Forex Strategy: Leading Vs Lagging Indicators

Forex traders use a multitude of data to determine their strategies. One practice that is quite common is the use of price-action “indicators.” Traders use these chart signals to determine where prices are headed, helping them to better time entries and exits into trades.

For the majority, there are two common types called lagging or leading indicators. Leading indicators signal when a trend or reversal is happening. Therefore, they enable traders to enter a position before the trend and capture all of the profits of that trend. Lagging indicators, on the other hand, signal that a trend has already begun. Using lagging indicators, a trader can enter a position with the trend.

So what’s the difference between the two? And is it better to use one or the other?

Leading Indicators in Forex Trading

The majority of major currencies trade within a range, as prices move from low to high or high to low. In other words, the currency pair is moving sideways. Leading indicators are most effective when a currency pair is moving within a predictable range.

Ultimately, these indicators signal when the price is nearing the top or bottom of the trend. When a currency pair nears the bottom of the range, it is considered “oversold,” and it is likely to reverse the trend. The opposite is true when it reaches the top of the range. The currency is “overbought.” Whatever type of indicator that you use, will signal a buy or sell call when the trend is at its peak.

There are many different types of…


7 Important Forex Trading KPI’s to Keep in Mind

The market is extremely volatile and leveraged and therefore it might be dangerous if the cost moves against your position. It is therefore important to use key performance indicators that will help you maximize your profits. One of the performance indicators is the time of day. Many people end up not being successful in this business because they trading at the wrong time of the day. Those who are successful are reported to be trading during the late US and Asian or early European trading sessions.

Another performance indicator is range trading. To make profit in this business, you are required to buy low and sell high. In the event that a currency has fallen and it is trading at significant support levels, it will be the best time to buy it. In the event that the same currency trades higher, you can sell it. You however need to watch out for worst market conditions whereby the currency continues to trade within ranges that are relatively low.

The currency pair is another important factor to keep in mind. Not all currencies act the same in this market, so you will need to know which pairs are going to be more profitable to you. You will also need to know which time of the day a certain currency pair tends to perform well, for instance, the Japanese Yen is usually more volatile during Asian hours compared to the British Pound or Euro since these are business hours in in this country.

Another key performance indicator that most traders use is called the…

Source by Sylvester Madxen

Forex Trading: Are You A Mean Reversion or Trend Following Trader?

One of the first steps for beginning day traders is to determine one’s trading philosophy. You should have an idea of how you want to approach your analysis and trading, develop a view of how the market behaves, and ultimately place trades based on this philosophy.

Generally speaking, there are two major philosophies in Forex trading: Mean reversion and trend following. Both are quite different, and the millions of Forex day traders around the world typically use one or both of these styles in their day-to-day efforts. Now, you might be wondering: What the differences between these two Forex strategies? Which one is best-suited for me? And what are their advantages? Here is a quick explanation:

Mean Reversion in Forex Strategy

The premise of mean revision trading is the idea that the markets fluctuate around a state of equilibrium. In Forex, that would be the exchange rate for a currency pair moves up or down around a mean average value, and ultimately returns to the mean average. To profit, mean reversion traders enter trades when values deviate up or down from the mean average. And when the currency pair reverts back, the trader exits the trade, hopefully taking a profit as a result.

In day trading, mean reversion is fairly common, because day-to-day currency values tend to remain fairly stable without large swings. In fact, it’s estimated that the markets tend to stay in a specific range 60 to 70 percent of the time, and stability is the ideal condition for mean reversion…


3 Simple and Effective Forex Strategies

Using simple but effective Forex strategies need not be difficult. There are three popular styles when it comes to actually trading currency. Ideally, you should try to apply aspects of each of these styles to maximize your success.

Here we will discuss them so that you can begin to implement in your Forex investment plan:

Technical Information Analysis

This is when you take advantage of all information available on the currency pair. This is especially useful because you can have constant updates and keep a very close eye on the best possible time to affect your buyout or trade.

