Forex Candlestick Trading Method

Forex Candlestick Trading Method

When you are dealing with Forex, you cannot ignore the importance and impact of a methodology involving Technical analysis of the market. It is important to predict future price trends from available price and volume data.

An effective technical analysis takes care of all fundamentals, including expectations, and is reflected in exchange rates. This branch of studies evolved from empirical observations of financial markets over hundreds of years.

The oldest is perhaps the Candlestick Techniques used by the Japanese Rice traders which date back to the 18th century and surprisingly popular till today.

Candlestick technique originated in Japan when Munehisa Homma of Dojima Rice Exchange used past prices to predict future price movements and generated an enormous amount of wealth. The concept was adopted to analyze the Forex market which later proved to be extremely effective.


Candlestick Forex Trading For Pinpoint Accuracy

The Candlestick trading incorporates the thought processes of the majority of the investors in the markets and therefore generates visual signals of an investors’ emotion! That is the reason behind the greater appeal of a Candlestick chart over other charting methods like bar charts.

It presents the same data with a dramatically dynamic visual interpretation. If you can recognize the change in an investor’s sentiment your profits will multiply by utilizing the added information depicted in the signals.

The Candlesticks have basic patterns comprise of Long days, Short days, White Marubozu, Black Marubozu, Spinning tops, Stars, Rain drops. The reversal patterns, Dark Cloud Cover, Engulfing, Evening Star, Harami, Morning Star Doji, Piercing Line, Three Black Crows, and Three White Soldiers. A single candle pattern can be Doji's (Dragonfly Doji or Gravestone Doji), Hammers/Hanging Man, Shooting Star, Hollow Red Candle and Filled Black Candle

The open, high, low, and close are depicted in a candlestick. If the close is higher than the open, the candlestick is hollow or white. If the close is lower than the open, the candlestick is filled or black. The hollow or filled section of the candlestick is the body while the thin lines above and below the body represent the period's entire trading range - which are called shadows.

The top of the upper shadow represents the high and the bottom of the lower shadow represents the low. The candlestick shadow reflects the intra-period high and low. The periods can be 5 min, 15 min, 1 hour, daily and weekly. If you find long shadows, it means the trading extended well beyond the opening and/or closing price. On the other hand a short shadow will tell you that the trading was confined closely to the open and/or closing price.

Generate Amazing Forex Wealth

If you know how to read the Candlestick charts you may be surprised to find out the amazing trends it reflects. A Long white candlestick will show strong buying pressure.

This means that the prices advanced significantly from open to close and buyers were quite aggressive. After an extended period of declines, long white candlesticks can mark a turning point or support level.

A Long black candlestick reflects strong selling pressure. The longer the black candlestick is, the further the close is below the open. This shows that the prices declined significantly from the open and sellers were aggressive. After a long decline a long black candlestick can indicate panic or capitulation.

Potent long candlestick in Marubozu brothers, which do not have upper or lower shadows, the high and low are represented by the open or close. A White Marubozu is formed when the open equals the low and the close equals the high, indicating that the buyers controlled the price action. Black Marubozu form when the open equals the high and the close equals the low. This indicates that sellers controlled the price action.

The Candlestick signal empowers you with the ability to pinpoint a change of direction. If you use other technical methods as supplemental tools it can generate enormous amount of wealth for you in Forex trading.

On the next page we will show you where you can download a free evaluation version of one of the best Forex analysis software packages available anywhere.

The Nostradamus Forex Trading Method

The Nostradamus Forex Trading Method

A Forex trader knows the highly volatile nature of currency trading can bring great rewards but also it can result in substantial losses. Therefore the traders seek a ‘Good’ and ‘Fool Proof’ money management system or tool for achieving stronger gains and mitigating unwanted losses.

Like the famous French publisher of prophecies Nostradamus, The Nostradamus Trading Indicator claims to have the ‘mythical power’ to predict the future trend of the Forex market. It is a Compass, which shows the directional force of the market.

The data is updated constantly on a second by second basis. It is designed to indicate signals when markets are trending -- reversing from a previous trend, or going range bound. So it can warn you when you should reverse out of a position at the end of a trend, and when you can expect target highs and lows to act as a good range.

