes so it is important you extent the fundamentals with an online swapping tutoring.
Why Online Forex Trading Education?Most family who want to try transaction are regularly busy with more of life to take care of. They probably do not have the time to attend a strategy on forex trading. Therefore, an online tradeoff training is more suited.
Since itâ�,��"�s online, you can take your time to read and abstract the word at your own pace. Also most of the basics of forex tradeoff can be found online for free. There are tons of websites that make available free exchange courses and tutorials.
There are also free forex trading online available plus well ahead substitution online such as the forexmentor program. While itâ�,��"�s usually not free, the charges are reasonably cheap compared to attending a forex swap course in a classroom.
Another important part of an online forex interchange learning is method. I believe no matter how well you understand swapping or if you result an A in a transaction enterprise, the real deal comes when you actually start exchange.Most forex swapping sites a demo account for new beginners to interchange to gather how to govern their forex trading account. There is no monetary risk, so it is a very good way to understand the ropes.Once you feel you have enough experience, you can open a expected forex substitution account or a mini account. I would highly recommend you open a mini forex account and start transaction in reduced amounts. Forex Trading is the greatest home- business probable offered now, and mayhap even in times gone by. Let me show you why.
We just want to be see-through about who this condition is existence in print for. Anyone looking to foundation a home based business, or business, without a lot of earnings, but who is alacritous to put in the time obligatory to succeed his or her goals.
Forex Trading vs. Real Estate
One of the more in style home business is real plantation.
Let's take a look at some of the more unappealing parts of the real lands business.
Real Estate:
Amount of Money Needed to Begin:
Regardless of what the have to say, it expenses a distinguished deal of bucks to get into the real fortune business. Even the "No Money Down" systems bring to light you to an amazing quantity of risk.
Whether you put affluence down or not, you are answerable to pay for the "product" you are .
If you are incapable to find a way to foodstuffs revenue from your speculation quickly, you will be a mortgage disbursement. It only takes a few of mortgage to turn "No Money Down", to "Some Money Down", to "No Money Left".
Amount of Time Needed to Begin:
Another lie frequent on infomercial after infomercial is that it only takes a few hours a week to launch making coins in the real domain business.
We don't want to chatter for everyone else, but whom do they mull over they are kidding. So, let me get this sorted out...
? looking for a home online
? verbal communication to a realtor
? powerful around your region
? discourse to a mortgage specialist
? and all of the other things you have to do on EACH AND EVERY HOUSE
All of these, combined, will only take me a few a week?
We assume we are to see why such a substantial majority of home based businesses fail. It's misleading to believe a halfhearted attempt will lead to triumph.
Amount of Knowledge Needed to Begin:
In organization to succeed in the real assets business you have to obtain a multiplicity of acquaintance. How do you equitably value a home? How long will it take to fix, and sell, a home? How much had better planks cost? How long does it take to appoint a sink?
Those are the clean . Zoning laws, bond laws, and tax laws are just some of the more complicated topics that you'll need to fathom.
The fact is, we can endure writing about the gen you need for days. Obviously, in regulation for you to succeed in real housing estate you need a mammon of data.
Amount of People Needed to Begin:
unless you are completely used to with all aspects of the real worth business already, you will run into one of a few problems:
1. The volume of time it would take you to become usual with all sides of real holdings.
2. The amount of coinage it would cost you to FAIL at the real property business.
3. Most likely, the expanse of wealth it would cost you to build a team of people who are willing to "share" awareness with you.
Experts don't come cheap, and without them you are feeble. In our attitude, this is one of the greatest shortcomings of the real business park business.
Your attainment, at the end of the day, lies in the hands of . We can't accent this enough...you pecuniary future is dependant on the enactment of a complete outsider.
Forex Trading;
Amount of Money Needed to Begin:
Nothing. Zero. Zilch. Nada. $0.
If done right, you would not risk any bread when education to trade the Forex. Again, we supposition it's only fair for us to enlighten. Without too technical, we want you to be aware of one very important point.
Whether you are swap with $1,000,000 or $0, the figures and technology obtainable to you is identical. You can pick up the skills and erudition compulsory free.
Not only is this uncommon in relationship to other home business, it's also one-off in family member to other tradeoff markets (There will be an perfect critique the benefits of the Forex vs. any of the other markets).
FX Trading Software
If you are ready to buy FX trading software, then there are several things you need to make sure you understand before making that purchase. Not all trading software is created equally, and there are many programs out there that are nothing more than paid advertisements rather than actual software programs. Worse still, other programs are really just stock picking programs disguised as forex trading software programs.
How do you know if what you are buying is a real, legitimate program? There are several things you can look for to help with your decision before you buy FX trading software:
1. Does the program offer case study results for your review? Many programs make claims but do not back them up with any real data, or the data they do show just does not make sense. Make sure you are looking at any case study data, and then verify it with your own market research before you buy FX trading software.
2. Does the software use actual market results or only historical data? Some programs use backward looking data to show what their program would have done in a past market. While that is certainly nice, it also allows the company that is marketing that program to hand pick profitable trades and thus potentially skew the results. A legitimate program will show you real time data and results of the software.
3. Is it really FX trading software, or some other kind of strange stock trading program? This may seem obvious to some, but frankly, there are so many programs out there, it is important to remember. Some services and programs today are actually only stock recommendation programs, and they are typically penny stocks. What is interesting here is that some of them actually are sponsored by the companies they promote! Also, since the price of the penny stock is so low to begin with, the pure volume of trading that occurs if a stock is recommended will artificially inflate that price, which of course is not exactly legal either! Know before you buy FX trading software that you are getting what you want.
4.Do not buy FX trading software if there is a recurring fee involved. Some sites today are actually disguised as membership sites, where you pay an amount month after month. In some months, you may only get the opportunity to make one or two trades, and depending on your bankroll, this may eat up almost all of your profit for that month. Avoid any program that charges these recurring fees. While a legitimate FX trading software platform will not be cheap, it should be a one time payment only.
There are many pitfalls a potential investor can fall into when looking to trade on the foreign exchange markets. As with any investment program, you are always at risk of losses and no program can ever 100% guarantee you will be profitable. You must research and understand the real risk involved before making a decision to buy FX trading software. While a good program will certainly increase your chances of making profit, always only invest what you can afford to lose.If you are ready to buy FX trading software, the top program available today, just released in November of 2008, is the FAP Turbo program. This program contains all the legitimate services and information that are necessary to succeed in trading FX online. For more information on FAP Turbo, visit http://www.TheFapTurbo.info. However, if you want to venture into online investing on your own, be sure you are getting reliable investment analysis from trusted sources.
How do you know if what you are buying is a real, legitimate program? There are several things you can look for to help with your decision before you buy FX trading software:
1. Does the program offer case study results for your review? Many programs make claims but do not back them up with any real data, or the data they do show just does not make sense. Make sure you are looking at any case study data, and then verify it with your own market research before you buy FX trading software.
2. Does the software use actual market results or only historical data? Some programs use backward looking data to show what their program would have done in a past market. While that is certainly nice, it also allows the company that is marketing that program to hand pick profitable trades and thus potentially skew the results. A legitimate program will show you real time data and results of the software.
3. Is it really FX trading software, or some other kind of strange stock trading program? This may seem obvious to some, but frankly, there are so many programs out there, it is important to remember. Some services and programs today are actually only stock recommendation programs, and they are typically penny stocks. What is interesting here is that some of them actually are sponsored by the companies they promote! Also, since the price of the penny stock is so low to begin with, the pure volume of trading that occurs if a stock is recommended will artificially inflate that price, which of course is not exactly legal either! Know before you buy FX trading software that you are getting what you want.
4.Do not buy FX trading software if there is a recurring fee involved. Some sites today are actually disguised as membership sites, where you pay an amount month after month. In some months, you may only get the opportunity to make one or two trades, and depending on your bankroll, this may eat up almost all of your profit for that month. Avoid any program that charges these recurring fees. While a legitimate FX trading software platform will not be cheap, it should be a one time payment only.
There are many pitfalls a potential investor can fall into when looking to trade on the foreign exchange markets. As with any investment program, you are always at risk of losses and no program can ever 100% guarantee you will be profitable. You must research and understand the real risk involved before making a decision to buy FX trading software. While a good program will certainly increase your chances of making profit, always only invest what you can afford to lose.If you are ready to buy FX trading software, the top program available today, just released in November of 2008, is the FAP Turbo program. This program contains all the legitimate services and information that are necessary to succeed in trading FX online. For more information on FAP Turbo, visit http://www.TheFapTurbo.info. However, if you want to venture into online investing on your own, be sure you are getting reliable investment analysis from trusted sources.
fx trading
Most countries have their own national currency such as the US dollar, the UK pound, the Japanese yen and the Thailand baht and these are of course necessary for making payments for goods and services within each country's borders. However, in a world where we are traveling more and more and where countries are increasingly trading with one another, foreign currency is required to pay for cross-border sales of goods and services. This means that there must be some mechanism in place to provide access to foreign currencies, so that payments can be made in a form that is acceptable to the seller, and thus the need for a foreign exchange market (or forex market which is simply short for FOReign EXchange).
In its simplest form foreign exchange refers to money which is denominated in a currency other than your own. For example, if an individual exchanges his own currency for the currency of another nation then he acquires foreign exchange. Of course we often think of foreign exchange in terms of tourism and most of us will have traveled abroad either on holiday or for business and exchanged currency on arrival at our destination to pay hotel and restaurant bills and for taxis, sightseeing and shopping. However, foreign exchange is not simply limited to the relatively small sums of money handled by tourists, but applies equally to larger transactions such as the exchange of hundreds of millions of US dollars when a US company buys another company which is based overseas.
Broadly speaking, in the US any money which is denominated in the currency of another nation would be termed as foreign exchange and it is important to remember that we are not necessarily talking here about cash. Foreign exchange can also consist of money which is available through a line of credit (such as a credit card) or that is held in the form of traveler's checks. In other words, we still talk about foreign exchange for any negotiable instrument which is denominated in a currency other than the US dollar.
When we talk however about the foreign exchange market we are not really concerned with the exchange of small sums of currency by tourists, but are looking at foreign currency which is exchanged between an international network of foreign exchange dealers and is normally exchanged in what most of us would see as being very large sums of money. For example, one of main players in foreign currency trading is the major banks and here a US bank might need Japanese yen and thus deposit several million US dollars with a Japanese bank in exchange for Japanese yen.
