Forex Signals

Trading on the short-term periods at the Forex market is often considered a more popular practice than the long-term trading. In short-term trades your positions usually don't last longer than a day, while in the long-term trading they can remain open for years. Although, I prefer to trade on the long-term charts and hold my positions open for the long periods of time, the short-term Forex trading has its advantages:

1. You can trade on thousands of opportunities when the currency rates change with a high volatility.
You can capture every swing — up or down, trade inside the ranges and channels. Even the sideways market can be traded in short-term. When you trade long-term you miss these opportunities.
2. You don't have to tie up your funds for the long periods of time.
Your margin capital is locked only for the short periods and you can even get it out of the trading account if you really need it and then put it back and continue trading without any problems. In long-term trading your money gets caught into positions for months.
3. The majority of the Forex trading signals work only for the short-term trading.
Usually both technical and fundamental signals are played out in several hours of trading on the Forex market. The number of signals and events that influence currency rates on the long-term scale is really minimal.

This is what you get if you like to trade inside the day and use such techniques as breakout trading, scalping, news trading, range trading and any other short-term strategy. Of course there are also some disadvantages in the short-term trading, but they are not the topic of this post.

Sigma devotes serious effort to serve the emerging retail segment of the Forex community. Its commitment to providing an excellent customer service, innovative currency trading technology, and dealing practices, establishes Sigma as a notable force that traders look forward to for an advanced Forex charting, Forex news, and fund safety.

Customers funds deposited with Sigma, are held and maintained separately in separated trading accounts at our partner banks. Sigma also provides its customers a variety of account plans, and services to choose from when creating or adjusting a profile.

The professionals at Sigma are dedicated to providing the guidance you need to accomplish your investment objectives.

Most forex traders lose and the reason they do, is they don't understand the simple equation for forex trading success enclosed in this article.

So learn it as part of your forex trading education and get on the road to currency trading success. Here is the equation and we will discuss its significance in a moment. Robust Logical System + Confidence in = Discipline to Apply = Forex Trading Success Now that's nice and simple - but most traders fail to understand it's significance.

What Is Hedging ?

Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.

Why Hedging is A Bad Idea for Retail Traders ?

This method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be some what muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!

Read more in SigmaForex

How does the SHI Channel indicator work?

The SHI Channel indicator and as the all of the channel indicator uses the highest high and lowest low of the price to determine the upper and lower bands of the channel.In the SHI Channel The channel is calculated according to the given period of calculation and the time frame of the used chart, and the channel is self-adjusted (Like the Bollinger Bands).As you see in figure 1 there are two thick lines that indicates the upper and lower channel and a dashed center line.

The channel gives the overall direction of the price movement - up or down - and may change from time to time, specially if it used with a low timeframe (1, 5 and 5 minutes).

How to trade using the SHI Channel indicator?

Actually you can’t trade with the SHI Channel indicator alone, it will not tell you when to enter the trade neither when to exit, The SHI Channel indicator telling you the overall direction of the price trend and the channels with the middle line warn you how much the trend is strong or weak, however , you have to use another indicators to generate the entry/exit signals

So.. for entry and exit.. i will use chart pattern.. you don't have to be an expert in chart pattern.. to make hundred bucks a month in fx.. i only focus on double top or bottom pattern, head n shoulder pattern, inverse Head n Shoulder, Ascending and descending triangle (the breakout of these triangle at 4h can give you about 400 pips)

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.

Support and Resistance Levels

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.

for more information

There are certain features that make forex trading extremely appealing to individual traders as well as to other financial institutions and banks. These are:

• The market is open for 24 hours and for 5½ days in a week.
• It offers highest liquidity with ease of transaction with almost all major currencies of the world.
• Widespread volatile presenting huge profit opportunities.
• Can potentially cover risk exposures with various standalone instruments.
• You earn profit from rates going up as well as down.
• Good leverage with low margin requirements present high profit potential.
• Various options available for zero-commission trading.

How Price is Quoted

In forex trading , currency prices are always quoted in pairs. For example, on a particular date, the rate of EUR/USD is 1.0856 and if you buy 1000 Euros on that particular date, you will have to pay 1085.60 U.S. dollars. But, at a later date if this rate becomes 1.2082, which implies that the value of euro increased in relation to the USD, you can sell 1000 Euros and will receive 1208.20 dollars.

Therefore, you make a net profit of $122.60. So, as an investor, your aim should be to buy currencies at low price and sell those in future in higher prices. If you buy or sell a currency but do not sell or buy back the equivalent amount, it would be referred as open trade or open position.

Major Currencies Traded in Forex

In Forex trading, most of the currencies are traded against USD. The other prominent currencies are Euro or EUR, the Japanese yen or JPY, the British pound sterling or GBP, and Swiss franc or CHF. These five currencies are known as the Majors. The pairs are quoted like USD/EUR or CHF/JPY, where the first one is referred to as the base and the second as the counter or quote currency. The value of the base currency is always 1. All trading is done with currency pairs.

Pips and Spreads

Prices in Forex are quoted to the fourth decimal point (leaving JPY, which is quoted till second decimal point) and in pips or percentage in point. It is the smallest price increment and one pip is equal to 0.0001. When the bid for EUR/USD is 1.0856 and offered rate is 1.0859, it has a spread of 3 pips. Spread, in simple terms, is the difference between the bid and the ask price. The forex market is mainly operated by the brokers who do not charge a commission for their services. And, it is the spread with which they make their profit. For investors, therefore, the lower the spreads the more saving is made.

Margin

Margin is the minimum security that ensures that the investor can pay back the amount in case of losses. It is a deposit that covers any future currency trading losses. With margin, you can hold larger positions than you have in your account.

Leverage

The concept of leverage is also quite common in forex trading, which is the ratio of total available capital to actual capital. If, for example, the leverage is said to be 200:1, it means the Forex broker will lend you $200 for every $1 of your actual capital investment. Though leverage is very important for your trading, higher leverage exposes your investment to higher risks.

Common Methods of Forex Trading

There are three methods for common investors to trade in forex market. They are through the spot market, the forwards and futures market, and the options.

• Spot is the simple currency exchange processes. Here, the settlement date is the second business day after the day the deal or trade is struck.
• Forward transaction is the process where the deal is for more than two days. Future is a type of forward contract, which has fixed currency amounts as well as fixed maturity dates. These are traded in future exchanges and not through general foreign exchange market.
• Options is the process in which fixed currency transactions are carried out with mentioning some specific future date.

Risk Factors in Forex Trading

Although forex trading is extremely lucrative, it has several risk factors involved. Those are risks involving currency exchange rate, interest rate, and risks with credit and country. The average lifespan of a typical trade varies from 2 to 7 days. There are technical and fundamental indicators, which are to be consulted to decide the entry, exit, and other decisions, like order placement etc. You should have solid risk management features and disciplined trading strategies to earn profit in forex trading without risking your investment.

for more information