Video 10 - How to trade the MACD indicator in Forex
newdigital, 2013.08.01 13:12
MACD Technical Analysis Buy and Sell Signals
Since the MACD uses 26 and 12 EMA to plot, we shall compare these two
EMAs with the MACD indicator to determine how these signals are
The MACD is a leading indicator meaning it generates
signals that are leading compared to price action as opposed to lagging
indicators that lag behind the price.
A buy signal is generated when there is a MACD fast
line crosses above the signal line. However, as with any leading
indicator these signals are prone to whipsaws/ fake out signals.
To eliminate the whipsaws it's good to wait for
confirmation. The signal is confirmed when the two lines cross above
the zero mark, when this happens the buy generated is a reliable
In the example below, the Moving average generated a
buy, before price started to move up. But it wasn't until the MACD
moved above the zero line that the signal was confirmed, and the Moving
Averages also gave a crossover signal. From experience its always good
to buy after both the MACD lines move above zero.
A sell signal is generated when there is a MACD fast
line crosses below the signal line. However, just like the buy signal,
these are also prone to whipsaws/ fake outs.
To eliminate the whipsaws its good to wait for
confirmation of the signal. The signal is confirmed when the two lines
cross below the zero mark, when this happens the sell generated is a
reliable trading signal.
In the example below, the Moving average generated a
sell confirmed after MACD moved below the zero line at the same time
that the Moving Averages gave a crossover signal.
Video 11 - How to trade Moving Averages in Forex Part 1
In this first video of two part series we discuss moving averages, how
they are calculated and the factors you need to consider if you will use
them as part of your trading strategy. In Forex trading, moving
averages are a really successful indicator to use but firstly, you need
to know what they do. This is what we discuss in this Forex training
Indicators: Custom Moving Average
newdigital, 2013.07.30 20:10
Moving Average Strategy Forex Trading
Moving average is one of the most widely used Indicator because it is simple and easy to use.
This Indicator is a trend following indicator that is used by forex traders for three things:
On the example below the blue line represents a 15 period MA, which acts to smooth out the volatility of the price action.
newdigital, 2013.07.30 20:12
For example if a trader uses the 7 day MA then, it will react to price
change much faster than a 14 day or 21 day MA would. However, using
short time periods to calculate the MA might result in the indicator
giving false signals (whipsaws).
If another trader uses longer time periods then the MA will react to price changes much slower.
For example, if a trader uses the 14 day MA then the average will be less prone to whipsaws but it will react much slower.
Video 13 - How to trade the Momentum indicator in Forex
In this Forex training video we discuss the Momentum indicator and how
it can be used in your Forex trading. The Momentum indicator detects
strength in a trend which is great if you are a trend trader but it also
detects weakness in trends thus providing us good exit signals.
newdigital, 2013.08.24 17:14
Momentum Technical Indicator
The momentum indicator uses equations to calculate the line of
plotting. Momentum measures the velocity with which price changes. This
is calculated as the difference between the current price candlestick
and the average price of a selected number of price bars ago.
Momentum indicator represents the rate of change of the currency’s
price over those specified time periods. The faster that prices rise,
the bigger the increase in momentum. The faster that prices decline, the
bigger the decrease in momentum.
As the price movement starts to slow down the momentum will also slow down and return to a median level.
Technical Analysis of Momentum Technical Indicator
The Momentum indicator is used to generate technical buy and sell
signals. The three most common methods of generating trading signals
used in Forex trading are:
Zero-Centerline Crossovers Signals:
Momentum is used as an overbought/oversold indicator, to identify
potential overbought and oversold levels based on previous indicator
readings; The previous high or low of the momentum indicator is used to
determine the overbought and oversold levels.
Trend Line Breakouts:
Trend lines can be drawn on the Momentum indicator connecting the
peaks and troughs. Momentum is a leading indicator and it begins to turn
before price thereby making it a leading indicator.
Candlesticks - Vol 11 - Dark Cloud Cover
Libraries: MQL5 Wizard - Candlestick Patterns Class
newdigital, 2013.09.13 12:10
Dark Cloud Cover
Dark Cloud Cover is a bearish candlestick reversal pattern, similar to the
Bearish Engulfing Pattern (see: Bearish
Engulfing Pattern). There are two components of a Dark Cloud Cover
A Dark Cloud Cover Pattern occurs when a bearish candle on Day 2 closes below
the middle of Day 1's candle.
In addition, price gaps up on Day 2 only to fill the gap and close significantly into the gains made by Day 1's bullish candlestick.