This will allow you to leave trade options open until a currency or currency pair will achieve the price that you’re looking for and keep a constant eye on happenings.

Sentiment Trades

This is a different aspect from technical trading because it involves market shifts that move based on feeling rather than specific fundamental facts. Market sentiment can often require you to react on a very visceral or gut driven basis and what you think the market will also react to.

It assumes that you have an understanding and intuitive feel for the market and currency trades based on prior experience. One huge advantage of this kind of trading is that it allows you to anticipate a market based on prior experience and outperform the herd consistently.

Specific Forex Strategies

There are literally dozens of books written on Forex trading strategies. Each specific strategy builds upon prior knowledge bases and allows you…


Forex Trading Robot – The Best Way To Get Profit

A trading robot is a piece of software that will automatically handle the currency trading process for you, it enters and exports trades with the goal of making a profit. A lot of traders ever switch to a piece of software like this because they are tired of entering in all these trades manually.

When you're trading manually you have to spend a lot of time each day keeping up with the market, and you have to spend a huge amount of time staying current with the trades you have active. It can take the pain out of this process for you, eliminating the need to enter this information manually. The majority of Forex trading robots will only come prepackaged with one specific way to trade. They only have one set of rules they follow, no matter what the market conditions could be, they're built to trade strictly currency pair. Because the market is constantly changing hour by hour this can be a big problem, as each currency pair will need to be treated differently.

Some trader prefer to use automated as their sole trading system and others using it to manage part of their portfolio. How well robots work depends on the adopted strategies and money management system.

To understand how well yours work, you should ask or back-test the robot software. You will get a better idea on their performance (risk / reward ratio, conservative wins and losses and etc). the market 24 hours a day.

Source by Guntur Sri S Bintoro

What Does a Forex Pip Mean?

A pip, that's a term you need to understand well if you are thinking of going into trading. It is a term used by traders to measure how much they have earned or lost in their trades. Seems not to be very important compared to other terms such indicators or leverage, but not knowing what pips meant to a trade can be costly.

Forex trading is usually done in pairs. The second of the currency pairs being traded is the quote price. This means that in the currency pairs EUR / USD, the US dollar will be the quote price. The price of this currency pair will be what the present value of the US Dollar is against 1 Euro, for example $ 1.70 or 17000.
You will notice that the quote price has to zeros added. The two zeros stands for the quantity of the currency pair to be traded. And the pip will be the measure, the smallest measure, of change or move in the price to the quote. One pip will be equivalent to 0001. In the example given, if the 17000 price changes to 1070 you would have earned 10 pips. How do you calculate earnings using the pips? There is what traders call as $ 100,000 standard lots, so if you earned 100 pips trading this lot your earnings will be $ 1,000.

The currency quote will vary, of course. Sometimes it will be USD / Euro. The same process of calculating movements and perception will be the same. But this time it's the price of the Euro will be used. The formulas may appear perplexing at first. However, you have enough time…

Source by Benjamin Stockton

Forex Secret – Currency Pair Reversal Points – Pivot Points

The currency pair pivot point is one of keystones in trading at Forex.

First of all, let us introduce the following designations (notions), necessary for the subject.

“High” is the maximum at the previous day;

“Low” is the minimum at the previous day;

“Close” is the price of closing at the previous day.

Generally speaking, there are the three principal criteria.

1. There is the stock reserve – i.e., the difference between Low and High per the trading session. For instance, as regards GBP/USD pair, this difference can exceed 100 points in a trading day.

2. The reader must also consider the reversal point of the currency pair movement (the pivot point) in the daily trading session. Thus, it is easy to calculate the possible profit that could be gained by a trader regularly.

3. If “the trend is the friend” (see Book 1), it is necessary to work along the trend direction. Under these conditions, the detection of the trend pivot points can prevent losses that could be conditioned by the following factors

· A change in the trend direction.