Today an increasing number of small investors are able to participate in the foreign exchange markets and benefit from the profits to be made as the prices of national currencies rise and fall against one another. In general however the private forex trader does not himself trade in large sums of money but is able to trade by working through brokers who are themselves major players in the market.
In its simplest form foreign exchange refers to money which is denominated in a currency other than your own. For example, if an individual exchanges his own currency for the currency of another nation then he acquires foreign exchange. Of course we often think of foreign exchange in terms of tourism and most of us will have traveled abroad either on holiday or for business and exchanged currency on arrival at our destination to pay hotel and restaurant bills and for taxis, sightseeing and shopping. However, foreign exchange is not simply limited to the relatively small sums of money handled by tourists, but applies equally to larger transactions such as the exchange of hundreds of millions of US dollars when a US company buys another company which is based overseas.
Broadly speaking, in the US any money which is denominated in the currency of another nation would be termed as foreign exchange and it is important to remember that we are not necessarily talking here about cash. Foreign exchange can also consist of money which is available through a line of credit (such as a credit card) or that is held in the form of traveler's checks. In other words, we still talk about foreign exchange for any negotiable instrument which is denominated in a currency other than the US dollar.
When we talk however about the foreign exchange market we are not really concerned with the exchange of small sums of currency by tourists, but are looking at foreign currency which is exchanged between an international network of foreign exchange dealers and is normally exchanged in what most of us would see as being very large sums of money. For example, one of main players in foreign currency trading is the major banks and here a US bank might need Japanese yen and thus deposit several million US dollars with a Japanese bank in exchange for Japanese yen.
Today an increasing number of small investors are able to participate in the foreign exchange markets and benefit from the profits to be made as the prices of national currencies rise and fall against one another. In general however the private forex trader does not himself trade in large sums of money but is able to trade by working through brokers who are themselves major players in the market.
broker
A lot of investors in the Forex trading world are among busy professionals. This means they have less time to monitor and analyze the market trends or handling their own Forex trading account by themselves. Most of them resorted to hire a reliable "Forex broker" to go through the details for them. A really reliable broker is needed in any kind of trading what more in the virtual world.
There are numerous Forex brokers booming in the world wide web. It is up to us to make the decision on which one to go for. Most of these brokers normally offer useful services to ease customers. Some of them even provide their customers with attractive trading platforms too. There are those brokers that offer other products to trade besides Forex such as metal, shares, funds and stocks. These brokers also offer various language supports, free demo accounts, mini Forex trading etc, the list goes onSome online Forex trading portal offers the broker program, where one can earn a steady stream of compensations for referrals. These portals mostly offer easy-to-use trading platform, trader education and personalized customer service. This is when any of the new investors like you "play" as the broker for your trading.
Basically, everybody wants to earn more and to get the best out of their Forex trading activities. Thus, at the end of the day, it is up to us to choice what's the best for us. How much we are willing to risk? What are the market conditions? What is our upside and downside potential? What is the logic behind entering this trade? These are the questions that we need to ask ourselves before choosing any Forex platform to trade with. Figure out these details and you are well on your way to prosper as a Forex trader.
There are numerous Forex brokers booming in the world wide web. It is up to us to make the decision on which one to go for. Most of these brokers normally offer useful services to ease customers. Some of them even provide their customers with attractive trading platforms too. There are those brokers that offer other products to trade besides Forex such as metal, shares, funds and stocks. These brokers also offer various language supports, free demo accounts, mini Forex trading etc, the list goes onSome online Forex trading portal offers the broker program, where one can earn a steady stream of compensations for referrals. These portals mostly offer easy-to-use trading platform, trader education and personalized customer service. This is when any of the new investors like you "play" as the broker for your trading.
Basically, everybody wants to earn more and to get the best out of their Forex trading activities. Thus, at the end of the day, it is up to us to choice what's the best for us. How much we are willing to risk? What are the market conditions? What is our upside and downside potential? What is the logic behind entering this trade? These are the questions that we need to ask ourselves before choosing any Forex platform to trade with. Figure out these details and you are well on your way to prosper as a Forex trader.
online Currency Exchange Converter
Looking for the best and most reliable online currency exchange converter? If the answer is yes, then you have spotted the right page. The internet has now become an indispensable element of every business and anyone looking for any services or product simply relies on Internet. This can also be said for a person who is looking for online currency exchange converter and as a result many websites have now started offering free online currency exchange converter.
This offered online currency exchange converter helps in knowing the exact amount you will be getting if you want a type of currency exchange. Prior to going for online currency exchange it is wise to know what foreign exchange is. Foreign exchange is the encashment of the currency of different country. It is also important that one is aware of the exact rates they will be getting so that there aren’t any problems in the future.
Foreign exchange usually takes place in the foreign exchange market which exists in every country. This foreign exchange market is by far the biggest market in the world. This is in terms of cash value traded which also includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.
Earlier people were dependent on banks and other financial institutions whilst undergoing currency exchange. But after the emergence of the Internet, people now prefer to go for an online currency exchange converter. The biggest advantage of selecting online currency exchange converter over traidiotnal institutions is that it not only saves time but also money. Moreover, you can do that for various countries’ currencies. Isn’t it a convenient way of doing currency exchange?
Afex is the leading UK based financial company offering free online currency exchange converter on its website. Its online currency exchange converter helps you in knowing the exact amount you will be getting when you undergo a foreign currency exchange. Afex understands that every individual has got different needs and requirements and to cater those diverse needs Afex has taken every possible step. Being the UK’s leading and largest financial company, Afex provides every service one looks for. Afex understands that talking to newstaff members every time is very annoying and can lead to frustration. To avoid this situation Afex assigns a personal account manager to you. This assigned account manager will be there with you from start to finish of your transaction. Afex’s online currency exchange converter is the most reliable tool which gives accurate currency exchange rates. And for your satisfaction you can even compare them with other tools or websites.
For more information on online currency exchange converter, associated foreign exchange, currency converter UK and online currency converter simply visit www.afex-uk.com.
This offered online currency exchange converter helps in knowing the exact amount you will be getting if you want a type of currency exchange. Prior to going for online currency exchange it is wise to know what foreign exchange is. Foreign exchange is the encashment of the currency of different country. It is also important that one is aware of the exact rates they will be getting so that there aren’t any problems in the future.
Foreign exchange usually takes place in the foreign exchange market which exists in every country. This foreign exchange market is by far the biggest market in the world. This is in terms of cash value traded which also includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.
Earlier people were dependent on banks and other financial institutions whilst undergoing currency exchange. But after the emergence of the Internet, people now prefer to go for an online currency exchange converter. The biggest advantage of selecting online currency exchange converter over traidiotnal institutions is that it not only saves time but also money. Moreover, you can do that for various countries’ currencies. Isn’t it a convenient way of doing currency exchange?
Afex is the leading UK based financial company offering free online currency exchange converter on its website. Its online currency exchange converter helps you in knowing the exact amount you will be getting when you undergo a foreign currency exchange. Afex understands that every individual has got different needs and requirements and to cater those diverse needs Afex has taken every possible step. Being the UK’s leading and largest financial company, Afex provides every service one looks for. Afex understands that talking to newstaff members every time is very annoying and can lead to frustration. To avoid this situation Afex assigns a personal account manager to you. This assigned account manager will be there with you from start to finish of your transaction. Afex’s online currency exchange converter is the most reliable tool which gives accurate currency exchange rates. And for your satisfaction you can even compare them with other tools or websites.
For more information on online currency exchange converter, associated foreign exchange, currency converter UK and online currency converter simply visit www.afex-uk.com.
Trading Forex Foreign Currency
The foreign exchange market, that is universally known as Forex, is the planet's biggest and most prolific financial exchange market. It started in 1973. As the largest and most productive currency exchange market, Forex is the platform where a vast mass of Forex trading or foreign currency trading occurs.
For encompassing such an huge quantity of complete yield day after day, Forex may be deemed as a liquid market ideal for foreign currency trading.
In comparison to other security trading, foreign currency trading doesn't happen on a set exchange rate. Indeed, monies are traded mostly among commercial banks, central banks, non-banking international corporations, private investors, hedge funds, and of course, the speculators.
Some time ago, minor investors weren't allowed to take part in this type of trading because a considerable sum of deposit was mandatory. But, in the latest years, with the steady evolution of the Internet and the increasing level of competition, smaller investors may be included in foreign trading because the prerequisite to trade in Forex has been changed.
There are a a small number of causes why foreign trading is starting to attract more and more smaller sized and medium investors. A significant cause is due to the fact that Forex trading runs 24 hours a day, 5 days a week. In comparison to the past years, in which trading was carried out exclusively via telephone, now it can be accomplished easily and constantly among traders all over the world through the use of the Internet. Furthermore, as it is an unpredictable financial market, foreign trading is the ideal spot for income opportunities as the markets throughout the world ebb and flow.
Foreign currency trading tactics utilized by traders in order to trade the market might make a huge diversity in their outcome. Forex trading is an exceptionally cutthroat field. In order to be victorious, persons must focus on a set of uncomplicated Forex trading strategies that they can implement with no uncertainty.
Find out more about forex foreign currency by visiting http://learnforexstocks.com, a popular forex website that offers tips, advice and resources including information on forex trading software, how to practice the forex market, access to a forex calculator, and more.
For encompassing such an huge quantity of complete yield day after day, Forex may be deemed as a liquid market ideal for foreign currency trading.
In comparison to other security trading, foreign currency trading doesn't happen on a set exchange rate. Indeed, monies are traded mostly among commercial banks, central banks, non-banking international corporations, private investors, hedge funds, and of course, the speculators.
Some time ago, minor investors weren't allowed to take part in this type of trading because a considerable sum of deposit was mandatory. But, in the latest years, with the steady evolution of the Internet and the increasing level of competition, smaller investors may be included in foreign trading because the prerequisite to trade in Forex has been changed.
There are a a small number of causes why foreign trading is starting to attract more and more smaller sized and medium investors. A significant cause is due to the fact that Forex trading runs 24 hours a day, 5 days a week. In comparison to the past years, in which trading was carried out exclusively via telephone, now it can be accomplished easily and constantly among traders all over the world through the use of the Internet. Furthermore, as it is an unpredictable financial market, foreign trading is the ideal spot for income opportunities as the markets throughout the world ebb and flow.
