Sergey Golubev / Profile

33 pips price movement by RBA Meeting Minutes

Increasing Your Probabilities in Break-Out Trades (source - dailyforex.com)

If you are new to day trading or have been in these markets for a long period of time, one this is clear: You have been exposed to the term “break-out” as a major market occurrence and a potential opportunity to see significant market gains. Break-outs signify important changes in market sentiment, and this could happen for a variety of reasons. Perhaps an important news release of piece of economic data has changed the market’s perceived value of an asset. This can be represented visually on a price chart, as the underlying activity literally “breaks through” important levels of support or resistance. A break of support would be a bearish break-out. A break of resistance would signify a bullish break-out is in place.

Watching Market Volumes

“Once we have an understanding of the mechanics of a forex trading breakout,” said Haris Constantinou, currency analyst at TeleTrade, “we next need to learn how to increase the probabilities in these trades so that we can maximize gains relative to the market majority.” One way of doing this is to look at market volumes as these support or resistance breaks occur. If trading volumes are low, it is a signal that a majority of the market is not behind the breakout move and that there is a possibility of a false break. Because of this, it is generally prudent to wait for breakouts that are accompanied by higher trading volumes. Higher trading volumes will show you that a majority of the investment community is in favor of the direction in which prices are moving. This is a better indication that prices will continue in this direction in the future. Without this confirmation, the probabilities for a successful trade are lower.

Watching for Follow-through

In addition to this, forex breakout traders that tend to be successful will also be looking increased volatility (follow-through) after the breakout occurs. After a significant break of support or resistance, follow through will depend on increases in volatility which are usually generated by stop losses that were put in place by traders on the wrong side of the break. So, for example, traders that were bearish when an upside break-out occurs will ultimately be forced to exit those positions. These bearish trades then, in effect, become new buy order that propel prices even higher. The reverse scenario would be true for a bearish break-out. Always remember, without these price extensions and increases in volatility, break-out traders will be vulnerable to a “false break-out” scenario that can quickly result in losses if not managed properly.
So, when we are looking to employ a well-structured break-out trading strategy, all of these factors need to be taken into consideration. It is not enough to simply look at breaks of support or resistance by themselves. Watching volume and follow-through can help to greatly improve trading probabilities.

2013-11-18 09:00 GMT (or 10:00 MQ MT5 time) | [EUR - Current Account]

Regulators

Each exchange is normally regulated by a national governmental (or semi-governmental) regulatory agency:

In Australia, this role is performed by the Australian Securities and Investments Commission.
In the Chinese mainland, by the China Securities Regulatory Commission.
In Hong Kong, by the Securities and Futures Commission.
In India, by the Securities and Exchange Board of India and Forward Markets Commission (FMC)
In Japan, by the Financial Services Agency.
In Pakistan, by the Securities and Exchange Commission of Pakistan.
In Singapore by the Monetary Authority of Singapore.
In the UK, futures exchanges are regulated by the Financial Services Authority.
In the USA, by the Commodity Futures Trading Commission.
In Malaysia, by the Securities Commission Malaysia.
In Spain, by the Comisión Nacional del Mercado de Valores (CNMV).
In Brazil, by the Comissão de Valores Mobiliários (CVM).
In South Africa, by the Financial Services Board (South Africa).
In Mauritius, by the Financial Services Commission (FSC)

The Week Ahead: Where in the World to Invest?

Believing in Your Method (based on dailyforex.com article)

There are several trading methods used in Forex:

Day trading has become very popular of late. Day trading involves sitting in front of your computer all day and sometime nights as well. You make money by buying and selling on small price movements. Day trading is typically trading that is based on technical indicators with the occasional news thrown in. Day trading requires skill that is honed through experience. Novice Forex traders should not choose to day trade Forex.

Scalping is another popular method of Forex trading. The main goal of scalping is to buy or sell a number of shares at the bid or ask price and then quickly sell them a few cents higher or lower for a profit. Many small profits can easily compound into large gains if a strict exit strategy is used to prevent large losses. You can be successful at scalping for a while, but it is really more like gambling than trading and you can end up losing far more often than wining.

The most successful method of trading is to look at the big picture. A trader can study the charts, interpret the financial indicators and look for the trends that the Forex currency pairs move in over a few days or weeks. This is the most basic method of Forex trading and one that is the least stressful. Setting targets and trading in small quantities can bring small profits but over time, these can accumulate into larger amounts.

Today’s most popular Forex trading method of late is the automated trading. There are several automated versions such as using signal providers. But the newest introduction to automated trading is the robot or EA. This allows the trader to set up a system which will run on auto pilot during the night or any time the trader is not physically available to trade. These robot programs are made available by most brokers but can also be obtained by ordering them through Amazon or other suppliers and installing them in one’s computer. Still, it does take a Forex account with a Forex broker in order to place a trade.

Depending on automation to trade removes much of the excitement of trading and leaves the control in the ‘hands’ of a machine. Still that seems to be the way of the world today and Forex is always one step ahead of the trend.

Always choose the method that works the best for you. But no matter how you plan to trade, always keep your emotions in check, mange your risk/reward ratio, and seek assistance when you need it. Believe in what you are doing and enjoy the ride.