Technical Analysis is probably the most common and successful means of making trading decisions and analyzing forex and commodities markets.
Technical analysis differs from fundamental analysis in that technical analysis is applied only to the price action of the market, ignoring fundamental factors. As fundamental data can often provide only a long-term or "delayed" forecast of exchange rate movements, technical analysis has become the primary tool with which to successfully trade shorter-term price movements, and to set stop loss and profit targets.
Technical analysis consists primarily of a variety of technical studies, each of which can be interpreted to generate buy and sell signals or to predict market direction. Please see our Technical Studies page for a detailed description of these studies and their uses.
One use of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels. The concept here is that the market will tend to trade above its support levels and trade below its resistance levels. If a support or resistance level is broken, the market is then expected to follow through in that direction. These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.
For example, in chart below EURUSD has established a resistance level at approximately .9015. In other words, EURUSD has risen up to .9015 repeatedly, but has been unable to move above that point:
The trading strategy would then be to sell EURUSD the next time it gets close to .9015, with a stop placed just above .9015, say at .9025. This would have indeed been a good trade as EURUSD proceeded to fall sharply, without breaking the .9015 resistance. Hence a substantial upside can be achieved while only risking 10 or 15 pips (.0010 or .0015 in EURUSD).
On GCI's integrated charting system (GCI Multi-Currency Charts), the red support line shown above can be drawn by clicking on the "Trend" button at the top of the chart window, and then drawing a line by clicking the mouse once at the beginning of the line, and again at the end of the line.
Simple yet powerful things of how 5% traders win the Forex battle
2 comments Posted by sara carter at 8:21 PM
Forex market is actually a battle field. You can win or lose in the forex market. It pays you to have a good strategy, discipline, Money Management, logical analysis and the right decisions.
Good strategy
Logical, good strategy is critical for you to survive in this battle. You have to be able to determine the right moment to entry and exit the market. Prepare for the worse; you have to have Plan B when price movement against you or it will kill you.
Discipline
Once you have your own strategy, then apply it and be discipline on use it. Entry the market when your strategy said so, and exit from the market when your strategy says so.
Money Management
This is important for you to get survive in this battle. Use only money where you can afford to lose. Consider that money management is important for long term of your trade.
Logical Analysis
Even currencies prices follow economic law:
High demands = Prices up
This pays you to trade using logical analysis and not wish.
Say, for example, my indicators give fake signals. Hence, I have to exit from the battle. I would rather lose in my stop lose than wish that the price will return over and then rob all my money.
Right Decisions
The rights decisions are not always make you win in the battle. It sometimes makes you to be a loser in some trades, but as a whole, it makes you to be a winner. The most important thing from this stage is how you learn from your lose and make your trade better and better.
Forex trading is a relatively new concept in the world of financial investments. High leverage offered, volatility, and 24-hour availability is the reasons why this business is simply too irresistible to ignore.
There are facts that most traders lost money in this market, but there are facts that some won the trades. The question is why?
Actually, the answer is simple. If you want to win in this market, then see it as a hard work. As a work, the market pays you to be discipline, open mind, and willingness to learn. If you want to win in this market then, turn this potential into profit.
The formula is simple,
Simple but Logical Trading System + Discipline = Win
Find your own trading system and be discipline on it.
You have to find your own trading system to follow. Trading system is the way you can accept responsibility and have confidence in what they were doing so. That’s way a trading system in which suitable and make big money for some trader is sometimes not suitable for other traders.
Be Discipline
Many traders change their win into loss. They do have good Forex trading systems that work, but the lack of discipline changed them to be losers. And of course, this is a fatal mistake. Traders have to follow and be discipline with their own Forex trading system no matter when losses occur.
Forex trading involves prediction and no one can forecast the next price future in absolutely right. Trading system is made based on logical and analytical calculations to predict the next currencies price movements. If you don’t have discipline, then you don have the logical and analytical predictions. That means, don’t have trading system.
Win
Once you follow the formula, you’ll be the winner. And keep with your own trading system. Sometimes, you do lose in your Forex trading, but this is OK. There is no trading system perfects and 100% profits. A good Forex trading system is a Forex trading system that will make you cumulatively win. Just follow the system and never turn your wins to losses by violating your trading system.
Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades. 
On technical side of the trading, the first thing to do is to find out the trend in ones trading time frame and the proper trading strategy for that trend. Some ride positions for months, while some ride positions for less than an hour or a day and their views of the trend obviously differ. For a trader who is running a position for months, a daily fluctuation may be just a meaningless noise while for a daytrader or an hour trader, a daily fluctuation could be a monstrous tsunami. Having a precise definition and a technique of identifying a trend and the turn of a trend in a trader`s time frame, and adopting the right strategies for that trend is the first elementary step in a hard school of trading. Imho.
I keep my technical side on any pair as simple as possible largely relying on other`s moves to see how I can take advantage of the situation. So for me the strategy is to "range trade". Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts.
Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend.
Good trades.
How to use SHI Channel?
Now we will explain how to trade with this method step by step.
Step 1. Open GBP/USD chart and use 30M Timeframe with candlestick pattern.
Step 2. Attach SHI Channel indicator, the Stoch (5,3,3) and RSI(7).
Please see the figure below to make sure that you have a right chart :
Wait for the price touch the lower/bottom line of SHI Channel, check the other indicators mentioned above, if it has an oversold condition at the same time we could enter buy order with TP 20-50 Pips. Check the example below :
As seen above, GBP/USD have an oversold condition at May 23 2007 and our indicators offering buy signal. We could put buy order at closing of bear candle or at price 1.9723 with TP 50 pips (1.9773) and SL 40 Pips (1.9683).
We will see how this method working :
As figured above our buy order hit the TP 50 pips at price 1.9773. Now we will learn to catch the sell signal.
Sell Signal :
Wait for the price touch the upper line of SHI Channel, check the other indicators mentioned above, if it has an overbought condition at the same time we could enter sell order with TP 20-50 Pips, as figured below :
In the chart above GBP/USD have an extreme overbought condition at May 23 2007 and our indicators offering sell signal. We could put sell order at closing of bull candle or at price 1.9888 with TP 30 pips (1.9858) and SL 40 Pips (1.9928).Once again we will see how this method working :
Yup, our 30 pips target price executed at 1.9858. So totally we have 80 pips form both buy and sell order in one day.
So simply method?
Yes, this method is simple and profitable, especially we have sideaways market. But please note that the strong signals is only generated when price touch Top/Bottom line of SHI Channel and the other indicators have an overbought/oversold condition at the same time also an extreme overbought/oversold are highly recommended to enter the market.*
Forex Market Strategy
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