Foreign currency trading tactics utilized by traders in order to trade the market might make a huge diversity in their outcome. Forex trading is an exceptionally cutthroat field. In order to be victorious, persons must focus on a set of uncomplicated Forex trading strategies that they can implement with no uncertainty.
Find out more about forex foreign currency by visiting http://learnforexstocks.com, a popular forex website that offers tips, advice and resources including information on forex trading software, how to practice the forex market, access to a forex calculator, and more.
currency trading
There are literally hundreds of currency trading systems on the market today. As a professional Forex trader, I buy every product related to the market and test them out to determine which ones make money and which ones are dogs. Supra Forex is one of four software systems I employ everyday to make my living.
The other three Forex trading systems I use are Fap Turbo, Forex Funnel and Forex Trend Systems. Fap Turbo is the only automated product that actually makes money for you on autopilot. I use Supra Forex in a semi automatic mode using a Forex strategy I personally developed, called "Triple Header Confirmations."
If you're not aware of this, each one of these systems and for that matter the vast majority of the software products were developed independently of each other. Why is that important, because each mathematical algorithm the systems use to make trading recommendations with is different.
Thus, some of the signals you will get from particular software systems are great and others stink. How are you going to know which ones make recommendations you can make money with and which ones are losers? Your not, unless you do what I have done and test them all out.
Back to Supra Forex now, it is one of the best software products on the market that will send you signals, trading recommendations or investment opportunities that will help you make money. It is as simple as that. Another plus to Supra Forex, is that it is also one of the most inexpensive software products you can buy.
If you are in the market for a currency trading system you could do a lot worse than Supra Forex. In my opinion, it is one of the top four products on the market today. Each and every day the markets are open I invest substantial sums of money based on the information it provides me. It only takes a few minutes to review these products and see what you think. In Supra Forex case, I am sure it would be a good use of your time.
We have researched, tested and reviewed 100's of Forex Trading Systems, Currency Trading Software and Forex Platforms. We kept the best and eliminated the rest for you to examine at Forex Trading Systems.
For the internets MOST comprehensive list of only the finest Currency Courses and Forex Trading Courses that provide the best Forex education online check out Learn Forex Trading at Trading Forex Reviews.Com.
The other three Forex trading systems I use are Fap Turbo, Forex Funnel and Forex Trend Systems. Fap Turbo is the only automated product that actually makes money for you on autopilot. I use Supra Forex in a semi automatic mode using a Forex strategy I personally developed, called "Triple Header Confirmations."
If you're not aware of this, each one of these systems and for that matter the vast majority of the software products were developed independently of each other. Why is that important, because each mathematical algorithm the systems use to make trading recommendations with is different.
Thus, some of the signals you will get from particular software systems are great and others stink. How are you going to know which ones make recommendations you can make money with and which ones are losers? Your not, unless you do what I have done and test them all out.
Back to Supra Forex now, it is one of the best software products on the market that will send you signals, trading recommendations or investment opportunities that will help you make money. It is as simple as that. Another plus to Supra Forex, is that it is also one of the most inexpensive software products you can buy.
If you are in the market for a currency trading system you could do a lot worse than Supra Forex. In my opinion, it is one of the top four products on the market today. Each and every day the markets are open I invest substantial sums of money based on the information it provides me. It only takes a few minutes to review these products and see what you think. In Supra Forex case, I am sure it would be a good use of your time.
We have researched, tested and reviewed 100's of Forex Trading Systems, Currency Trading Software and Forex Platforms. We kept the best and eliminated the rest for you to examine at Forex Trading Systems.
For the internets MOST comprehensive list of only the finest Currency Courses and Forex Trading Courses that provide the best Forex education online check out Learn Forex Trading at Trading Forex Reviews.Com.
foreign exchange
The vast currency market is a foreign concept to the average individual. However, once it is broken down into simple terms, one can begin to easily understand the foreign exchange market and see what a profitable avenue of income participating in the trading of Forex can be.
Whether or not you are aware, you already play a role in the foreign exchange market, also known as the Forex market. The simple fact that you have money in your pocket makes you an investor of currencies, and more particularly, an investor of U.S Dollars!
The cash in your wallet and money in your savings account are in U.S. Dollars. The value of your mortgage, stocks, bonds, and other investments are expressed in U.S. Dollars. In other words, unless you are among the few Americans who have foreign bank accounts or have bought a modest amount of foreign currencies or securities, you are an investor of U.S. Dollars.
By holding U.S. Dollars, you have basically elected not to hold the currencies of other nations. Your purchase of stocks, bonds, and other investments, along with money deposited into your bank account represent investments that rely heavily on the integrity of the value of the currency in which it is denominated the U.S. Dollar.
Due to the constant increasing and decreasing value of the U.S. Dollar and the resultant fluctuation in exchange rates, your investment portfolio may have experienced changes in value, thus affecting your overall financial status.
With this in mind, it should be no surprise that many shrewd investors have taken advantage of the fluctuation in exchange rates using the volatility of the foreign exchange market to trade currencies and put more money in their pockets.
The foreign exchange market has experienced many changes since its inception. For years, as you learned above, the United States and its allies, under the Bretton Woods Agreement, participated in a system in which exchange rates were tied to the amount of gold reserves belonging to the nation. However in the summer of 1971, President Nixon took the United States off the gold standard, and floating exchange rates began to materialize.
Today, supply and demand for a particular currency, or its relative value, is the driving factor in determining exchange rates. There have been many radical global economic changes over the last decade.
Some of these changes have decreased obstacles and increased opportunities in world trade, such as the fall of communism in the Soviet Union and Eastern Europe, the renewed political reform in South America and the continuing liberalization of the Chinese economy have boosted the worldwide economy by opening up new markets and opportunities. These events have lifted traditional trade barriers resulting in a tremendous increase in foreign investment.
With this increase however, all nations are more interrelated and dependent upon one another. Increasing trade and foreign investment have made the economies of all nations more and more interrelated.
Fluctuations in economic activity in one country are reflected in that country's currency and immediately transmitted to its partners, altering the relative price of products and thus affecting costs and profits, which in turn affect changes in currency values.
Regularly reported economic figures around the world, such as inflation or unemployment levels, as well as unexpected news, such as natural disasters or political instability, alters the desirability of holding a particular currency, thus influencing international supply and demand for that currency.
The U.S. Dollar, therefore, fluctuates constantly against the currencies of the rest of the world. The current web of international trade and the resultant fluctuations in exchange rates have created the world's largest market the foreign exchange market, a market whose vast size makes it the most efficient, fairest, and liquid of all markets.
The Interbank Foreign Exchange Market is an unregulated, decentralized international forum that deals in the various major currencies of the world, with virtually no direct government regulation or interference.
The Interbank Foreign Exchange Market involves trading one nation s currency for the currency of another nation. Foreign exchange, however, is not a "market" in the traditional sense since there is no centralized location for trading activity. It is an electronically linked world-wide network of currency traders dispersed throughout the leading financial centers of the world.
An international community of approximately 400 banks make the daily currency exchanges for buyers and sellers worldwide who conduct business linked by the Internet, phones, computers, fax machines and other means of instant communication.
Trading occurs over the telephone and through computer terminals at thousands of locations worldwide. The direct Interbank market consists of dealers with currency settlement capabilities trading as principals. It is this dealer segment of the market that is responsible for generating a large portion of the overall foreign exchange volumes.
Trading between dealers creates the largest turnover in the market, making foreign exchange the most liquid of all markets. Trading approximately $1.5 trillion every day, the foreign exchange market is the largest financial market in the world. Traditionally, the foreign exchange market has only been available to banks, money managers, and large financial institutions.
Over the years, these institutions, including the U.S. Federal Reserve Bank, have realized large gains via currency trading. This growing market is now linked to a worldwide network of currency traders, including banks, central banks, brokers, and customers, such as importers and exporters.
Today, the foreign exchange market offers opportunities for profit not only to banks and institutions, but to individual investors as well. A great advantage is the size and volume of the Forex Interbank market makes it impossible to manipulate the market for any length of time. Unlike the equity markets, no really effective "insider" interference is possible for any length of time in the Forex market.
As a result Forex is an action based, decentralized international market that allows various major currencies of the world to seek their true value. It operates as the purest form of supply and demand for currencies as a tradable commodity. This is why many analysts refer to it as the most efficient market in the world.
Whether or not you are aware, you already play a role in the foreign exchange market, also known as the Forex market. The simple fact that you have money in your pocket makes you an investor of currencies, and more particularly, an investor of U.S Dollars!
The cash in your wallet and money in your savings account are in U.S. Dollars. The value of your mortgage, stocks, bonds, and other investments are expressed in U.S. Dollars. In other words, unless you are among the few Americans who have foreign bank accounts or have bought a modest amount of foreign currencies or securities, you are an investor of U.S. Dollars.
By holding U.S. Dollars, you have basically elected not to hold the currencies of other nations. Your purchase of stocks, bonds, and other investments, along with money deposited into your bank account represent investments that rely heavily on the integrity of the value of the currency in which it is denominated the U.S. Dollar.
Due to the constant increasing and decreasing value of the U.S. Dollar and the resultant fluctuation in exchange rates, your investment portfolio may have experienced changes in value, thus affecting your overall financial status.
With this in mind, it should be no surprise that many shrewd investors have taken advantage of the fluctuation in exchange rates using the volatility of the foreign exchange market to trade currencies and put more money in their pockets.
The foreign exchange market has experienced many changes since its inception. For years, as you learned above, the United States and its allies, under the Bretton Woods Agreement, participated in a system in which exchange rates were tied to the amount of gold reserves belonging to the nation. However in the summer of 1971, President Nixon took the United States off the gold standard, and floating exchange rates began to materialize.
Today, supply and demand for a particular currency, or its relative value, is the driving factor in determining exchange rates. There have been many radical global economic changes over the last decade.
Some of these changes have decreased obstacles and increased opportunities in world trade, such as the fall of communism in the Soviet Union and Eastern Europe, the renewed political reform in South America and the continuing liberalization of the Chinese economy have boosted the worldwide economy by opening up new markets and opportunities. These events have lifted traditional trade barriers resulting in a tremendous increase in foreign investment.
With this increase however, all nations are more interrelated and dependent upon one another. Increasing trade and foreign investment have made the economies of all nations more and more interrelated.
Fluctuations in economic activity in one country are reflected in that country's currency and immediately transmitted to its partners, altering the relative price of products and thus affecting costs and profits, which in turn affect changes in currency values.