Nostradamus - Constantly Updating Forex Trends

The working principle is based on software that is capable of testing millions of combinations of indicators and optimized parameters before predicting the near future market movements.

Nostradamus gives neural network based predictions of the high and low of the chosen market for the next two and 8 hours. The Compass indicator gives you the direction and strength of any market move based on which you can form an ideal intraday trading strategy.

The Nostradamus method presents a framework for the intraday trader on basis of which the trader can form the opinion to enter, maintain, and exit positions for maximum profits. The trader may perceive the market trends in their own way and can use Nostradamus to strengthen their confidence, and help in suggesting the timing of any position they choose to take.

Nostradamus uses the bid side of the last updated market price of the instrument, to calculate charts, actual highs and lows. The Compass indicator provides a 5 minute chart.

The Nostradamus Compass - Easy But Effective

If you open the system, you can find values for the time of the last update marked in Cyan at the top of the chart. The Compass shows the current bar, and a current value based on the Open, High, Low and Last price of the instrument. You may also view additional Compass dial windows for different currency pairs by clicking on the blue link. All times on the system are always London times.

The Compass dial has three main zones, Long Position in green, Rangebound that is blue, and Short Position in red, separated by two smaller regions called Reversal/Signal, which are purple. In the middle of the pointer is a number, which is the latest calculated value of the Compass indicator.

Compass is always a number between 0 and 100, and as the value of Compass changes, the pointer moves and points at the various zones, telling the trader what the market is doing, and what position one should have in the market.

The yellow line on the chart is the historical plot of the Compass indicator, with a scale between 0 and 100 on the left axis. Two relevant levels on the chart are marked corresponding to the red and green position areas on the Compass dial. They are the 80 level in red, and the 20 level in green.

Use Nostradamus to Mazimize Your Forex Profits

On the top corner of each graph - you can find a button for Alert Settings. You can monitor four fields individually by sound, by a pop up window or both. The Level to check fields contain default values which prevent any limits being triggered. For example you can be warned by a pop up window once when the Compass reaches 20 by setting the Compass high to 19.

The Compass reading updates on a regular basis, and must be watched constantly to get a true feeling for its signals. With all updates taking place in the market the track record of the system automatically updates the results from the previous period. It compares the actual high and actual low reached in the market with the prediction, and show the error rate in pips.

According to the veteran traders of Forex market, the Nostradamus method is one of the best indicators to predict the near term future, based on a detailed examination of their performance in the past.

For details on using the Nostradamus method for Forex trading including your opportunity to recieve a free 14 day trial please visit Nostradamus System Limited by clicking here.

On the next page we will look at the ancient analysis method of candlesticks. Click the 'next' button below to learn how candlestick charting can help you trade more efficiently than ever before.

Technical Analysis in the Forex Market

Technical Analysis in the Forex Market


Technical analysis is the method of forecasting price movements in the forex market by looking at purely market-generated data. Almost every trader uses some kind of technical analysis.

Price charts are one such basic method of analysis. These charts help traders in determining the ideal entry and exit points for a trade by providing a visual representation of the historical price action. Just by looking at a chart, the traders come to know if they are buying at a fair price or selling at a cyclical top.

An ideal technical analysis also incorporates the fundamental considerations by incorporating them in the charts and data tables. Technical analysis assumes that all market fundamentals are represented in the actual market data.

Technical Analysis - An Armory of Forex Trading Tools

There are three basic principles behind all technical analysis. These are the actions of the market in relation to current events, trends in price movements and past Forex history.

Technical analysis systems largely depend on mathematical representations of the Forex market patterns and behaviors. These include price charts, volume charts, and a long list of other more specific methods of analysis.

Market data are used to determine the strength and sustainability of a particular trend. Technical analysis is therefore one method that helps you forming a disciplined trading method.

Few of the basic Price charts include various chart patterns that show price action. The most common are bar charts where each bar represents one period of time which can be anything from one minute to one month or even several years.

Forex Charting Techniques for Detailed Analysis

Candlestick patterns can also be used to forecast the market. With colored bodies, candlesticks provide greater visual detail in their chart patterns than bar charts. Point and figure patterns are essentially the same as bar charts but Xs and Os are used to market changes in price direction.