The rejection of the gap up is a bearish sign in and of itself,
but the retracement into the gains of the previous day's gains adds even
more bearish sentiment. Bulls are unable to hold prices higher, demand
is unable to keep up with the building supply.
The chart below of Boeing (BA) stock illustrates an example of the Dark Cloud
Traders usually suggest not selling exactly when one sees the Dark Cloud
Cover Pattern (Day 1 & Day 2) until other confirming signals are given such
as a break of an upward trendline or other technical indicators. One reason for
waiting for confirmation is that the Dark Cloud Cover Pattern is a bearish
pattern, but not as bearish as it could be: part of the gains from Day 1 have
still been preserved.
A more bearish reversal pattern is the Bearish Engulfing Pattern that completely
rejects the gains of Day 1 and usually closes below the lows of Day 1.
Episode 63: Ichimoku Clouds -- The One-Look Equilibrium Chart
Indicators: Ichimoku Cloud
newdigital, 2013.11.25 12:23
Ichimoku Cloud (based on The Definitive Guide to Trading Trends with Ichimoku Cloud article)
Many traders are asked what indicator they would
wish to never do without. The answer has never wavered as there is one
indicator that clearly illustrates the current trend, helps you time
entries, displays support and resistance, clarifies momentum, and shows
you when a trend has likely reversed. That indicator is Ichimoku Kinko
Hyo or more casually known as Ichimoku.
Ichimoku is a technical or chart indicator that is
also a trend trading system in and of itself. The creator of the
indicator, Goichi Hosada, introduced Ichimoku as a “one glance”
indicator so that in a few seconds you are able to determine whether a
tradable trend is present or if you should wait for a better set-up on a
Before we break
down the components of the indicator in a clear and relatable manner,
there are a few helpful things to understand. Ichimoku can be used in
both rising and falling markets and can be used in all time frames for
any liquid trading instrument. The only time to not use Ichimoku is when
no clear trend is present.
Always Start With the Cloud
The cloud is
composed of two dynamic lines that are meant to serve multiple
functions. However, the primary purpose of the cloud is to help you
identify the trend of current price in relation to past price action.
Given that protecting your capital is the main battle every trader must
face, the cloud helps you to place stops and recognize when you should
be bullish or bearish. Many traders will focus on candlesticks or price
action analysis around the cloud to see if a decisive reversal or
continuation pattern is taking shape.
In the simplest
terms, traders who utilize Ichimoku should look for buying entries when
price is above the cloud. When price is below the cloud, traders should
be looking for temporary corrections higher to enter a sell order in the
direction of the trend. The cloud is the cornerstone of all Ichimoku analysis and as such it is the most vital aspect to the indicator.
Time Entries with the Trigger & Base Line
Once you have
built a bias of whether to look for buy or sell signals with the cloud,
you can then turn to the two unique moving averages provided by
Ichimoku. The fast moving average is a 9 period moving average and the
slow moving average is a 26 period moving average by default. What is
unique about these moving averages is that unlike their western
counterparts, the calculation is built on mid-prices as opposed to
closing prices. I often refer to the fast moving average as the trigger
line and the slow moving average as the base line.
components are introduced in a specific order because that is how you
should analyze or trade the market. Once you’ve confirmed the trend by
recognizing price as being below or above the cloud, you can move to the
moving averages. If price is above the cloud and the trigger crosses
above the base line you have the makings of a buy signal. If price is
below the cloud and the trigger crosses below the base line you have the
makings of a sell signal.
Confirm Entries with the Mysterious Lagging Line
In addition to the mystery of the cloud, the lagging
line often confuses traders. This shouldn’t be the case as it’s a very
simple line that is the close of the current candle pushed back 26
periods. When studying Ichimoku, I found that this line was considered
by most traditional Japanese traders who utilize mainly Ichimoku as one
of the most important components of the indicator.
Once price has broken above or below the cloud and
the trigger line is crossing the base line with the trend, you can look
to the lagging line as confirmation. The lagging line can best confirm
the trade by breaking either above the cloud in a new uptrend or below
the cloud in a developing downtrend. Looking above, you can see that the
trend often gathers steam nicely after the lagging line breaks through
the cloud. Another benefit of using the lagging line as a confirmation
indicator is that the lagging line can build patience and discipline in your trading
because you won’t be chasing the initial thrust but rather waiting for
the correction to play out before entering in the direction of the
Trading With Ichimoku Checklist
Now that you know the components of Ichimoku here is
a checklist that you can print off or use to keep the main components
of this dynamic trend following system:
1.Where is Price in Relation to the Cloud?
