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US futures trading is regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). The CFTC is an independent federal agency based in Washington, DC that adopts and enforces regulations under the Commodity Exchange Act and monitors industry self-regulatory organizations. The NFA, whose principal office is in Chicago, is an industry-wide self-regulatory organization whose programs include registration of industry professionals, auditing of certain registrants, and arbitration.
Episode 64: Moving Average Envelopes: Simple But Effective Trend Indicators!
newdigital, 2013.11.29 06:48
Moving Average Envelopes consist of a moving average plus and minus a certain
user defined percentage deviation. Moving Average Envelopes serve as an
indicator of overbought or oversold conditions, visual representations of price
trend, and an indicator of price breakouts. The inputs of the Moving Average
Envelopes indicator is shared below:
A chart of the Nasdaq 100 ETF (QQQQ) shows a 20-day moving average with both
a 1% and 2% percentage bands:
In the chart above of the QQQQ's, the price is not trending. During
non-trending phases of markets, Moving Average Envelopes make great overbought
and oversold indicators.
When stock prices are done resting and consolidating, they breakout, in one
direction or the other.
An illustration of an upward price breakout is shown above on the chart of
the QQQQ's. On the right side, the QQQQ's gapped up above the 2% price band.
A new trend in price is usually indicated by a price breakout as outlined
above with a continued price close above the upper band, for an upward price
trend. A continued price close below the lower band would indicate a new
downward price trend.
In the chart of the QQQQ's, after the price breakeout, the closing price
continued to close above the upper band; this is a good example of how a price
trend begins. Soon after, the price will fall back into the Moving Average
Envelopes, but the Moving Average Envelopes will be heading in a positive
direction - easily identifying the trend as up.
Moving Average Envelopes is a helpful technical analysis tool for identifying
trends and trend breakouts and identifying overbought and oversold conditions.
Other similar indicators such as Bollinger Bands and Keltner Channels that adjust to volatility
should be investigated as well.
17. How to trade the Stochastics indicator in Forex
In this Forex training video we discuss how to trade the Stochastics
indicator. We discuss three main ways to trade it and it is up to you
and your personality to decide which suits you the best.
Indicators: Stochastic Oscillator
newdigital, 2013.10.09 07:23
Pinpointing Forex Trend Trade Entries with Stochastics
By far, traders who trade in the direction of the predominant daily
trend have a higher percentage of success than those who trade the
counter trend. One of the biggest attractions of the Forex market it is
characterized by long trends that afford traders the potential to make
hundreds of pips if they have timed their entries with precision and
used protective stops to limit risk.
But How Can Traders Find Where to Enter with a Risk for Maximum Gain?
The mantra, “the trend is your friend until it ends,” can be found in
many trading books, but it seems that many forex traders have not made
the trend their friend and in some cases, the trend has become the
enemy. Rather than being on the receiving end of those pips afforded to
traders who have correctly entered the trend, many traders have been on
the “giving” end of the trade losing pips while fighting the trend.
As people have turned to online dating services to meet their ideal
match, forex traders can turn to stochastics as a way of making the
trend the their friend again.
In an uptrend on a daily chart, stochastics %K and %D lines moving below
the horizontal ‘20’ reference line and coming back above the 20 line
indicates that the profit-taking correction is coming to an end. The
stochastic crossing up also tells us that buyers are beginning to enter
the market again. In addition, this shows that there is good support.
How to Trade the Trend Using Stochastics
Patience is the name of the game when attempting to trade with the
trend. Getting into the trend too early can expose traders to large
drawdowns. Getting in too late reduces the amount of profit before the
swing is completed.
Use the stochastics indicator to find that “Goldilocks” entry of not too
early and not too late. Once a strong uptrend is found, wait for
stochastics with the settings of 15, 5, 5 to move into the oversold
region below the 20 horizontal reference line. Next, wait for the %K and
%D lines to move back above the 20 line. Enter long with a stop placed a
few pips below the last low. Set a limit for at least twice the size of
Once in an uptrend position, traders will attempt to squeeze as much
profit as possible. Traders usually take profits on their open position
or trail stops once stochastics moves into the overbought region. It is
important to note that a forex currency pair can continue to make new
highs even though stochastics is in the overbought region.
So next time you see a trend and you do not know how to make it your
“friend”, let the stochastics indicator introduce you! Once these swings
are highlighted by stochastics, stop placement becomes easier as well.
stochastics crossovers in an uptrend can help you pinpoint your entries
to join the major trend.
19. How to trade trend lines in Forex
In this Forex training video we discuss how to trade trend lines when
the market is trending upwards and downwards. We provide detailed
instructions on how to draw trend lines, set targets and stop losses
whilst also focusing on how not to get caught out with fake trend lines.
newdigital, 2013.10.09 18:20
How to Exit While Trading with Trendlines
When we place our trades based on trendlines, we are placing them based
on support and resistance levels. We are thinking the price will bounce
off a trendline like it did in the past. I propose we use the same logic
when setting our stops and limits.
In the example above, it’s easy to see the sell entry that was given to
us based on the bearish trendline. We entered right at the trendline
looking for a bounce back down, but where do we want to exit? When do we
call it quits if the trade goes against us? Where do we place our
profit target? Let’s take a look.
