An easy approach to the forex trading

Stefano Calicchio

• Editore: Stefano Calicchio
• Anno: 2013
• ISBN:
  9788868552732
• Argomento: Negocios y empresa
• Categoria: Cambio de divisas

What is the Forex Trading? How it works? Learning quickly the basis of the Forex trading has never been so easy. This complete and simple guide will provide you with the operation mechanism of the Foreign Exchange Market. Here you will find all the information you need to start working in the Forex: from book operations to currency crosses, from the Technical Analysis to the Fundamental Analysis, from the preliminary study of charts to the Money Management. An Easy Approach to the Forex Trading is the first essay which will guide you step by step through the most liquid market of the world. Just forget about the useless, theoretical long books sold at a crazy price on the internet and enjoy reading something different which can provide you with the knowhow you are looking for at an amazing price!

Operational Examples of Candlestick Trading

In order to offer the reader a better idea of the potentialities this technique has at an operational level, now we are going to analize some of the most frequent price patterns available in the Forex. The price patterns occur when two or more candles draw up schemes that have statistically shown their validity in the past as forestallers of a trade inversion. Among the most well-known bull price patterns we can quote the followings Japanese candles:

The Inverted Hammer: this candle appears at the end of a bear movement and it takes the shape of a small body and a shadow at the top.

The Hammer: this candle, which is opposite to the Inverted Hammer, also appears at the end of a bear movement and it takes the shape of a small body and a shadow at the top. It anticipates a bull trend inversion.

The Engulfing Bullish: this candle appears when a bear trend is followed by a long bull one, whose minimum and maximum peaks close below and above the previous candlestick.

The Morning Star: this configuration is one of the most successful bull trend schemes. It is composed by three candles:
-  The first is an example of a bear trend.
-  The second is a typical small doji, which opens by a down gap (below the previous minimum), and it a sign of the market indecision.
-  The third candle is a typical example of a strong bull trend.
 
Among the bear trend patterns, we can have:

The Shooting Star: this candle is formed by a long tail at the bottom and by a small basic body. It appears at the end of a bull trend.

The Hanging Hand: this is the opposite of the Shooting Star. It appears during a bull overbought trend and it expresses the wish of the market to proceed as a bear one.

The Engulfing Bearish: this candle, which is the opposite of the Engulfing Bullish, appears when a bull trend is followed by a long bear one.

The evening star: this candle is the opposite of the Morning Star, but it appears at the end of a bull trend. Both candles have the same statistic value.

The Candlesticks in Action

In order to offer you a better idea of the Japanese candles potentialities you can find in the Forex, we suggest that you follow some price patterns examples. The purpose is to inform you on the importance of this subject, which can be crucial during the trading. Therefore let us see the following picture:

In the circles, we can observe some different and typical inversions or permanent patterns of the candlestick charts. Here we can easily recognize some of them.
 
Now we are going to analyze the chart. At the start of this currency cross (for instance, EUR/USD) there appears a bear trend. The first circled picture is the pattern of a bear trend. Then we can see a price inversion attempt, which is stopped by sellers’ strength.
 
The cross swap continues by an acceleration of the sales (the three long black candles make this trend evident), and it is followed by a steady moment characterized by indecision.
 
After that, we have different candles with a small body, and short swinging battles, which can be won by sellers as well as by buyers.
 
The minimum in the market is finally reached by a candle with a long bear shade. It is the most evident sign that the sellers’ strength is over.
 
As a matter of fact, this picture is an example of an Inverted Hammer candle. From now on, the market will start going upward again.
 
The following candles are characterized by buyers’ victory, as well as a new minimum bull trend, which will be shortly tested, and higher than the previous ones.
 
This simple analysis can help you to understand the great importance of the Japanese candlesticks' analysis in order to plan a winning trading strategy. By studying the charts, a successful Forex trader does not only learn how the possible combinations and schemes these candles can form, but he can also understand at first glance what type of configuration is going to form as far as the trend is concerned.
 
After having developed a correct point of view, it will be fundamental to analyze the price patterns and anticipate the changes in the market directions.

Breakouts

A Breakout is an interesting operational strategy used by Forex traders to plan directional trades. It is a technique with good probabilities of making a success, even if traders need some training to perform properly.

First of all, we are going to define what it is. A breakout occurs when a cross currency course break a bear or a bull price level which is historically difficult to overtake and that is detectable as an important support or resistance.

When this sign generally occurs, the rise of currency cross volatility can appear, so it is possible to plan some bull or bear trades, by setting as a stop loss the s...