2. Is price consistently on one side of the cloud or is price whipping around on both sides consistently?
3. Which level of the Ichimoku would like to use to place your stop?
194. How Trading On Margin in Futures Works
Trading on margin very simply means the ability to control a certain
size position without having to put up the full value of that position
in cash. Margin allows a trader to magnify both the potential gains,
and the potential losses on an account. In this lesson we are going to
cover margin as it relates to futures trading, so if you need a basic
overview of how trading on margin works, see the links below this video
for more information.
There are two primary advantages of trading futures over trading stocks
which relate specifically to margin. The first, is that futures traders
generally have access to much lower margin requirements than most stock
traders. Generally the maximum leverage available in the stock market
is 4 to 1, meaning that you have to put up at least 25% of the value of
the position in order to remain in the trade, which would magnify your
gain or loss by 4 times, compared to a position without margin. In the
futures market, intraday margin levels can go to 100 to 1 or greater.
This means that a trader only needs to maintain as little as 1% of the
position value, in order to remain in the trade, potentially magnifying
gains and losses on a trade by up to 100 times. While the ability to
magnify potential gains is generally seen as an advantage to futures
traders, it also comes with an added level of responsibility, as loss
potential is also magnified by the same amount.
The second advantage of trading futures over stocks as it relates to
margin, is that you do not have to pay for the use of margin as you
would in the stock market. While you only have to put up a portion of
the trade value when trading on margin in the stock market, ultimately
the full position value is needed to place the trade. Because of this
stock traders must borrow the rest of the trade value from their broker,
and as this is a loan, they pay interest on the money they borrow. In
the futures market, margin is seen as more of a "performance bond" or as
money that you have to put up to make sure that you can make good on
any losses incurred on a trade. Because of this you are not required to
have the full position amount in order to place a trade in the futures
market, which means there is no interest paid when trading on margin.
There are several other nuances as it relates to margin that it is
important to understand when trading futures. Firstly, unlike in the
stock market where margin requirements are generally the same for most
actively traded stocks, in the futures market margin requirements differ
depending on what futures contract you are trading. The reason why is
because in the futures market, margin requirements are set based on
volatility and position size, meaning that the more volatile a futures
contract is, the higher the margin requirement is generally going to be.
Just as in the stock market there is an initial and a maintenance margin
requirement for futures contracts, meaning that you must have a certain
amount of money in your account to initiate a new position, and then a
certain amount of money in your account to continue to hold or
"maintain" the position once it is initiated. These levels are set by
the exchange and while a broker can require a higher margin level than
the minimums set by the exchange most do not. Lastly, it is important
to understand here that these initial and maintenance margin
requirements apply only to positions which are held overnight, and most
futures brokers offer a lower margin requirement to traders who open and
close positions within the same trading day.
As an example, the current initial margin for holding an E Mini S&P
contract overnight as set by the futures exchange is $6,188, and the
current maintenance level is $4,950. The daytrading margin as set by
the Apex Futures is $500 for both the initial and the maintenance
So as most traders open and close their positions within the same
trading day when trading the E Mini S&P, they need to have at least
$500 in their account when trading with Apex in order to initiate and
maintain a position, per contract traded. If a trader is planning to
hold an Emini S&P contract overnight, as of this lesson they will
need to have at least $6,188 in their account in order to initiate the
position, and at least $4,950 in their account in order to maintain the
position. If the trader drops below these levels then the broker has
the right to liquidate their positions, and/or they will get a telephone
call from the firms margin desk, to arrange to have additional funds to
be deposited into the account.
While overnight margins are set by the exchange and generally the same
from broker to broker, daytrading margins are set by the broker and
therefore vary widely. One of the reasons why I have chosen to
recommend Apex Futures, is because they offer $500 daytrading margins,
which are among the lowest in the industry. Keep in mind however that
leverage is a sword that cuts both ways, so while increased leverage
amplifies the potential gain on a position, it also amplifies the
Lastly it is important to keep in mind that although it is not a super
common occurrence, margin requirements can be changed by the broker or
the exchange at any time due to increased volatility in the markets. It
is important to understand here that if requirements are raised, then
traders will be required to have the set maintenance margin amount for
existing positions, as well as any new positions which are initiated.
Video 14 - How to trade RSI indicator in Forex
Indicators: Relative Strength Index (RSI)
newdigital, 2013.08.07 14:49
RSI Swing Failure Forex Trading Setup
RSI swing failure can be a very accurate method for
trading short term currency moves. It can also be used for trading long
term trends but it is best suited for short term trading especially for
those traders that trade reversals.
The RSI failure swing is a confirmation of a pending
market reversal. This setups a leading breakout signal, it warn that a
support or resistance level in the market is going to be penetrated.