Setting Stops Beyond Support/Resistance
We need to look at placing our stop somewhere above this trendline. If
the resistance is broken through, we were wrong on the trade and should
accept the loss quickly. It’s possible that price could return back to
profitable territory after breaking this resistance, but we cannot rely
on being lucky. We can only trade based on what we see.
I like to set my stop 5-25 pips from the closest support/resistance
level depending on the time frame I am trading. The smaller the time
frame of the chart, the tighter I will place my stops. On this trade, I
set my stop 5-6 pips away from my entry since that was beyond the
resistance line as well as the previous swing high (Bounce #2).
Remember that when we set our Stop loss, this is also setting our
monetary risk on the trade. So we also need to consider our trade side
in respect to our Stop loss distance.
Setting Limits Within Support/Resistance
Now that our stop is set, we need to focus on our profit target. For our limit placement, we have two objectives:
And the reason we want our limit to be placed within the closest
support/resistance level (by at least 5 pips) is for the exact same
rationale we used to open this trade to begin with. We know prices have a
tendency to bounce off price levels they have bounced off of before, so
we want to make sure that no support/resistance is in between our entry
and our limit level. In the example below you can see I placed my limit
5 pips above the swing low (potential support). This gives price a
clear path to a profitable trade.
Trendline Strategy Complete
This trendline strategy is one that can be used universally across all
currency pairs and time frames so it is definitely a worthwhile style of
trading to learn. The logic behind the entry and exit rules is also
something that can be tailored to other types of strategies as well.
Candlestick Charting - Vol 13 - Bearish Engulfing Pattern
Libraries: MQL5 Wizard - Candlestick Patterns Class
newdigital, 2013.09.11 16:21
The Bearish Engulfing Candlestick Pattern is a bearish reversal pattern, usually
occuring at the top of an uptrend. The pattern consists of two Candlesticks:
Generally, the bullish candle real body of Day 1 is contained within the real
body of the bearish candle of Day 2.
The market gaps up (bullish sign) on Day 2; but, the bulls do not push very
far higher before bears take over and push prices further down, not only filling
in the gap down from the morning's open but also pushing prices below the
previous day's open.
With the Bullish Engulfing Pattern, there is an incredible change of
sentiment from the bullish gap up at the open, to the large bearish real body
candle that closed at the lows of the day. Bears have successfully overtaken
bulls for the day and possibly for the next few periods.
The chart below of Verizon (VZ) stock shows an example two Bearish Engulfing
Patterns occuring at the end of uptrends:
Three methodologies for selling using the Bearish Engulfing Pattern are
listed below in order of most aggressive to most conservative:
An example of what usually occurs intra-day during a Bearish Engulfing
Pattern is presented next.
The following 15-minute chart of Verizon (VZ) is of the 2-day period comprising
the Bearish Engulfing Pattern example on the prior page:
The next lesson in free futures trading course which covers what makes up the price of the futures contract.
Candlestick Charting - Vol 14 - Bullish Engulfing Pattern
newdigital, 2013.09.11 16:10
Bullish Engulfing Pattern
The Bullish Engulfing Candlestick Pattern is a bullish reversal pattern, usually
occuring at the bottom of a downtrend. The pattern consists of two Candlesticks:
The bearish candle real body of Day 1 is usually contained within the real
body of the bullish candle of Day 2.
On Day 2, the market gaps down; however, the bears do not get very far before
bulls take over and push prices higher, filling in the gap down from the
morning's open and pushing prices past the previous day's open.
The power of the Bullish Engulfing Pattern comes from the incredible change
of sentiment from a bearish gap down in the morning, to a large bullish real
body candle that closes at the highs of the day. Bears have overstayed their
welcome and bulls have taken control of the market.
The chart below of the S&P 500 Depository Receipts Exchange Traded Fund
(SPY) shows an example of a Bullish Engulfing Pattern occuring at the end of a
There are three main times to buy using the Bullish Engulfing Pattern; the
buy signals that are presented below are ordered from the most aggressive to
An example of what usually occurs intra-day during a Bullish Engulfing
Pattern is presented next.
The following 15-minute chart of the S&P 500 exchange traded fund (SPY) is
of the 2-day period comprising the Bullish Engulfing Pattern example on the
Ichimoku: Strategies, Setups and What to Watch for
Many traders have had challenges trading the JPY pairs. However the
Japanese traders have had large amounts of success in trading their
native currency. This is not just due to familiarity, but the approach
and indicators they use to measure key levels for these pairs - the
Ichimoku Cloud.This indicator is not only easy to learn, but
highly accurate in giving JPY trading signals. When one learns how to
use it correctly, one can build a very high accuracy and profit ratio
trading the JPY pairs which can be some of the most volatile. Taking
this class can give you a chance to master trading the yen and learn a
unique approach to trading the Asian pairs as a whole.
newdigital, 2013.11.22 19:06
Breakout with Ichimoku (based on Take Advantage of False Breakouts at Great Prices with Ichimoku article)
A false breakout takes place when price appears to be making a renewed
move in the direction of the trend only to be retraced. A trend trader
who is looking for prices to eventually move higher but wants
confirmation of a price thrust in the direction of the trend is
especially prey to false breakouts. This is because a break of
resistance like a trendline that is pierced by price without follow
through is ground zero to a false breakout.