Regularly reported economic figures around the world, such as inflation or unemployment levels, as well as unexpected news, such as natural disasters or political instability, alters the desirability of holding a particular currency, thus influencing international supply and demand for that currency.
The U.S. Dollar, therefore, fluctuates constantly against the currencies of the rest of the world. The current web of international trade and the resultant fluctuations in exchange rates have created the world's largest market the foreign exchange market, a market whose vast size makes it the most efficient, fairest, and liquid of all markets.
The Interbank Foreign Exchange Market is an unregulated, decentralized international forum that deals in the various major currencies of the world, with virtually no direct government regulation or interference.
The Interbank Foreign Exchange Market involves trading one nation s currency for the currency of another nation. Foreign exchange, however, is not a "market" in the traditional sense since there is no centralized location for trading activity. It is an electronically linked world-wide network of currency traders dispersed throughout the leading financial centers of the world.
An international community of approximately 400 banks make the daily currency exchanges for buyers and sellers worldwide who conduct business linked by the Internet, phones, computers, fax machines and other means of instant communication.
Trading occurs over the telephone and through computer terminals at thousands of locations worldwide. The direct Interbank market consists of dealers with currency settlement capabilities trading as principals. It is this dealer segment of the market that is responsible for generating a large portion of the overall foreign exchange volumes.
Trading between dealers creates the largest turnover in the market, making foreign exchange the most liquid of all markets. Trading approximately $1.5 trillion every day, the foreign exchange market is the largest financial market in the world. Traditionally, the foreign exchange market has only been available to banks, money managers, and large financial institutions.
Over the years, these institutions, including the U.S. Federal Reserve Bank, have realized large gains via currency trading. This growing market is now linked to a worldwide network of currency traders, including banks, central banks, brokers, and customers, such as importers and exporters.
Today, the foreign exchange market offers opportunities for profit not only to banks and institutions, but to individual investors as well. A great advantage is the size and volume of the Forex Interbank market makes it impossible to manipulate the market for any length of time. Unlike the equity markets, no really effective "insider" interference is possible for any length of time in the Forex market.
As a result Forex is an action based, decentralized international market that allows various major currencies of the world to seek their true value. It operates as the purest form of supply and demand for currencies as a tradable commodity. This is why many analysts refer to it as the most efficient market in the world.
foreign exchange trading
Foreign Exchange Market, or Forex as it is commonly called, is an international exchange market to buy and sell different currencies from around the world. An investor has the ability to buy and sell these currencies in order to create gains from small movements in the value of one currency over another. The Foreign Exchange Market or Forex is open from Monday at 0:00 GMT until Friday at 10:00 GMT. For this reason Forex traders are not limited to the general time constraints of the New York Stock Exchange or NASDAQ.
This versatility attracts many investors to become Forex traders. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. These massive amounts of trades make it extremely difficult for any one trader to affect the market.
Foreign Exchange Trading is simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.49989 with a 1% margin and anticipate the exchange rate to climb. If that occurs and you close the exchange rate at 1.5050 you would earn roughly $400. Forex is giving you a 40% return on your investment.
Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Although there are day traders, Forex traders have much shorter hold times on positions. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.
Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one should make. There are two methods, fundamental Forex analysis, and technical Forex analysis.
Technical Forex Analysis is the most commonly used practice and uses the assumption that the changes that occur in the Foreign Exchange Market happened for a reason and are accurate. The belief is that if a currency has been trading towards a high then that currency will mostly continue towards that high with the adverse being true as well. The technical Forex view does not try to make long term predictions about the market but instead simply tries to take advantage of what has already been seen in the past.
The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. If there is a sharp rise in the prime interest rate a Forex trader may take a position based on that information.
Online Forex trading on the Foreign Exchange Market has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. This will help you to understand the Forex trading process and how currencies are affected by different things that are happening on a global scale.
This versatility attracts many investors to become Forex traders. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. These massive amounts of trades make it extremely difficult for any one trader to affect the market.
Foreign Exchange Trading is simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.49989 with a 1% margin and anticipate the exchange rate to climb. If that occurs and you close the exchange rate at 1.5050 you would earn roughly $400. Forex is giving you a 40% return on your investment.
Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Although there are day traders, Forex traders have much shorter hold times on positions. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.
Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one should make. There are two methods, fundamental Forex analysis, and technical Forex analysis.
Technical Forex Analysis is the most commonly used practice and uses the assumption that the changes that occur in the Foreign Exchange Market happened for a reason and are accurate. The belief is that if a currency has been trading towards a high then that currency will mostly continue towards that high with the adverse being true as well. The technical Forex view does not try to make long term predictions about the market but instead simply tries to take advantage of what has already been seen in the past.
The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. If there is a sharp rise in the prime interest rate a Forex trader may take a position based on that information.
Online Forex trading on the Foreign Exchange Market has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. This will help you to understand the Forex trading process and how currencies are affected by different things that are happening on a global scale.
Wednesday, January 7, 2009
THE SIGNIFICANCE OF PEAKS
The significance of a valid peak/
trough reversal will depend on the
type of trend. The longer the trend,
the greater the significance of the
peak/trough reversal will be. A series
of rallies and reactions that show
up on the hourly charts will be nowhere
near as significant as a reversal in a series of intermediate
peaks and troughs, where the rallies and reactions might
last for several months. If we observe a reversal in a series of
intermediate rallies and reactions, then we would be able to
infer a primary trend, where the expected decline or advance because the low was below the previous low. However, there
trough reversal will depend on the
type of trend. The longer the trend,
the greater the significance of the
peak/trough reversal will be. A series
of rallies and reactions that show
up on the hourly charts will be nowhere
near as significant as a reversal in a series of intermediate
peaks and troughs, where the rallies and reactions might
last for several months. If we observe a reversal in a series of
intermediate rallies and reactions, then we would be able to
infer a primary trend, where the expected decline or advance because the low was below the previous low. However, there
was no sign of lower peaks, since the mid-April high was the
high for the move. This is why it does not usually pay to go
with half-signals. It was not until early August that a rally
peak did not make a new high, and this was confirmed with
a new low, signaling a new bear trend. I cannot say that things
will work out this well every time, because they will not.
However, it is surprising how well this simple tool can help
in improving trading results.
LINES OR CONSOLIDATIONS and WHAT’S A LEGITIMATE PEAK
Sometimes, reactions within a trend develop as a sideways
movement, where the price experiences a trading range.
Figure 4 shows some ranging action following an advance.
(The same could be said in a declining market.) These trading
ranges are also known as lines (as originally referred to in
Dow theory).
Whenever the price experiences a breakout from such a
trading range, it has the same effect as if the range were a rally
or reaction. This means it is possible for a breakout from a
trading range to either act as a peak and trough buy or sell
signal, or a reconfirmation of the prevailing trend. In effect,
when the price breaks out of a line (range), it is violating
Consolidation
takes 1⁄3 – 2⁄3
of the time of
the previous
advance
Consolidation
100% 33 – 66%
Retracement should be
1⁄3 – 2⁄3 of the previous
advance
100%
FIGURE 5: CONSOLIDATION. As a rule, consolidation will take from one-third to two-thirds the time of a
preceding advance or decline. But then —
FIGURE 6: RETRACEMENT. The classic retracement ranges between one-third
and two-thirds of the previous move.
New high!
X
FIGURE 4: HALF-SIGNAL. At X, a lower trough occurs, but subsequently, the high
is taken out and the alert for a downtrend is canceled. Half-signals are not as reliable
as full concordance of peak and trough movement.
several minor turning points that are really
support or resistance areas. Taken together,
they represent the equivalent of more significant
peaks or troughs.
WHAT’S A LEGITIMATE PEAK
AND TROUGH?
Most of the time, the various rallies and
reactions are distinct enough so that it is
relatively easy to identify their turning points
as legitimate peaks and troughs. A reaction
to the prevailing trend should retrace approximately
one-third to two-thirds of the
previous move. Thus, the rally from the
trough low to the subsequent peak in Figure
5 is 100%. The ensuing reaction should then
fall between a one-third to two-thirds correction
or retracement of that move; on
occasion, it can reach to 100%. Technical
analysis is far from precise, but if a corrective
move is less than the minimum one-third, then the peak
or trough in question is suspect.
A line is a fairly controlled period of profit-taking or
digestion of losses, so the depth of the trading range may fall
short of the minimum approximate one-third retracement
requirement (Figure 6). In such instances, the correction
qualifies more on the basis of time than magnitude. It is
important to note that we are dealing with psychology here —
in this case, the bullish psychology associated with the runup
in prices. That sentiment needs to be tempered, either with a
price reaction or with time.
A rule of thumb you might want to use is for the correction to
last between one-third and two-thirds of the time taken to
achieve the previous advance or decline. In Figure 5, the time
length between the low and the high for the move represents
100%. The consolidation prior to the breakout constitutes roughly
two-thirds, or 66% of the time taken to achieve the advance —
ample time to consolidate gains and move on to a new high
movement, where the price experiences a trading range.
Figure 4 shows some ranging action following an advance.
(The same could be said in a declining market.) These trading
ranges are also known as lines (as originally referred to in
Dow theory).
Whenever the price experiences a breakout from such a
trading range, it has the same effect as if the range were a rally
or reaction. This means it is possible for a breakout from a
trading range to either act as a peak and trough buy or sell
signal, or a reconfirmation of the prevailing trend. In effect,
when the price breaks out of a line (range), it is violating
Consolidation
takes 1⁄3 – 2⁄3
of the time of
the previous
advance
Consolidation
100% 33 – 66%
Retracement should be
1⁄3 – 2⁄3 of the previous
advance
100%
FIGURE 5: CONSOLIDATION. As a rule, consolidation will take from one-third to two-thirds the time of a
preceding advance or decline. But then —
FIGURE 6: RETRACEMENT. The classic retracement ranges between one-third
and two-thirds of the previous move.
New high!
X
FIGURE 4: HALF-SIGNAL. At X, a lower trough occurs, but subsequently, the high
is taken out and the alert for a downtrend is canceled. Half-signals are not as reliable
as full concordance of peak and trough movement.
several minor turning points that are really
support or resistance areas. Taken together,
they represent the equivalent of more significant
peaks or troughs.
WHAT’S A LEGITIMATE PEAK
AND TROUGH?