This setup should occur at values above 70 for an upward trend and
values below 30 in a downward trend.
RSI Failure Swing
in an upward trend
If the RSI hits 79 then pulls back to 72, then rises
to 76 and finally drops to below 72 this is considered a failure swing.
Since the 72 level is an RSI support level and it has been penetrated
it means that price will and follow and it will penetrate its support
In the example below, the RSI hits 73 then pulls back
to 56, this is a support level. The RSI then rises to 68 and then
drops to below 56, thus breaking the support level. The price then
follows afterwards breaking it support level. The RSI swing failure is a
leading signal and it is confirmed when price also breaks it support
level. Some forex traders open trades once the swing failure is complete
while others wait for price confirmation, either way it is for a
trader to decide what work best for them.
RSI Failure Swing in a downward trend
If the RSI hits 20 then pulls back to 28, then falls
to 24 and finally penetrates above 28, this is considered a failure
swing. Since the 28 level is an RSI resistance level and it has been
penetrated it means that price will and follow and it will penetrate its
Candlesticks - Vol 12 - Piercing Pattern
newdigital, 2013.09.18 14:53
Piercing Line Pattern
The Piercing Pattern is a bullish candlestick reversal pattern, similar to the
Bullish Engulfing Pattern (see: Bullish
Engulfing Pattern). There are two components of a Piercing Pattern
A Piercing Pattern occurs when a bullish candle on Day 2 closes above the
middle of Day 1's bearish candle.
Moreover, price gaps down on Day 2 only for the gap to be filled (see: Gaps) and closes significantly into the losses made
previously in Day 1's bearish candlestick.
The rejection of the gap up by the bulls is a major bullish sign, and the
fact that bulls were able to press further up into the losses of the previous
day adds even more bullish sentiment. Bulls were successful in holding prices
higher, absorbing excess supply and increasing the level of demand.
The chart below of Intel (INTC) stock illustrates an example of the Piercing
Generally other technical indicators are used to confirm a buy signal given
by the Piercing Pattern (i.e. downward trendline break). Since the Piercing
Pattern means that bulls were unable to completely reverse the losses of Day 1,
more bullish movement should be expected before an outright buy signal is given.
Also, more volume than usual on the bullish advance on Day 2 is a stronger
indicator that bulls have taken charge and that the prior downtrend is likely
A more bullish reversal pattern is the Bullish Engulfing Pattern that completely
reverses the losses of Day 1 and adds new gains.
For further study, the bearish equivalent of the Piercing Pattern is the Dark Cloud Cover Pattern
In this Forex training video we discuss hot to trade Bollinger Bands like a pro. There are two main ways in which you can make a lot of money by using Bollinger bands in a trending or a range bound market. Simply follow the instructions on the video to start making profits through Forex trading.
Indicators: Bollinger Bands ®
newdigital, 2013.08.06 13:54
Bollinger Bands and Volatility
When volatility is high; prices close far away from
the moving average, the Bands width increases to accommodate more
possible price action movement that can fall within 95% of the mean.
Bollinger bands will widen as volatility widens. This
will show as bulges around the price. When bollinger bands widen like
this it is a continuation pattern and price will continue moving in this
direction. This is normally a continuation signal.
The example below illustrates the Bollinger bulge.
High Volatility and Low Volatility
When volatility is low; prices close closer towards
the moving average, the width decreases to reduce the possible price
action movement that can fall within 95% of the mean.
When volatility is low price will start to
consolidate waiting for price to breakout. When the bollinger bands is
moving sideways it is best to stay on the sidelines and not to place any
The example is shown below when the bands narrowed.
newdigital, 2013.08.06 14:04
Bollinger Bands Trend Reversals- Double Tops and Double Bottoms
A Forex trader should wait for the price to turn in
the opposite direction after touching one of the bands before
considering that a reversal is happening.
Even better one should see the price cross over the moving average.
Double Bottoms Trend Reversals
A double bottom is a buy setup/signal. It occurs
when price action penetrates the lower bollinger band then rebounds
forming the first low. then after a while another low is formed, and
this time it is above the lower band.
The second low must not be lower than the first one
and it important is that the second low does not touch or penetrate the
lower band. This bullish Forex trading setup is confirmed when the
price action moves and closes above the middle band (simple moving
Double Tops Trend Reversals
A double top is a sell setup/signal. It occurs when
price action penetrates the upper bollinger band then rebounds down
forming the first high. then after a while another high is formed, and
this time it is below the upper band.
The second high must not be higher than the first
one and it important is that the second high does not touch or penetrate
the upper band. This bearish Forex trading setup is confirmed when the
price action moves and closes below the middle band (simple moving
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