How Ichimoku Helps You Recognize a False Breakout
Like many pains of trading such as stops getting hit at an unfortunate
price, false breakouts cannot be avoided. However, they can be minimized
as well as become a nice trading signal upon their failure. The reason I
like looking to false breakouts as a trading opportunities is that they
can often have a sharp reversal in the direction of the prior move with
a good risk to reward ratio.
Ichimoku is a technical trading system that helps you catch moves in
the direction of the trend on the time frame that you’re trading.
Ichimoku is often seen as a difficult system to learn due to the 5
components that are displayed on the chart to explain a trading
opportunity but each line serves a purpose and when you understand each
purpose, you begin to get a feel for the value that Ichimoku can bring
to your technical trading strategy.
If this is your first reading of the Ichimoku report, here is a recap of the traditional rules for a sell trade:
If the breakout turns out to be legitimate and 1.3550 is taken out, then
the next target would be in the neighborhood of 1.3630 /3650 range.
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?
Moving Average Cloud Trading
Text made by the author :
Here I touch on support and resistance, moving averages, trend lines and fractals which is all involved in trading this moving average cloud system.Before deciding whether or not to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice. I am not liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
Indicators: Custom Moving Average
newdigital, 2013.07.31 07:47
A stop loss should be set just below the MA. Ideally it should be set a few pips below the previous low.
If price is on a down trend and starts to retrace, then most traders
might wait to sell at a better price when the price hits a resistance
level. Traders will sometimes use the MA to determine the resistance
A sell signal is generated when price hits the MA, turns and starts
moving in the downward direction. The signal is confirmed when price
closes below the MA. Because many traders use the moving averages to
generate trading signals, price will normally react to these levels.
A stop loss should be set just above the MA. Ideally it should be set a few pips above the previous high.
Resistance turns support
When a resistance is broken it turns into support and vice versa.
This happens when the fundamentals of a currency change and consequently
the direction of a currency pair. The direction change is reflected by
the moving average, the direction is confirmed when the resistance turns
into support or vice versa (when support turns into resistance)
newdigital, 2013.09.19 13:17
Tweezer Tops and Bottoms
The Tweezer Top formation is a bearish reversal pattern seen at the top of
uptrends and the Tweezer Bottom formation is a bullish reversal pattern seen at
the bottom of downtrends.
Tweezer Top formation consists of two candlesticks:
Tweezer Bottom formation consists of two candlesticks:
Sometimes Tweezer Tops or Bottoms have three candlesticks.
A bearish Tweezer Top occurs during an uptrend when bulls take prices higher,
often closing the day off near the highs (a bullish sign). However, on the
second day, how traders feel (i.e. their sentiment) reverses completely. The
market opens and goes straight down, often eliminating the entire gains of Day
The reverse, a bullish Tweezer Bottom occurs during a downtrend when bears
continue to take prices lower, usually closing the day near the lows (a bearish
sign). Nevertheless, Day 2 is completely opposite because prices open and go
nowhere but upwards. This bullish advance on Day 2 sometimes eliminates all
losses from the previous day.
A Tweezer Bottom is shown below in the chart of Exxon-Mobil (XOM) stock:
The bears pushed the price of Exxon-Mobil (XOM) downwards on Day 1; however, the
market on Day 2 opened where prices closed on Day 1 and went straight up,
reversing the losses of Day 2. A buy signal would generally be given on the day
after the Tweezer Bottom, assuming the candlestick was bullish green.
The bullish Tweezer Bottom formation shown on the last page of the daily chart
of Exxon-Mobil is shown below with a 15-minute chart spanning the two days the
Tweezer Bottom pattern was emerging:
Notice how Exxon-Mobil (XOM) stock went downwards the whole day on Day 1. Then
on Day 2, the bearish sentiment of Day 1 was completely reversed and XOM stock
went up the whole day. This sudden and drastic change of opinion between Day 1
and Day 2 could be viewed as an overnight transfer of power from bears to bulls.
The 15-minute chart below of the E-mini Russell 2000 Futures contract shows
how a three day Tweezer Top usually develops:
On Day 1, the bulls were in charge of the Russell 2000 E-mini. On Day 2,
however, the bulls began the day trying to make a new high, but were rejected by
the overhead resistance created by the
prior day's highs. The market then sank quickly only to recover halfway by the
end of the close on Day 2. Day 3 opened with a spectacular gap up, but the bulls were promptly rejected by the
bears at the now established resistance line. The Russell 2000 E-mini then fell
for the rest of the day. Many classic chartists will recognize this triple
Tweezer Top as a Double Top formation (see: Double Top).
The Tweezer Top and Bottom reversal pattern is extremely helpful because it
visually indicates a transfer of power and sentiment from the bulls and the
bears. Of course other technical indicators should be consulted before making a
buy or sell signal based on the Tweezer patterns.