Most of the time, the various rallies and
reactions are distinct enough so that it is
relatively easy to identify their turning points
as legitimate peaks and troughs. A reaction
to the prevailing trend should retrace approximately
one-third to two-thirds of the
previous move. Thus, the rally from the
trough low to the subsequent peak in Figure
5 is 100%. The ensuing reaction should then
fall between a one-third to two-thirds correction
or retracement of that move; on
occasion, it can reach to 100%. Technical
analysis is far from precise, but if a corrective
move is less than the minimum one-third, then the peak
or trough in question is suspect.
A line is a fairly controlled period of profit-taking or
digestion of losses, so the depth of the trading range may fall
short of the minimum approximate one-third retracement
requirement (Figure 6). In such instances, the correction
qualifies more on the basis of time than magnitude. It is
important to note that we are dealing with psychology here —
in this case, the bullish psychology associated with the runup
in prices. That sentiment needs to be tempered, either with a
price reaction or with time.
A rule of thumb you might want to use is for the correction to
last between one-third and two-thirds of the time taken to
achieve the previous advance or decline. In Figure 5, the time
length between the low and the high for the move represents
100%. The consolidation prior to the breakout constitutes roughly
two-thirds, or 66% of the time taken to achieve the advance —
ample time to consolidate gains and move on to a new high
HALF-SIGNALS
On occasion, we are left in doubt
whether a trend has reversed. In
Figure 3, we see that at point X
the latest trough breaks below
its predecessor, but not the latest
peak — and only half a signal
has been given. What is now
required is for a fresh rally to
peak below the previous top and
for the price to slip below the
previous low at point Y. This is
a much less timely signal because
the price will have already
fallen from the final high; but by
the same token, the probabilities
of it being a valid reversal
are that much greater. Anyone
not waiting for the signal at Y
would have run the risk of being
left out of a powerful rally such
as the hypothetical one shown
in Figure 4. In that instance,
prices rose and made a new peak,
indicating the trend had never
reversed in the first place. Halfsignals
also appear when a trend
reverses from down to up.
Peak and trough analysis
should be treated as only one
indicator among many in a technical
arsenal. You would not
normally rely solely on a moving
average crossover, oscillator
signal, or trendline violation
to justify entering a trade; similarly,
peak and trough should be
used in conjunction with other
indicators.
The difference with peak and
trough analysis is that indicator
for indicator, it generally offers
a stronger signal than most trendfollowing
techniques. This is
because technical analysis is
very much concerned with the
psychology that underlies price
movements. The fact that a reversal
from a downtrend to an
ANDREW
Peaks And Troughs
The oldest ways of chart analysis had to work in the days
before computers (B.C.). There’s no reason they shouldn’t
work now. Here’s a look at peaks and troughs, a classic form
of chart analysis that worked B.C. and work now.have always thought that, in
general, the simplest techniques
work the best. High up
in this category, and perhaps
the most underrated, is the concept
of peak and trough analysis,
a technique first brought to
our attention as a tenet of Dow
theory. While the theory itself
has lost much of its luster in
recent years, the peak and
trough part of it has not. It is arguably the most important
building block of technical analysis.
When you look at almost any chart, it’s fairly evident that
prices do not go up and down in straight lines, but move in
zigzag patterns instead. During a bull trend, a rally is interrupted
by a correction in which part of the advance is retraced.
This is then followed by another rally, after which a subsequent
correction follows, and so on.
These are the peaks and troughs. As long as a trend
experiences a series of rising peaks and rising troughs, it is
considered to be intact. However, when the series of rising
peaks and troughs is replaced by a series of declining peaks
and troughs, the prevailing trend has reversed.
Figure 1 shows a series of rising peaks and troughs. When
a subsequent rally fails to make a new high for the move (A),
this alerts us the trend may have changed. It is not until the
price slips below the previous bottom (B), however, that the
price action reveals a declining peak and trough. The trend,
according to this technique, is now deemed to be bearish.
In a bear trend, prices continue their downward zigzag
(Figure 2) until the latest trough fails to make a new low for
the move (C). The subsequent rally takes the price above the
previous high (D), and the series of declining peaks and
troughs gives way to a series of rising ones. The actual signal
takes place at E, when it is evident that the price has made a
new high. At that point, we do not know where the next peak
will occur, but we do know it is likely it will be higher than the previous one.As you can see from the price
action at point F, there is nothing
to stop the price from falling
below the trend reversal signal
(E), but pricing will still be consistent
with a rising trend.
CONCLUSION
Finally, another important aspect is the closing tick index reading. I have found that closing tick readings exceeding
+750 are evidence for a potential short-term top. Closing tick readings of +1,000 or more almost always define a
short-term top.
Technically based traders have multiple tools to work with. Some are very complicated while some, such as the tick
index, are simple; some are very well known, while others languish in obscurity. Probably one of the least known is
the tick index - which may be why it works so well.
VARIATIONS
The two reversal patterns discussed do not occur often, so I watch for some variations. First, tops do not necessarily
occur the same day of the extreme high tick reading. If the market is going to make a top, then the day after an
extreme uptick reading is recorded is important. Generally, another high tick reading is recorded following the peak
reading of the previous day. The second day's trading high may exceed the first day's high by more than two and a
half S&P points, and a bearish reversal candlestick pattern (Figure 7) will appear. This condition usually triggers a
short-term sell signal.
In the case of a bottom, after an 800 or higher downtick reading is recorded, the next day the tick reading should
again be at extreme levels. The second day's trading low may exceed the first day's trading low by more than two
and a half points. At that point, watch for a bullish candlestick pattern to appear (Figure 8) for a confirmation of a
buy signal. For bottoms, I noticed that the second downtick reading can be less than or greater than the first bottom
downtick reading. For tops, however, the second top's high uptick reading is less than the first top's.
In runaway markets, the tick index readings will exceed +600 for rallies and -800 for declines for extended periods.
When the difference between the open and closing range for the day exceeds two S&P points, the trend is still intact,
even though tick readings may have reached the upper limits of +600 for tops and -800 for bottoms. This price range
represents the body of a candlestick chart.
No turning point in the market can be anticipated until the difference between the opening and closing price on the
S&P contracts narrows to less than two S&P points, no matter how high the tick readings. In Figure 5, on
November 21, the S&P broke down, ending a consolidation pattern, with a tick reading of -1,070 recorded. No
bottom was anticipated because the body of the candlestick chart for that day was more than two S&P points. The
next day, November 22, a tick reading of -1,340 and the same condition prevailed. On November 23, a -800 tick
reading was recorded and the difference between the opening and closing price was less than two S&P points. This
condition would imply a short-term bottom. You can see on Figure 5 that this is exactly what happened.
HISTORY
Tops in the stock market generally occur with readings of +600 or more. As a rule, the more the tick reading exceeds
+600 intraday, the stronger the top. Some of the highest intraday uptick readings for trading days in 1994 can be
seen in Figure 3. You can compare these tick readings and the price action of the S&P cash index by looking at
Figures 4 and 5
Near significant bottoms, such as the 1994 dates of March 2, April 4, June 24, October 5, November 22 and
December 8, the NYSE tick index readings equaled or exceeded -1,100 intraday (Figure 6). Therefore, when tick
readings exceed -1,100, a buying opportunity may be near. For example, leading up to the April 4th time frame - an
important market bottom - the extreme three-day cumulative average negative tick readings were as follows: On
March 30, a -1,450 tick was recorded; on March 31, a -1,460 tick was witnessed; and the reading for April 4 was a
-1,450 tick. The average downtick reading for those three days was -1,453, which was the highest three-day average
for 1994. You may recall April 4 marked the low of the year.
Extreme tick readings do not necessarily mark significant turning points. Sometimes they appear at the start of a
consolidation pattern instead of a top or a bottom. For example, in Figures 4 and 5, on February 4 and November 4,
-1,380 and -1,140 tick readings were recorded at 468 and 462.50 on the S&P cash index, respectively. February 4
and November 4 were temporary bottoms; the market went sideways for a couple weeks before breaking down to
new lows. Negative tick readings exceeding -1,100 did stop the decline, but the resulting condition was a short-term
bottom that evolved into a consolidation pattern. Thus, when an intraday downtick reading of -1,100 or more
appears, it may be wise to tighten your stops and watch to see if a bullish candlestick pattern develops.
TECHNIQUE
First, a high degree of coincidence appears to exist between bullish tick index signals and bullish candlestick patterns
as well as the bearish combinations. For bullish patterns, I have found tick readings exceeding -800 intraday (the
minus sign indicates 800 more stocks were trading on a downtick than an uptick) appear near short-term market
bottoms.
Second, I look for a classic double bottom on the Standard & Poor's 500 daily chart where the second bottom of the
double bottom does not trade more than two and a half S&P points below the first. The tick index reading on the first
bottom must surpass -800; in fact, readings exceeding -800 are preferable. The tick index reading for the second
bottom can be greater or less than the first but should still reach an extreme level. When the tick index readings
exceed -800, preferably a reading of -1,000 ticks or more, the short-term bottoms are stronger. In addition, when the
second bottom is within five business days of the first, the signal generated is more reliable. Finally, with the buy
signal alert indicated by the tick index, I look for a bullish candlestick pattern before an all-out buy signal is
generated. For a sell signal using the NYSE tick index, I look for a double top on the S&P 500 daily chart where the second top
does not exceed the first by more than two and a half S&P points. The first top must have a tick reading of at least
+600 or more. The second top will usually have fewer uptick readings than the first, but the readings should still be
high. For a sell signal, a bearish candlestick pattern must be present at or near the second top. The best signals occur
when the span between the first peak and the second peak of the double top does not exceed five business days.
The NYSE Tick Index And Candlesticks
Awealth of information waits to be discovered in the New York Stock Exchange (NYSE) tick index. Its strong
suit is its simple calculation. At any point, this index represents the number of stocks trading on an uptick minus the
number of stocks trading on a downtick. Extreme tick readings of greater than +600 may indicate temporary
exhaustion of buying power, while negative tick readings in the territory of 800 or more can point to a selling climax.
I use these readings throughout the day as an indicator for buy and sell decisions, as well as for recognizing the
continuation of the prevailing trend. The tick index is broadcast throughout the day from most real-time data vendors,
including the stock market tape that can be seen on the bottom of the screen during CNBC's day-time broadcast.
The tick index can be enhanced by using technical price pattern recognition, specifically candlestick charts. (See
sidebar, "The candlestick method.") Although I have used numerous other technical studies, combining the NYSE
tick index and candlestick charting creates a reliable indicator for signaling turning points in the stock market.