Technical indicators like Trend, Strength, Volatility, Cycle, Support or Resistance, Momentum indicators are again quite helpful segment of technical analysis. Trend describes the persistence of price movement in one direction over time. Trends can move in three directions -- up, down and sideways.
Market strength is the intensity of market opinion with reference to a price by examining the market positions taken by various market participants. They are based on volume or open interest.
Volatility is the magnitude, or size, of day-to-day price fluctuations independent of their direction. It has been observed that changes in volatility tend to lead changes in prices.
Cycle indicates repeating patterns of market movement, specific to recurrent events, such as seasons, elections, or yearly budget. Cycle indicators determine the timing of a particular market patterns. Elliott Waves are one of the most well known examples of Cyclic indicators.
Support and resistance describes the price levels in which the markets repeatedly rise or fall and then reverse.
Momentum is the speed at which prices move over a given time period. The momentum indicators determine the strength or weakness of a trend. Momentum is highest at the beginning of a trend and lowest at trend turning points. If momentum is trending strongly and prices are flat, it forecasts a potential change in price direction.
Effective Implementation of Technical Analysis = Profitable Forex Trading

To use Forex technical analysis effectively, you must have a good understanding of the basic tenets of technical analysis. You must remember that price is your primary tool. But almost all the systems incorporate serious technical studies to delve deeper into the data.

Some such time tested studies are Moving Averages, Stochastic, RSI (Relative Strength Index), Bollinger Bands, MACD (Moving Average Convergence Divergence), Fibonacci Retracements etc. But you should not get engrossed in the mathematics involved in putting together each study.

It is much more important to understand how and why these studies can be manipulated in an ideal way for the currency you are trading. Reading between the lines and finding the details behind the details are therefore going to be your key to success.

For a software package that can help you chart Forex market moves and implement technical analysis effectively we recommend a visit to our Forex Analysis Review section. To carry on reading and to learn about the Nostradamus method of trading click the 'Next' button below.

Forex Fundamental Analysis

Forex Fundamental Analysis

There are two major methods of analysis used in forecasting the behavior of the Forex market; they are Technical analysis and Fundamental analysis.

They differ greatly but the trader can apply both to complement and supplement the study of the market for achieving superior results.

They also have the same goal i.e. to predict a price or movement of the market. The technical analysis studies the effect while the fundamental analysis studies the cause of market movement.

Fundamental Analysis has a very broad spectrum. One aspect looks at the general or qualitative factors; the other side considers tangible and measurable i.e. the quantitative factors.

Use Fundamental Analysis With Technical Analysis

In general the fundamental analysis method looks to forecast the future of price movements based on events that have not taken place yet. Important factors and statistical methods are used to predict how these events will affect supply and demand and the rates of the Forex.

We must remember that Fundamental analysis and Technical analysis are not the reliable factor on their own, but each needs to be used in conjunction with the other to form opinion about the changes in the Forex market.

Fundamental analysis is therefore the method of forecasting the future price movements based on economic, political, environmental and other relevant factors and statistics that are going to affect the basic supply and demand of the market.

A fundamental analysis involves in-depth study of the market. It focuses on what is going to happen in a market based on supply and demand, seasonal cycles, and weather and government policy.


Predicting Future Forex Trends For Profits

Fundamental analysis can be defined as the macro or strategic assessment of where a currency should be trading based on the movement of the currency's price itself.This is often highly dependent on the economic condition of the country of that currency, monetary policy, and other "fundamental" elements.

The analysis is performed on historical and present data, but the objective is to predict the future trend.

Economy condition reflects how the country is attractive for foreign investments and capital inflow. In general it can be said that the better the macro economic indicators – the stronger the domestic currency is.

According to Fundamental analysis, the markets may misprice in the short run but the "correct" price will eventually be reached. Profits can be made by trading the mispriced and then wait for the market to recognize its "mistake" and reprice the security.

Traders may use fundamental analysis within different portfolio management styles. Buy and hold traders find out 'good' buys from the past trend which can lower their risk and probability of wipe-out. In fundamental analysis you make your own decision rather than going by the apparent movement of the market.