· Besides, this conception of the trend pivot points permits us to understand when a deal must be opened in a new trend – i.e., in the beginning of the currency pair movement but not in the middle of it. The author especially doesn’t recommend opening a deal at the end of a new trend.

Briefly to say, the skill of detecting the real pivot point is necessary for the regularly gaining of profit at Forex (for pity, the knowledge of it is…


Silicon Forex Review – Is This Forex Robot Trader a Scam?

There has been a lot of discussion about the new Forex robot trader called Silicon Forex recently. Does this robot trader really work like how the creator says it would, and are its back test results reliable? I decided to demo test this Forex robot for myself and I will discuss more about it in this article below.

1. What Is The Silicon Forex Software?

This is basically an automated robot that opens and closes trades by itself on the Metatrader 4 platform. It does not require the user to sit in front of his or her computer screen every minute to look out for profitable opportunities. Installing and setting up this software is very easy with the step-by-step instruction manual and videos provided.

2. What Currency Pair Does Silicon Forex Trade and Why?

This piece of software trades very well on the Euro / USD, which is generally the best currency pair to trade as it is the most liquid and brokers charge the lowest spread for this currency pair. Back test results have also shown that the system achieves about 75% successful trades which is a very impressive track record for any trading robot.

3. My Experience and Thoughts after Using Silicon Forex

If what you are looking for is an instant and fast way to make money, I would tell you that Silicon Forex is not for you. You will need a medium to long term perspective to make money with this software. If you look at the equity curve generated by this robot, you would notice that it may not make money sometimes for an extended period…


How Do I Trade Breakouts in Forex?

Trading breakouts could be like gambling with your money if you are not knowledgeable with the data i.e. the fundamentals. However, if you really would love to trade breakouts and be able to generate over a 100 pips within a short time, then you have to know more about the fundamentals of Forex trading as well as the technical indicators.

The two major news events that trigger breakouts are:

1.) Interest rate decision.

2.) The non-farm payroll from the united states.

One thing you need to know about breakouts is this; before such news is released, the market looks usually quiet but tends to move in favor of the erring currency in the pair and if it’s the base currency, the currency pair usually moves higher than usual before the breakout. The same happens if the erring currency is the counter, this time in the opposite direction. You should also notice a squeeze in the Bollinger as if tightening up, and in the process of releasing something. I use the 62 band Bollinger.

I should tell you this about breakouts though, the currency pair usually tends to test its last resistance or support point before it finally makes a strong rally upwards or downwards.

Now how do I prosper from this?

I know there are lists of calendars used in confirming economic news events. I use the fxstreet, forexfactory and dailyfx to mention but a few. I love the forexfactory however, because you can configure the exact time of news event to your computer time in your country.

When the news comes out…

by Ogbonnaya Eme

What is the Most Profitable Strategy For Forex?

Do you want to learn a profitable strategy for Forex? Even though the Forex market is open 24 hours a day, the currency pairs will be very different at different times of the day. This is due to the activity of the participants in the market at different times. Many beginners have the misconception that the more they trade, the more money they should be able to make. This can not be further from the truth.

1. How Do You Develop A Profitable Strategy For Forex?

A profitable strategy needs to take into consideration the technicals of the chart and the volatility of the particular currency pair. If you are planning to make your own strategy and not adopt a proven system or software, then you must have a good understanding of the timing of various markets, and how to profit in different volatility levels.

For example, it does not make sense to develop a strategy that sets small stop loss levels If the strategy is used to trade a currency pair whose price swings very wildly.

2. Is It Possible To Create A Single Strategy To Trade Every Currency Pair?

This is another mistake that many traders make. Making a successful strategy to trade one currency pair does not mean that it will work for every other pair. Again, this is due to volatility and market conditions.

If you are a beginner, I highly recommend you to try out other's tested and proven systems first before you try to make your own. Nowadays, I use a trading software that trades Forex and makes money…