CONCLUSION
By using real-body support and resistance levels, we can try to improve our trading and analysis on several levels. In
the short term, we can derive important counteraction trading points and improved longer-term entry levels. In the
longer term, we can use real-body support and resistance to get a jump on market breakouts in a trend-trading
strategy.
Let me reiterate: Candlestick charting should not be used in a vacuum. That applies to the real-body support and
resistance levels as well. You should, however, take the time to try out this methodology. I'm sure you'll find it
worthwhile, and a beneficial addition to your technical toolbox. It just goes to show that by keeping our eyes open,
we just might be able to discover new techniques.
John Forman is a currency analyst for Technical Data, a provider of real-time and day-end market commentary and
trading advice over the Telerate system. He writes mostly from a technical perspective and also has experience in
trading US and Canadian government cash and futures issues, equities and the energy markets.
A REAL-LIFE EXAMPLE
Figure 3, which shows the sterling/Deutschemark cross-rate, contains several excellent examples. You can see how
many times prices either approached or penetrated real-body support and resistance points but were unable to sustain
those levels. Time after time, an attentive trader could have entered positions counter to the prevailing market action
and would have done well. There are two noticeable exceptions, however.The first came in late December 1994, when the market finally broke down out of its range. Two things should have
been noted that might have kept you out of a trade. One is the double top, or tweezers pattern in the candlestick
vernacular, which took place about 10 days prior to the breakdown. That would have been your first indication that
the trend was probably toward lower prices. The second indication came two days before the breakdown in the form
of a shooting-star pattern, followed by a large negative real-body candlestick. This was another signal of lower
prices.
The second exception was in January 1995, when the market again broke down after a consolidation. This, too,
probably could have been avoided. All indications were signaling a bearish trend. That should have kept the careful
trader from trading the doji day just prior to the breakdown. The doji, however, might have caused some confusion.
In addition, look at how taking those positions against the prevailing action is a great way to enter a new longer-term
position. One glaring example of this took place early in January 1995, just before the second breakdown. After
rallying for three days, the market approached, but never broke, real-body resistance. Prices did not stop falling until
they were about 600 points lower, less than a week later.
MINIMIZING THE RISKS
There is no way around the risks inherent in trading counter to the prevailing market action. All we can do is reduce
the risks as much as possible by using the tools available. Happily, there are ways to do this.
First, always be aware of the longer-term picture. If the market you are planning to trade is in the middle of a strong
trend, going against that action is probably one of the quickest ways to lose money. Wait until the momentum starts
to ease; this will reduce your chances of getting caught on the wrong side of a breakout.
Further, this is a good time to mention a candlestick caveat: Beware of reversal patterns signaled by candlesticks in a
trending market. The bond market is especially notorious for throwing out countertrend candlestick signals during
major trends, and I've seen the same in other markets as well. Never look at candles in a vacuum.
So what should we look at in conjunction with candlesticks to lower our risk in the countertrend trades I am
suggesting? For one, there's John Bollinger's band width indicator (BWI) as a trend indicator, which can be used by
monitoring the area between the upper and lower bands. (I outlined this technique in the November 1994 STOCKS
& COMMODITIES.) I like to use the BWI as an indicator of a weakening trend; I want to jump in when the slope of
the BWI line starts to decrease. This is the first signal that the trend is petering out, and that at this point countertrend
trades are reasonably safe.
There are, of course, other technicals that you can use. Bollinger bands themselves can be helpful, among others.
Select the tool or tools that make you most comfortable.
More important than any additional indicator you could use, however, is your money management strategy. There
are many ways you could trade using this methodology, and each has its own advantages and limitations. Cash or
futures trading exposes you to the potential for theoretically unlimited risk, requiring tight stops and quick
executions. Options could limit your risk, but probably at the cost of requiring larger moves to make them
worthwhile. Of course, you may be able to tailor a combination of instruments to suit your needs.
An important factor in determining your risk exposure, and as a result how you trade, is the point at which you cut
your losses. Often, there is no second support or resistance level nearby to provide a good stop-loss point, which
means you'll have to use your own instinct as a guide. I find it useful to use whatever candlestick shadows there are
as a rough guide to how far the market might go against me, thus letting me set reasonably good stops.
One last thing to consider: Where you're going to get out. I use a combination of techniques. Fibonacci retracement
levels work fairly well, as do moving averages. I prefer to determine another support or resistance point using real
bodies. Unfortunately, there are times when a significant level is not available nearby, forcing me to use other
techniques.
TRADING APPLICATIONS
One of the first uses that many technicians see for this technique is in terms of breakouts, much like in using bars.
The advantage in using real-body highs and lows for support and resistance is that ranges are tighter, allowing entry
into a trading position earlier than might otherwise have been the case.
Perhaps the most intriguing part of this new methodology, however, is its usefulness for day trading. Most
technicians use candlesticks as a day-end indicator, but this technique gives us a greater degree of depth than is
necessary for day trading. Real-body support and resistance allow us to take our analysis into the shorter time
frames, which in turn allows us to get better entry points for our longer-term trades.
In my own analysis, I favor trading counter to the prevailing market action when a nearby real-body support or
resistance level has been crossed intraday. This means that I recommend selling when the market has broken through
very recent real-body resistance, and buying when recent real-body support has been breached. This is my strategy
for trading against levels that are only a few days old, and one I recommend mostly for a very short-term position
(say, day trading).
Longer-term levels require trading against the approach of a level. Often, in such cases, prices have come from a
relatively long way off, and just reaching those key levels is a major achievement. Waiting for a break of support or
resistance may mean missing a trade. Positions set under these circumstances can be held for longer time frames,perhaps as long as a week.
In candlestick charting, as in bar charting, the more times a level is touched, the more significant the level becomes.
This is, however, a double-edged sword; if a resistance point is touched or penetrated slightly several times, it
becomes more likely that a real breakout is in the offing. The wrong side of a breakout is not where we want to be.
At the same time, however, the more times that a resistance point is touched, the larger the eventual decline is likely
to be if the market falls instead of rallying.
DETERMINING SUPPORT AND RESISTANCE
When a chartist looks at a bar graph, accumulations of highs and lows are often seen as key market levels. Breaking through these points signals important changes in the expected direction of prices. Candlestick real bodies, however,
may turn out to be better for this task. Much like highs and lows are on bar charts, an accumulation of real-body
highs or lows at a given level is significant.
An example of real-body resistance levels can be seen in Figure 2. The real-body high from the first day provides the
initial resistance point. Note how the second day's action takes prices above that resistance, even to a new high, but
the market ends lower on the day. The situation is similar after the fourth day. Twice the market rallies above
real-body resistance, only to fall back. Real-body support levels would work in a similar, but opposite, manner.The last candlestick on the chart is what would be considered a breakout. For the sake of our definition, a breakout
of real-body support or resistance is official only if it is on a closing basis. In effect, there must be a real-body
penetration of the support or resistance point before we can consider the action to be significant.
Candlesticks For Support And Resistance
Observation is the best friend of the technical analyst. By watching the markets, I noticed something interesting
about candlestick charts, which I use extensively. I realized the real bodies used in candlestick charting can be used
to determine significant support and resistance points, a strategy I had never seen before. Take a look at how it can
be done.
Although they have only recently become popular in the Western Hemisphere, Japanese traders have been using the
candlestick charting technique for hundreds of years. Candlestick charts, much like the bar chart equivalent, utilize
the open, high, low and close activity to plot a period (usually a day). In candlestick charting, unlike bar charting
where the highs and lows tend to be the focus, the opens and closes are the most significant.
A candlestick is composed of two features, as shown in Figure 1. The real body is a rectangle encompassing the area
between the open and close and is what gives candlestick graphs their distinctive appearance. The real bodies are
blacked in if the open is above the close and white if the close is above the open. A session in which the open and
close are the same is commonly referred to as a doji session and is represented by a single horizontal line at that
price.
The shadows of a candle - which give the appearance of being wicks - are drawn in the area above and below the real
body. The upper shadow is the area between the high and the top of the real body, while the lower shadow is the
area between the bottom of the real body and the low. It is possible to have one, two or no shadows. When a
shadow is absent, the result is often referred to as a shaved candle.
Much of candlestick analysis revolves around the search for, and identifying, reversal patterns. Many of the
distinctive terms associated with candlestick charting come into use with reversal patterns. This is where the real
difference between candlestick charting and bar charting comes into play. However, candlestick analysis can offer
more than you think. Most technicians use highs and lows for support and resistance points as part of their basic
charting techniques. But in keeping with the candlestick emphasis on opens and closes, let's change the way we look
at the market. Instead of the usual highs and lows, let's use real-body highs and lows.
The Daily Routine.
Here’s a daily routine that I’ve used in the Strategy:10 system. Some of the most
successful months of my trading career happened when I followed this plan.
Up at 3:00 am EST. Check the charts.
Ask the following questions:
1. Where did the USD close (5pm EST) yesterday against the majors?
2. What effect will today’s economic reports have, if any, on the forex market?
a. FED interest rate movements
b. ECB decisions
c. Unemployment – Weekly Moving Average above or below 400k?
d. Greenspan speaking?
3. Are we at an all time high or low on the EUR or GBP or CHF? Or:
a. Are they way oversold or overbought? Is it better to not trade today?
4. If I make a trade now, what might go wrong? What’s the most I’ll lose? Gain?
Is the market just dead quiet right now? Moving fast?
5. Is the EUR or GBP moving right now? How far are the pairs from support and
resistance?
The 7:10 Principles
1. Buy and sell on breakouts. I teach this in the 1 on 1 training, and I
do it myself.
2. Stop trying to make $8 million on every trade.
3. Set a 10-pip limit only. Exit the trade at 10. Exit the trade at 10.
Stops are set based on market conditions, but are always set.
4. Goal: + 10 pips every day.
5. If I earn more than 10 pips on a trade because the trade moves so
fast in my direction, I can set my stop to protect the 10 and then go
for more. I like to teach traders to just start going for 10. There are
advanced strategies that go for more than 10, but we just start here.
6. There is no ‘makeup’ strategy. If I take a loss, then I’m just trying
to end up with a 10 pip gain for the day. If I can’t get it, then I
don’t try for 20 the next day, or whatever. I can keep trying for the
10 pips gain as long as I haven’t lost more than 5% of my capital.