Analyzing Economics and Macro Forex Factors

With fundamental analysis, one can find out if the prices in the market are undervalued, overvalued, or working in a fair value by applying the concept of intrinsic value as the market price tends to move towards its intrinsic value. If the intrinsic value is above the current market price, the investor would purchase the currency and if it is below, the investor would sell it from the portfolio or take a short position.

A top-down trader starts the analysis with global economics, including both international and national economic indicators, such as GDP growth rates, inflation, interest rates, exchange rates, productivity, and energy prices. The bottom-up investor starts with specific currency pair, regardless of their current position.

So we come to the conclusion that as a trader in forex market one would require to take help of Fundamental analysis along with Technical Analysis methods to maximize the gain by correctly recognizing the market trends.

We will now look at the practice known as Technical analysis which we have mentioned so often in this section. Click the 'Next' button below to continue.

Free Netpicks Forex Strategy & Auto-Trade Trial

Free Netpicks Forex Strategy & Auto-Trade Trial



Netpicks is a strategy service with a strong reputation for providing consistently profitable trading recommendations.

Based on a strategy that has been running for over 10 years with 121%+ profit in 2006, Netpicks is probably the most popular strategy and auto-trade service in the Forex industry.

The Netpicks service normally retails at $197 per month which may seem a lot to some but the fact is, this service produces results which can easily cover the monthly fee many times over.

Probably the best news is that you can try their strategy service for a full 2 weeks completely free of charge with no obligation to purchase.

This is gold to anyone looking for a strategy and/or auto-trade service since many are not prepared to let you test them out for free simply because they know their service doesn't produce consistent results.

Free Forex Strategy Trials = Complete System Confidence

The fact Netpicks are willing to give people a free two week trial speaks volumes about their confidence in their strategy. With your free strategy service trial you will receive:

Access to Real-Time Short Term Trading Forex Signal Broadcast. You'll receive EventTrades with high reliability for day trading
Receive a free book "Insider's Forex Trading Secrets"
A 100% Mechanical and completely non-subjective forex trading strategy.
Free 24 Hour Auto-Trade Service
Free support via email, telephone and online chat
Remember, this is all being provided to you at no cost which makes the Netpicks trial a no-risk strategy service. If you wish you can read our full review of Netpicks by clicking here.

One thing I should point out though is that to get the free trial you will need to register with your credit card, nothing will be charged in the first two weeks but if you do not cancel your card will be automatically charged.

This shouldn't put you off though since it really is an excellent strategy service and I am confident you will want to carry on the service since it will probably be generating you much more than $200 a month of profit!

Developing a Forex Strategy

Developing a Forex Strategy


A fool-proof trading strategy can help you gain profit from day one in the Forex market. If you spend some time to study the market you will find some price patterns that recur consistently.

You can substantiate your observations with charts or graphs using a strategy builder software and then finally develop a strategy unique for your trading habits.

So developing a sound and effective trading strategy is the important foundation of the trading. You must develop working knowledge of technical analysis as well as knowledge of some of the more popular technical studies before deciding which is going to be the best strategy for you.

A trading strategy should optimize your risk with respect to the reward, or vise versa. It should have a disciplined method of limiting the risk and make the most out of favorable market moves.

Using Technical Analysis to Build your own Forex Strategy

Technical analysis can supplement your trading strategy. Many professionals for example make use of moving averages along with other indicators. This method has an element of risk control (built-in) – where a long position will be stopped out fairly quickly in a falling market generating a stop-and-reverse signal or a sell signal in a rising market

At the initial stage you should rely on a logical system in having a view of the market. Discipline will be the keyword for establishing yourself as a successful trader. Your trading decisions should not be based on irrational emotions where you continue to experience losses with the hope of regaining the position. Your ability to limit your losses is just as important as determining the entry points.

For example you can be more comfortable with a mini account where the pip value is just $1 per pip which limits the losses as well as helps you in gaining confidence. In a mini account, a 30-pip floating loss is approximately $30 but the same 30-pip move on the 100K account becomes a $300 floating loss.


Choose Your Forex Broker Wisely For Best Results

Your strategy should be supported with intuitive and user-friendly trading software which will have a rapid execution from live, streaming prices and fixed spreads intra-day and night. You should increase your trading size as your confidence builds.

