Using Technical Indicators

By Ahmad Hassam

Technical analysis depends on the use of indicators in finding the optimal points for entry and exit for each trade. A number of advanced technical indicators have been developed over the years that are used by the traders to confirm a particular market pattern. Two or more indicators are used in conjunction to confirm whether the markets are trending, ranging etc.

You should understand how to use these technical indicators to confirm trending or non trending conditions. Each technical indicator plays a unique role in the overall technical analysis process. Time periods and the technical indicators are useful tools for the traders. Spotting interday or intraday turning points caused by large moves, retracements, continuances or reversals is very important for traders and technical indictors are used to identify and confirm these turning points.

Each technical indicator performs differently in both trending and non trending markets. You should understand how each technical indicator shows direction, entry, exit or weaknesses or strength of price action in trending or non trending market conditions. You should memorize these differences to make the best use of these tools in your trading.

Lets discuss some of the important technical indicators that are popular among the traders. Directional Movement Indicator (DMI) combines Average Directional Index (ADX) and the Directional Index (DI). The Average Directional Index measures the strength of a prevailing trend. ADX rises when the trend is strong. It falls when the prior confirmed trend or direction is weakening and it measures the trending quality of the market. ADX isolates those periods where the market is not trending.

Directional Index (DI) is positive DI+ and negative DI-. DI+ and DI- show direction. When DI+ rises above DI-, an upward direction is confirmed. When DI- rises above DI+, a downward direction is confirmed. A strong move in the markets is confirmed when ADX is rising and both DI+ and DI- are apart.

The Stochastic Indicator is often referred to as the overbought or oversold indicator. The Stochastic Indicator identifies swings, tops and bottoms. It measures the relationship between the closing price of a currency pair and its high or low during a specific number of days or weeks.

The Stochastic Indicator does a wonderful job in finding the reversal tendencies in prices. As the price of the currency pair rises, the closing price tends to be closer and closer to the extreme high prices of the currency pair. Similarly as the prices fall, the closing price tends to fall on average closer and closer to the extreme low prices.

The Stochastic Indicator is considered to be a highly accurate method of picking the tops and bottoms. It is very popular among the traders. This indicator tries to find a correlation between the moving closing price of the currency pair and its reversal tendencies. It is a very useful tool that can be used as a timing aid in knowing when to take action in a currency pair particularly when it is used in conjunction with other technical indicators. - 23217

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Develop your own Forex Trading System. Read about L.M.T Forex Formula.

Reading Foreign Exchange Quotes

By Bart Icles

The foreign exchange market can overwhelm a lot of people. Having a good grasp of foreign exchange trading can help you a lot in starting your foreign exchange venture. After having substantial knowledge of the basics of the foreign exchange market, you can start working on learning how to buy and sell currencies.

Learning how to read foreign exchange quotes in spot markets is a basic step in foreign exchange trading. A currency is quoted in relation to another currency, wherein the value of one currency is shown through the value of another. A foreign exchange quote typically looks like this: USD/EUR = 0.7076. This reads that one US dollar is equivalent to 0.7076 Euros. The currency on the left side of the slash is the base currency and the one on the right is the quote or counter currency. When taken together, this is what foreign exchange market players refer to as a currency pair.

Normally, currencies are traded in the foreign exchange market with the US dollar as the base currency. When a quote does not indicate the US dollar as one of its components, it is called a cross currency. An example of a cross currency pair is EUR/JPY, wherein the quote will indicate how much Japanese yen does one Euro cost. Cross currencies can open new opportunities in the foreign exchange market. However, you should take note that cross currencies are not as actively traded than pairs that include the US dollar.

Currencies can be quoted in two ways: directly and indirectly. Direct currency quotes are simply currency pairs wherein the domestic currency is the base currency. In contrast, indirect currency quotes are those where the domestic currency is the quoted or counter currency. For example, you are looking at the Euro as the domestic currency and the US dollar as the foreign currency. The direct currency quote for this pair should read EUR/USD, and its indirect currency quote is USD/EUR.

You should also be familiar with the bidding and asking prices in the foreign exchange market. Currency pairs are traded with bid and ask prices, wherein the bid price is they buying price and the ask price is the selling price in relation to the base currency. In buying a currency pair, the ask price is the amount of quoted currency that need to be paid to buy one unit of the base currency. The bid price on the other hand is the amount of quoted currency that can be bought with one unit of the base currency.

Two other terms that you also need to be familiar with are spreads and pips. Spreads refer to the difference between the bid price and the ask price. A pip is the smallest movement that a currency price can make. In a currency pair that reads USD/EUR = 0.7076/03, the spread is 0.0003 or 3 pips. A change of three pips would result to 0.7079 from 0.7076. - 23217

About the Author:

Using a forex trade signal starts with a desire to learn and a drive to become a great trader. Learning to use a forex trading signal software is a powerful technique, it takes a good teacher and mentor. But once you learn how to trade using them your life will change and you have options and financial resources you never had before.