7. Time: I can trade for 5 hours per day, meaning I can have the
trading platforms open and sit at my computer for a max of 5 hours
per day. If I can’t earn my 10 pips during that time, then I can set
my stops and limits and walk away, but I can’t actively watch the
market any longer.
Stops and Limits
A STOP is placed so that you don't lose too much money. For example, if I
bought EUR/USD at 1.1445, I would start losing money if it started moving down.
So, I might set a STOP at 1.1425 -- meaning, if the currency drops to that level, the
system AUTOMATICALLY exits the trade. I'm out 20 pips, but that's a lot better
than being out 40 pips if it starts tanking really fast (and this happens all the time, as
you have seen).
A LIMIT works the same way, only for gains. If I set my limit to 1.1535 on that
same trade, then later in the day (or the hour), when the currency moves up to 1.1535,
the system AUTOMATICALLY exits the trade, and I make money. This happens
whether I'm still at the computer, or down the street, or dead. THIS IS THE ONLY
WAY TO TRADE IF YOU’RE NOT GOING TO BE PRESENT TO WATCH
THE TRADE.
My system for trading relies heavily on three things:
1. Technical analysis - a ½ hour, 3 hour, daily, weekly, and monthly chart.
2. STOPS and LIMITS.
3. 10-pip goal every day. This requires DISCIPLINE.
If you started with $10,000 on January 1st, and earned 10 pips per day, and only
traded 17 days of the month, then you would end the year 2,000 pips UP, and with
about $130,000. For a spreadsheet that details this system, write me at
rob@robbooker.com.
If you continued the next year with 10-pips per day, the next year you would be
making between $10,000 and $17,000 per month trading (depending on your risk
tolerance). Can you do this? Absolutely. Can you do this today? Maybe, maybe
not. You have to dedicate yourself 100% to learning how to trade intelligently.
A Different Strategy
It’s as simple as this: I don't try to make a ton of money on each trade, and I
never try to get revenge. I’m not a scalper (someone who sits and makes 20-second
trades for a few pips at a time).
Instead, I set up good trades, that have a lot of potential, and then I shoot for 10
pips. Just 10 pips. That’s it. I don’t let myself lose a lot of money. I only try to get
10 pips, and if that’s all I get, then I’m out for the day. It's easy enough to get 10 pips
that once that threshold is met, it's okay to get out. When you know that you can
turn turn $10,000 into $130,000 in one year on 10 pips a day, it's no longer important
to strike back at the market or get greedy on one day of trading.
And you can learn to turn $10,000 into $130,000 in one year on just 10 pips a day.
Why is this innovative, different, or revolutionary? Because you are going to not
only take money from novices with this strategy, you’re going to take money from
other advanced traders. Advanced traders want big money. They didn’t spend years
learning to trade so that they could make $200 a day. They want big, big returns.
They go for 40 pips at a minimum. They are conservative with their trading capital
because the market can take BIG swings against them when they’re waiting for 40
pips. Advanced traders think I’m nuts for getting out of a trade at 10 pips. What if it
goes to 40 pips? Won’t I be upset that I missed out?
Not at all. I’ll show you later how I can still make those 40 pips. But I’m never
displeased with 10. First, though, I’ll explain stops and limits.
Greed and Revenge
Greed
Most traders in the forex market try to make a zillion dollars on every trade.
They're greedy. This leads them to stay in a good trade, hoping to get
more money out of it. This can lead to disaster -- the trade can move against
them and they get creamed. This happens all the time, and it still happens to
me from time to time. It's the single greatest threat in trading. But you can
already understand why that's probably true. But how do you overcome greed
when trading?
Revenge
This is the other big one. A lot of traders get creamed in the market and
then want to strike back. So they double their last order and go for broke.
This is natural, and I still deal with this emotion every day. The problem
is, how does one combat this?
Do not underestimate this emotion. It will drive you to ruin if you let it.
The market is not your friend. The market is so much more powerful than
you are. You cannot get “back at” the market. Trading when angry or
vengeful will be a total disaster. If you get rocked on the market, then back
up, take a deep breath, and talk to a mentor. Re-read the charts. Take a
break. Even if you think you see the best opportunity in the world after you
get blasted – just take a break. There will be trades tomorrow.
Pips
Okay, now back to our program. To start, you have to understand what a
"pip" is. A pip is the last number to the right in a currency. For example:
If the EUR/USD traded at 1.1335 this morning. The "5" is the pip. If it moved to
1.1535, which it did today, that would be a 200-pip move.
The next concept that you need to understand is the concept of leverage.
It’s a lot like margin in stock trading, only on steroids. It’s a simple concept.
If you have $10,000 to trade with, your forex broker will let you borrow money
from him so that you can trade in larger quantities. They will let you borrow
as much as 400 times (400:1) what you put up in a trade. Most brokers allow
between 50:1 and 100:1 margin. So, if you put up $1,000, and your broker
allows 100:1 margin, then you’ll be trading $100,000 worth of currency (instead
of $1,000).
That’s important, because every pip equals a certain dollar amount. When you
trade $10,000, each pip movement equals $1. The chart below shows how it
goes from there.
If you trade 1,000,000 worth of currency, each movement would be equal to
$100. So if you bought at 1.1445 and sold at 1.1545, you would make 100 x $100,
or $10,000. Now, I don't know about you, but I could live off of that much.
That's not saying, however, that you can make $10,000 per day. Of course
it's possible, but there are a lot of factors that make it very difficult. Like, how
do I know that it's going up or down?
When should I get in a trade?
Even more importantly, can you deal with the emotions of forex trading?
Alan Farley, a trading expert, rightly observes that mastering the emotions of
trading is more difficult than mastering the technical skills. You’ll soon find
out what he means by that.
Amount Traded $ Per Pip
$10,000 $1
$50,000 $5
$100,000 $10
$500,000 $50
$1,000,000 $100
$5,000,000 $500
The Basics
Read this – a great forex primer:
http://www.forex.com/history_forex.html
On the left navigation section, you'll see "Forex Pro > Short Term Trend
Trading". This is an essential read for you – even if it seems technical in nature, you
should read it anyway, just to get the information in your head one time. I suggest
you read everything on this link, start to finish. Getting a background in the market
takes about a week (at most), but it's very important for you to understand how the
system works. The knowledge you gain early will pay off later. I didn't read this stuff
BEFORE trading, and it actually kind of helps to read through the material while
you’re entering and watching your first trades – because there’s nothing quite like
trading while you learn. Read the sections in "Forex Essentials". This is as clear an
explanation as exists.
The Four Groups
There are four groups in the forex market. There are the novice traders –
the greenies, the ones who try to outrun the bear and lose every time.
In addition to the novice traders, there are three other levels of
participation in the forex market: the dealers, the institutional traders, and the
advanced traders.
The dealers are the most powerful and they make the market, setting prices
and putting together deals.
The institutional traders work in banks, wire firms, or government
agencies. They trade huge amounts of money at a time, and the size of their
trades gives them enormous power.
Next, there are the advanced traders. This group
is comprised of people from all across the world,
sitting in smaller investment firms, offices, or even
their homes. You can be a part of this group. In
some cases, the advanced traders are the smartest
group – trade for trade – than any other group.
Because they don’t move a lot of money on each
trade, they don’t have as much power as the
institutional players. Because their trades are brokered
by the dealers, they’ll never have absolute trading power. But, because there
are so many novice traders – the advanced traders have plenty of people that
they can outrun. Your goal as a forex investor is to aggressively take money
out of the pockets of the novice traders.
Don’t feel bad about that. Someone’s going to take your money along the
way, and it’s going to teach you, very quickly, lessons that can only be learned
through failure. So, every time you take money from a novice trader, just
remember: you’re teaching him a valuable lesson. After a while, you might
even enjoy watching your hiking companion being eaten by the bear.
A bear chased two hikers. One hiker, while being chased,
One hiker, while being chased,
stopped to put on running shoes.
As he was changing out of his hiking boots, his companion looked at him in
horror and exclaimed, “What in the world are you doing? You’ll never outrun the
bear if you stop now!”
Calmly, the other hiker said, “I don’t have to outrun the bear. I just have to
outrun you.”
The forex market offers more opportunity for fast financial success – and
financial ruin – than almost any other market. The get-rich crowd has always been
attracted to it. This crowd includes speculators, trading novices, retirees, and
professionals looking for a way to get out of debt, increase the excitement in their
lives, or simply get rich really fast.
These are the people who you will be taking money away from. These are the
people who will be eaten by the bear. You don’t have to outrun the bear (the entire
market). In fact, that’s impossible. You can’t beat the entire market. Those of you
who try will learn fast that the market has no mercy, can outrun anyone, and shows
no mercy.
TO CONSIDER
Bear in mind that the significance of the trend being reversed
will depend on the time span of the oscillator. An oscillator
constructed from monthly data will have greater trend reversal
potential than one constructed from daily data. Further,
reverse divergences can be observed in many different types
of momentum indicators with a jagged appearance. Examples
include the relative strength index (RSI), the Chande
momentum oscillator and the demand index. I prefer the rate
of change (ROC).
It’s important to note, however, that reverse divergences
are only valid for raw data because the smoothing process
automatically delays turning points, so the turning point for
the price often occurs after the smoothed momentum has
reversed direction. To get a reverse divergence at a top
requires two peaks for the price and two for the indicator. It
works the same way for bottoms.
IN THE MARKETPLACE
Figure 6 features the British pound with a 39-week ROC. If
you look closely at the end of 1986, you can see the arrow
marking the momentum low is just slightly to the right of the
arrow marking the price low. In 1989, the currency was
forming the second bottom in a double-bottom formation at
a time when the oscillator was touching a multiyear low.
Reverse Divergences And Momentum
An oscillator’s failure to confirm the higher high or the lower
low of the market is a red flag to most technical traders. Is
there a message when the price diverges from the indicator?
This veteran technician thinks there is.
echnical analysts are constantly
comparing prices and indicators
to see whether they are moving in
gear or if there are discrepancies.
It’s when discrepancies appear
that an alert to a probable change
in trend is given. Most traders are
familiar with the concept of momentum
indicators experiencing
positive and negative divergences
by Martin J. Pring
with price. For instance, as you can see in Figure 1, momentum
makes a series of declining peaks as the price works its
way higher. This indicates that the underlying momentum is
gradually dissipating, signaling that a peak in the price may be
at hand. The opposite set of conditions would be true for a
declining trend. The problem with divergences is that you never
know how many to expect prior to the actual trend reversal.
