Why Trade Forex?
History of the Foreign
Currency Exchange Market
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The principles of technical analysis derive from the observation
of different financial markets over hundreds of years. The oldest
known example of technical analysis was a method developed by
Homma Munehisa during early 18th century which evolved into the
use of candlestick techniques, and is today a main charting tool.
Steve Nison brought this technology to the West from Japan and
with the demand for understanding Steve Nison published the Candlestick
Technique books. In these books he describes the Japanese using
candles to calculate rice contracts as far back as the 8th century.
Thus candlestick charting techniques..
In the foreign exchange markets, Technical Analysis is more widespread
than fundamental analysis, especially in shorter duration trades
such as DAY trading.
It is a method of evaluating price by analyzing statistics generated
by market activity such as past prices and volume. Technical analysts
do not attempt to measure the value but instead use charts and
other tools to identify candlestick and chart patterns that can
suggest future activity. Technical analysts (or technicians) also
seek to identify price patterns and trends in financial markets
and attempt to exploit those patterns. While technicians use various
methods and tools, the study of price on currency charts is primary.
Technicians especially search for archetypal (an original model
after which other things were patterned) patterns, such as the
well-known “Head and Shoulders” reversal pattern, and also study
such indicators as volume, Fibonacci retracement and moving averages
The most important function of any Technical Analyst is to find
one technical method that WORKS consistently
for the trader, that can be statistically graphed and journalized,
showing a viable result for the trader on a consistent basis.
This can then be implemented for self and others.
There are 3 styles of trading:
DAY Trading – includes momentum and
scalping. Trades last seconds, minutes or hours and are closed
within the day. Day traders need to adopt a rational and analytical
outlook. Emotional traders will lose money quickly in this type
of trading style. Close attention is needed and day trading can
become a full-time profession. Day trading normally requires a
trader be in front of the computer while trading.
In our opinion, day trading can be done with less capital in one’s
account than either SWING or POSITION trading due to the shorter
duration of the trade and thus less fluctuation of the currency
within that time period.
SWING Trading - executing a trade
and keeping that trade running for hours up to two or three days.
In our opinion a trader requires more capital in one’s account
to swing trade.
POSITION Trading – executing a trade
and keeping that trade running for days, weeks or even months;
sometimes up to 6 months or more. In our opinion this style requires
Beginner’s attempting this style of trading would find this style
to be extremely risky, as one needs much more capital in one’s
account due to the duration of the trade and the widening fluctuation
of the currency. It would be much wiser for a trader to become
consistently proficient in shorter duration trades before risking
the value of one’s account that is necessary to trade in this
Technical Analysis on Charts
Some key indicators we look for on a chart:
These all assist us in our analysis of the
- Support and Resistance Levels
- Candlestick patterns
- Trend lines
- Candlestick support patterns
- Candlestick resistance patterns
- Reversal Type Candles
- Continuation Type Candles
- Fibonacci Retracement levels
Chart Patterns: *
The Views and opinions represented
in the provided website links and resources are not controlled
by the RB (Referring Broker) or the FCM (Futures Commission
Merchant). Further, the Referring Broker and the FCM are not
responsible for their availability, content, or delivery of
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