Forex Software - Knowing How to Find the Best

By John Eather

Whenever you're in the marketplace to get some forex software, discerning the most proper forex trading program is extremely important. Since there are such numerous forex trading companies trying to get your business, it's a gruelling task to decide on the most efficient forex trading program.

Just about all of the forex software products on the market offer you platforms for real-time forex trading. Therefore, you will need to deliberate additional elements that allow certain forex softwares to stick out from its rivals.

Before you purchase forex software, you will need to make sure that the software has certain important features. The most important feature is security, so online forex trading software should have 128 bit SSL encryption. This will ensure that hackers are blocked from accessing your important personal and financial data, like account balances and transaction history.

The niftiest forex software should also be supported by a company with around-the-clock technical support and maintenance in the event of a problem. Additionally, you will want to make sure that the software includes day by day backups of vital info, and a security system to forbid unauthorized account access.

Along with these very important security processes, a few forex trading companies use smart cards and fingerprint scanners for their workers. Through this extra security measure only workers are able to gain access the servers.

Downtime frequency and the average length of it is also another worthwhile factor to consider when deciding on forex software. You'll want to be sure to pick out an online forex trading company and forex software which is rock-steady and has 24/7 accessibility.

Lastly, you will want to see to it that the forex software you select to help your forex trading has technical support available just in case a session is suddenly cut off. By making sure the forex software you select integrates all of the features mentioned above, you will maximise your security and online forex trading success. - 23217

About the Author:

Before you start trading forex online, please sign up for John Eather's fantastic ecourse and reports about Online Forex Trading. Receivethe most recent information about trading forex online. Go to MoneyMakingFxTrader.com to learn more.

The Advantages Of Online Commodity Trading

By Anne Durrell

Online commodity trading is an exciting and different opportunity for trading on the internet. Interest in the market is increasing and that means larger trading volumes and larger potential for profits if you know what you are doing.

There are even schools that have been started to help people get the hang of online commodity trading. Most courses last a few days and teach the basics of the market.

Whether or not you decide you need to attend a class, it is important that you understand all there is to know about commodity trading before you get started. You need to learn how to place and how to control your orders in the commodity market.

This involves learning how to use the latest software. Studying how professionals make money through buying and selling will provide you with good examples of how you need to conduct yourself even though the trades you will be doing will likely be on a much smaller scale.

You can control the major losses by learning which online commodity trading transactions involve the most risk.

A bit of education will help you to reliably determine which investments are likely to be profitable and which should be avoided due to risk factors. It is possible to utilize different types of contracts at the same time to increase your leverage.

Things makes the online trading more complex, but if you do it carefully and correcly, you can earn profits with less risky. So if you want to do well in the online trading, you better be discipline and move carefully with a good plan and solid knowledge about the market as well the software your are using.

If you put the time in to learning the market and make carefully scripted decisions, you may find that online commodity trading is very lucrative. For some it becomes a full time career.

The internet makes it flexible so you can start slow and increase your trading volume as you get more comfortable. Soon you may be able to quit your day job! - 23217

About the Author:

Anne Durrell has written many articles about online trading . She comes from USA. We suggest you check out her other guide on google stock price tips, and forex software system trading guide!

Discover Strategies through the Day Trading Software

By Mitch King

Day trading is one style that needs the day trading software which is a very valuable study material for traders who are engaged in this type of trade execution. This style is applicable to traders and investors with sufficient time and enough capital to do personal surveys and research. There are several trade executions that people in the stock exchange business employ.

The stock exchange is characterized with speculative judgments due to the erratic market cycles which changes inevitably. The up and down trends in the market shift drastically and all the key players in the market are much aware of that fact. There is a need for consistent studies and learning to do when one is involved with the stock exchange market.

Some traders find themselves to be closely attached to some sectors in this type of markets. With great thanks to the advance of technology, traders are able to see the current activities of the different sector in of stock exchange. The stock charts are employed by the players to translate their technical analysis of the movements in the market.

It is basic for traders and investors to understand the stock charts for these contain the truthful figures of the exchange market. The chart displays the vital signs that can influence their decisions as to when they should approach the market place. Charting is an art that every player in the market must learn and master.

A specific chart is always adapted which is suitable to the trading style of a trader or investor. A lot of very important aspects have to be considered in this sort of business. The techniques and strategies likewise vary depending on the players mode of transaction which can be discovered through the day trading software. - 23217

About the Author:

Day trading is one technique that needs the Day Trading Software which can be very valuable for traders who are engaged in this type of trade execution. This technique is applicable when trading and investing in the Stock Market. Simply visit this site at http://www.tradestocksamerica.com to know more about it.