An unusual but normally reliable discrepancy occurs when
price and momentum switch roles (where the price leads the
momentum indicator), the opposite of the normal situation
just described. That’s why I refer to this phenomenon as a
reverse divergence. Figure 2 shows a reverse divergence at a
market peak. See how the price makes its high at point A, then
makes a lower high at point B, but the oscillator makes a
higher high at B. The fact that the oscillator peaks at B as the
price is declining is what makes this a reverse divergence.
Of course, reverse divergences can also fail, so I like to see
some kind of trend reversal in the price as a confirmation. I’ve
used trendlines in these examples, but a reliable moving
average crossover† works just as well. Figure 3 shows a
reverse divergence in action at a market bottom. Note how the
price makes its final low at point A, but the oscillator bottoms
at point B. This phenomenon appears to work so consistently
because prices are determined by many different cyclic
rhythms, and an individual oscillator only reflects a very
small part of that picture. The type of cycle being reflected
will, of course, depend on the time span of the oscillator, so
the longer the time span, the longer the cycle.
When a price peaks or troughs ahead of the ideal cycle
turning point, it indicates underlying strength or weakness,
depending on whether it’s in a downtrend or uptrend. Perhaps
some other cycle not reflected by the specific momentum
indicator being monitored has now become dominant. At any
rate, when the price peaks or bottoms ahead of the oscillator,
there is a strong possibility that a trend reversal will materialize.
EXPERIMENT WITH YOUR FAVORITES
There is nothing magical about the 5-15 price oscillator;
hidden divergences appear on many indicators. Figures 7 and
8 illustrate HDs on the June 1996 bond chart using Williams’
%R† and momentum† indicators, both of which can be found
on most charting software. Different indicators will display
HDs at different places on the price chart, and some indicators
may produce more hidden divergences than others.
The 14-unit Williams’ %R exhibited bullish hidden divergence
at the indicator double bottom at points 1 and 2 as price
made higher lows at each of those points. Other bullish HDs
occurred at points 2 and 3, 3 and 4, 4 and 5 and points 7 and 9.
An indication of a trend reversal appeared at point 10 when %R
made a higher high than it had at either points 6 or 8, but the
price high at point 10 was lower than at points 6 and 8. Price
support at point 9 was broken to the downside following the
bearish HD. The decline continued following another bearish
HD at point 12.
Both bullish and bearish HDs occurred at similar places on
the price chart using a 12-unit momentum indicator on the
same bond chart. (The 12-unit momentum indicator is the
default level on MetaStock software.) Despite bearish classic
divergence at points A, B and C on the momentum indicator as
price moved up above the 120 level during the last four months
of 1995, bullish HDs were evident between points 1 and 2, 2
and 3, 3and 5, and 5 and 7. The first sign of a bearish HD came
in January, when point 6 on the indicator double topped with
point 4 as price made a lower high at point 6. The trend change
was confirmed when price broke support at points 5 and 7. The
second bearish HD occurred at points 8 and 9, which was
followed by a swift five-point decline.
Just as classic divergence does not appear on every price
chart, so it is with hidden divergence. But when HDs do appear,
they are worthy of attention, as they can add to your profit
potential by keeping you on the right side of a trend or by
confirming a trend change. The trick is to train your eye to
recognize a hidden divergence when it presents itself. Now that
you know what to look for, see if you can spot them on the
indicators you like to use.
THE BEARISH HIDDEN DIVERGENCE
In a bearish HD, price makes a
lower high, but the indicator
makes a higher high. This type
of nonconfirmation is mainly
found during corrective rallies
in a downtrend but may
also occur during retests of a
price top. Bearish HDs signal
potential underlying weakness in a security.
An example of bearish hidden divergence appeared on the
June 1995 cattle chart (Figure 4). Following a steady twomonth
decline, price rallied in April to form point 1. After a
brief decline, price rallied again to form point 2, which moved
the indicator to a higher level than it had been at point 1.
However, price made a lower high at its own point 2. The lower
price high, accompanied by a higher indicator high, produced
a bearish hidden divergence, and prices continued their decline.
In May, another price rally ensued, taking both price and
indicator to their respective point 3s. Because the indicator was
higher at point 3 than at point 2 and the price high was lower
at point 3 than at point 2, point 3 would be labeled as another
hidden divergence.
But this proved to be a false hidden divergence, as price rose
above the point 3 high within the next few days. A false hidden
divergence is similar to a false classic divergence in that
momentum has changed but not enough to produce a major
price change. A trendline drawn from the price top of point 2
4 high. The next bearish HD took place at point 6 where the
indicator rose above its point 5 high, but price failed to take out
its point 5 high. Price then continued to decline to the $18 level.
Figure 6 also shows that not all hidden divergences lead to
large price moves. Let me note here, however, that hidden
divergences generally do help to keep a trader on the right side
of the trend.
Just as classic divergence does not appear on every price chart, so it is with hidden divergence. But when they do appear, they are worthy of atenton
low at point 2 than it had at point 1. In May, at point 4, the
indicator was lower than at point 3, but the price low at point
4 made a double bottom with the price low at point 3 before
price resumed its advance. As the indicator made lower lows
in July and August at points 6 and 7 than it had at point 5, price
continued to make higher lows. Another double-bottom price
low occurred at points 8 and 9, but the indicator made a lower
low at point 9, signaling the potential for additional strength.
The year 1995 also produced a strong bull market in the
grains. December corn made a $3,000 runup in price during a
five-month period (Figure 3). Classic bullish divergence was
not evident at the August price double-bottom retest of the July
lows, but hidden divergence was very much in evidence as the
indicator made a lower low at point 2 that was not confirmed
by lower prices. Point 3 represents a confirmation rather than
an HD because both price and oscillator dipped approximately
at the same time.
The next HD occurred at point 5. In October, the oscillator
at point 5 was lower than it had been at 4, yet the price low was
higher than it had been at either points 3 or 4. This was another
place to enter or buy more contracts. Traders would have seen
the bearish classic divergence in September and October as
price continued to make new highs, while the indicator made
lower highs. Some would have thought the move was over, but
those who exited might have spotted the HD re-entry opportunity
at point 7 when the indicator was well below point 5 and
the price low was higher than it had been at point 5, suggesting
a price rally.
The “X” at point 6 in Figure 3 calls attention to a variation
that I call the second-point lookback, which can be used when
looking for hidden divergences. Most of the time, the HD will
occur between the last two indicator lows such as those
between points 4 and 5. Sometimes, though, it is important to
look at the low made two indicator points ago. In this case, the
indicator low at point 7 was lower than the indicator low at 6
— the preceding indicator low — but then so was the price
low. That produced a confirmation with price and would
appear to negate the pattern. However, a look back to the
indicator low at point 6 showed that it was higher than point 5
and that point 7 was lower than both points 5 and 6 and that the
price low was higher at both points 6 and point 7 in relation to
point 5. Many times, this indicates either a resumption of the
up move or a rally to retest the top.
THE BULLISH
In a bullish HD, the indicator
makes a lower low, but price
makes either a higher low or a
double-bottom low. This type of
nonconfirmation occurs mainly
during corrective declines in an uptrend, but it may also be found on occasion at price retests of
the lows. Bullish HDs indicate underlying strength in the
security and often make good entry or re-entry points.
During its spectacular rise (and before its equally spectacular
decline), Micron Technology [MU] displayed many bullish
hidden divergences (Figure 2) in 1995. At point 2, the indicator
made a lower low than it had at point 1, but price made a higher
CLASSIC DIVERGENCE
Classic divergence is one of the best-known types of
nonconfirmation. A divergence is a separation between price
and indicator that warns of a possible short- to intermediateterm
change of trend. A bullish divergence arises during a
down move when price makes either a lower low or a double
bottom but the indicator makes a higher low or a double
bottom. A bearish divergence occurs during an up move when
price makes either a higher high or a double top and the
indicator makes a lower high or a double top. Classic divergences
can occur at price tops or bottoms and also at price
corrections.
The chart of PepsiCo [PEP] in Figure 1 shows both a bearish
and a bullish divergence. The stock price rose from April to the
end of May 1995. The oscillator made a top in early to mid-May
at point A. However, when price made a top in late May (point
B), the oscillator made a second top at a lower level. This was
a sign that price momentum was decreasing and warned of a
potential change in trend either from up to down or sideways.
The stock made a corrective decline going into July. At the
price low in mid-July (point D), the oscillator made a second
bottom, but at a higher level. This signaled that downside
momentum had decreased and either a potential rally or sideways
move could occur. The bullish divergence was confirmed
as price resumed its up move.
Hidden Divergence
NEW TECHNIQUES
M
Divergence, which is a term that technicians
use when two or more averages or
indices fail to show confirming trends,
is one of the mainstays of technical
analysis. Here’s a new way to use oscillators
and divergence as well as methods
to locate entry levels during a trend.
ost technical indicators
mirror or confirm price
movement. When price
moves up, the indicator moves up; when
price moves down, the indicator moves
down. When prices peak, the indicator
peaks; and when prices bottom, the indicator
bottoms. Sometimes, however, a
discrepancy occurs between price and
indicator movement. That discrepancy
is known as nonconfirmation and can be
seen most clearly on overbought or oversold
indicators as well as on indicators
that move above or below a zero line.
Many traders only learn to recognize
the type of nonconfirmation that occurs
at market tops and bottoms, which is the
classic divergence. But there are other
forms of nonconfirmation I call hidden
divergence (HD) that, when present,
offer additional profit potential.
Hidden divergences are the opposite of classic divergences.
Classic divergence looks for lower low prices accompanied by
higher indicator values at price bottoms and higher high prices
accompanied by lower indicator values at price tops. Hidden
divergences, on the other hand, seek higher price lows accompanied
by lower indicator values during up moves and lower
price highs accompanied by higher indicator values during
down moves. Most hidden divergences signal continuation
moves in the direction of the prevailing trend.
Here are examples of each type of nonconfirmation using
stock and commodity charts. Even though many indicators
display nonconfirmations, I will use a five- to 15-unit (5-15)
price oscillator to illustrate various nonconfirmations. The
oscillator is simply the difference between a five-unit exponential
moving average (EMA) of the closing price and a 15-
unit exponential moving average of the closing price. The
value of that difference fluctuates above and below a zero line.
Monday, January 5, 2009
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