Choose a trading platform that allows you to formulate and test trading ideas in identify opportunities in real-time. An automated trading system will save your time with fast executions.

You should only risk 1-3% of the available capital allocated to your trading. You can calculate that using the size and, the difference between the entry price and maximum stop price.

You should always be comfortable with the size of a trade; the moment it turns you uneasy you should bring down the amount. Staying for long in any forex trading market is the key factor for making money. Therefore, you should trade slowly over a longer time with minimal risk.

Your trading platform should be based on a positive expectancy system. Your profit will be directly proportional with the number of trades your system actually makes, how much capital you allocate and how accurately you use the trading signals. Expectancy is calculated using profit or loss on each trade - dividing that by the initial risk, and then taking the average from a series of trades.


The Right Forex Strategy = Unlimited Profitability!

Some of your conventional as well as online forex broker systems can offer you only marginal profitability and trading implementation costs like high commission, wide spreads, and large amounts of slippage. This can be avoided by carefully choosing the right broker.

If you decide that you wish to pursue building your own Forex trading strategy then please go careful, perhaps re-read this page to make sure you fully understand the key rules to follow.

If you perhaps feel you are not quite ready to develop your own Forex trading strategy then you may wish to view our strategy service reviews section and learn more about the various strategy services available.

By clicking the 'Next' button below you will be taken to the next section which contains details of how to receive a free strategy service trial.

Binary Equation Forex Trading

Binary Equation Forex Trading


Binary Equation Trading has been expressed as the “trading strategy with a mathematical advantage”. Based on the work of the 18th century mathematician, Jean le Rond d'Alembert, it produces a "Probability Advantage" that can bring amazing profit!

One need not be a mathematics genius to understand the working principles behind binary equation trading. It has no complicated indicators or does not encourage news trading. In other words it is quite easy and fast.

It allows the traders to take a view on the expected direction of the exchange rate between major world currencies. For example, on a specific day, for USD/CHF > 1.3000 the method allows the traders to take a position on whether the USD/CHF exchange rate will be greater than 1.3000 or not for the day.

The trader can buy if the USD/CHF exchange rate (according to him or her) is going to be greater than 1.3000, and sell if he or she thinks that the USD/CHF exchange rate will be less than or equal to 1.3000.

Binary Equation Trading = Confident Trading

What is most important for you as trader to identify and interpret the signals based on which you can form your own decision in forex trading. If your trading platform is based on the century old binary equations the predictions are going to be fool proof. The rules and logics are fully explained and therefore you can have confidence in the system even when you experience a string of consecutive losses.

Most of the systems based on binary equations have made money in the real world of trading - not just hypothetically. These are always better than any optimized system which uses unique rules or different parameters to trade in specific financial markets. But the trading methods based on binary equation works satisfactorily for a broad spectrum of financial instruments.

You can always build your own system with some inputs from the trading methods based on binary equation to customize the system and to implement a rigid discipline, which is the key to building consistent profits.


Gaining the Forex Mathematical Advantage

If your automated forex trading is based on the binary equation method, it is easy for you to rely on it. It conducts trade in real time and as you need to take quick decisions they are to be accurate so that you do not incur unwanted losses.

As the trading has to be performed within milliseconds, it is to be based on the mathematical formulations for producing fast and accurate results.

The trading method based on binary equation brings in the diversification you require for maximizing your profit. As the mathematical backbone is present for the entire system, it can be applied for any market operating in any time zone, with equal considerations. You can also adopt multiple trading models.

Your automated model to analyze short-term data will be based on the mathematical models which is rather impossible to achieve for a manual trader.


Analyzing Short-Term Data for Long-Term Profits

You can use these short-term data to analyze how the market is going to move in the next 15 minutes or half an hour, and accordingly take decisions. High frequency trading based on binary equation allows you to use existing data in different ways and in different markets.

A trading method based on binary equation improves liquidity. The risk management logic is also based on mathematical calculations; this ensures that you are not going to take wrong steps resulting losses.

If you are interested in trading Forex with the Binary Equation method then we recommend Profits are Up - a Binary Equation Forex strategy system with incredible results.

Next we will look at how to develop your own Forex strategy and the benefits of doing so, click the 'next' button below to continue.