Monday, August 31, 2009

Technical Analysis : Chart Pattern

1. Double top (reversal formation)
For obvious reasons this is often called an "M-top". The market is failing twice at a resistance and is reversing then sharply. A break of the support would indicate further losses towards the target that can be evaluated through the following procedure. The vertical width of the "M" (price difference) is projected downwards from the breakpoint of the support.

2. Double bottom (reversal formation)
The opposite of Double top. (often called an “W-top”). When the market is failing twice at a support and is reversing then sharply. A break of the resistance would indicate further rising towards the target that can be evaluated through the following procedure. The vertical width of the “W” (price difference) is projected downwards from the breakpoint of the resistance.

3. Triangle
The triangle formation can be quite difficult to analyse and the fact that a few different types of triangles exist doesn't make this task any easier. Furthermore a triangle is most commonly just a pause in a trend (continuation pattern) but can also terminate a trend (reversal formation).

4. Head and Shoulders
Formation of left shoulder forms a new high with a corrective dip, next rally forms higher high = head, correction from head goes below high of left shoulder and near as low of the left shoulder correction, breaching up trend line, rally of right shoulder does not breach head high, retracing half to three quarters of head correction..

Saturday, August 29, 2009

Technical Analysis : Basic Movement

1. Support
A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line. A support level penetrated becomes resistance.

2. Resistance
A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line. A resistance level penetrated becomes support.
3. Trend
Trend is simply, the overall direction prices are moving, UP, DOWN, OR FLAT.
Short term - less than 3 weeks,

Medium term - 3 weeks to 6 months

Long term (major term) - more than 6 months.

An up-trend line is a straight line passing through the "rising" troughs of an up-move. The importance of a trend line is increasing with every additional touching point, confirming the trend lines value. A reversal of the trend is indicated with a violation of the up-trend line.A down-trend line is a straight line passing through the “falling” troughs of a down move. The importance of a trend line is increasing with every additional touching point, confirming the trend lines value. A reversal of the trend is indicated with a violation of the down-trend line.

A Neutral Trend (No trend, sideways trend) means there is no direction.

4. Channel
When prices trend between two parallel trend lines they form a Channel. When prices hit the bottom trend line this may be used as a buying area and when prices hit the upper trend line this may be used as a selling.

Sunday, August 23, 2009

Technical Analysis : Candlesticks

Using Candlesticks to Identify Reversals
What are candlesticks?

Candlestick charts convey information pertaining to price action, or the movement of a currency pair’s price over the specified amount of time. Each candlestick contains four attributes:

· the opening price of the currency pair at the time the candle opened
· the closing price
· the high of the time frame
· the low of the time frame

On a daily chart, each candle represents a 24 hour period; on an hourly chart each candle represents an hour, and so on.

A visual analysis of a candlestick is as follows:

Key Definitions
Body: The difference between the opening price and the closing price. This is the wide portion of the candle that is colored red or green.
Wick or Shadow: The thin portion of the candle that represents the extreme high and low points for the time period represented by that candle.

Key Concept: Candlesticks Signal Reversals

· Candlesticks can be used to identify trend reversals in the market

So why are candlesticks so important in trading? Simply put, it is because they are the best gauge of what is going on in the market at the present time. Candlesticks give us insight into the emotions of the market participants. Although traders may come and go over time, human emotion remains constant. A certain series of events creates a candlestick pattern, and when we see that pattern we know exactly what has transpired.

Ultimately, candlesticks can easily be used to identify potential reversals of trends in the market – especially when used in conjunction with other indicators.

Key Candlestick Patterns

The following are key candlestick patterns to look for:

When these patterns appear in a chart, and when they appear at levels that coincide with other indicators – such as Fibonacci retracement levels, or moving averages – they create a potential trading opportunity.

Tuesday, August 18, 2009

Fundamental Short List

Fundamental Analysis

Introduction to the fundamental analysis

The most important and complicated component of the currency dealing is ability to analyze the tendency of market changes and therefore to forecast which factors will influence on the currency rate and how. The probability of a quick profit taking and quick losses is included in the price trend. Thus, correct forecast of the market trend, estimation of different events, correct reaction to the speculations and expectations àre the necessary component of trader?s

successful work. There is a great deal of factors which influence on the whole market as well as on the separate instruments (currencies, shares, futures). There are two main methods of the market analysis — fundamental and technical. The fundamental analysis estimates the market situation in the context of political, economical, financial and credit aspects. The technical

analysis is based on the methods of graphical research and mathematical analysis.

In the context of the fundamental analysis monetary, political and economic events in the world are studied. These events may influence on the market development. The most important here is information about economic indicators of the countries, work of exchanges and large companies such as market-makers, interest rates of the central banks, government's economic rate, probable changes in the country's political situation, various speculations and

expectations. The fundamental analysis is the most complicated and important part of the work at the forex market. To perform the fundamental analysis is much more difficult than any other, as the same factors have different influence on the market in different situations and important factors may shift to the insignificant ones. Except some more formal rules experience of work at the market is needed here.

Fundamental factors are usually estimated from two points of view:

Influence on the interest rate & State of the country’s national economy.

Data of Economic Development of a Country

The principle of this sub-group impact is based on the axiomatic statement that the rate of any currency is the derivative of this country economic development. Stability of economic development specifies foreign investors interest in the capital expenditures to the country and, correspondingly, demand on the national currency. The data of economic development of a country include such key indicators as balance of trade and balance of payment, inflationary rates,unemployment rate, GDP etc.In the Forex market a unified system of currencies quotation through the US dollar was elaborated. Thus, the US economic development and the dollar rate

are the key factors, which specify market movement, common to the main currencies. That is why the US dollar and its behavior are in the limelight, as they trigger some specific reaction of other currencies. Frankly speaking, it doesn't eliminate other factors impact, such as policy of the national banks or influence of the related markets, which will be described briefly a bit later. In the USA the main indicators of economic development are released monthly or


Trade negotiations

Trade negotiations are the important part of economic policy of any country. In particular, such the important economic indicator as trade balance represents the difference between export and import. In case the sum of exported goods and services exceeds the price of imported ones Trade Balance is positive (surplus), in case import surpasses export it is negative (deficit). The trade deficit is the main problem for the USA within the last years. It is one of the reasons of the dollar fall against the major European currencies. Results of trade negotiations have an immediate impact on the market.

Thursday, August 13, 2009

Common Mistakes in FOREX

In FOREX capital market every trader makes mistakes.

Errors in Order Entry. The quickest way to lose money in FOREX is to make mistakes when you place your orders. Fortunately, every trade entry today has some kind of order confirmation mechanism.

Use Only Risk Capital. The Golden rule of FOREX is to play with small amount of money so even if you lose it, there is still plenty left on account. Risk money should be amount that you would be comfortable to loose.

Start With Enough Capital. If you are considering doing serious business in FOREX, than it is good idea to start with a bigger account. Accounts that are too small have proportionally larger fees and sometimes can even have certain limitation in trading.

Understand the Risks. This is very important factor. FOREX is highly related to different kind sof risks and you have to be aware of them. Sometimes market crushes suddenly and you can not do much about that, but there are some signals like government crisis, officials statements, market trends that troubles might be on horizon and you have to prepare yourself to that.

Take the Time to Learn. The biggest mistake a new trader can make is to start playing unprepared. The basic knowledge of FOREX can save big money.

Wednesday, August 12, 2009

The FOMC and the Markets

Fed heads like me will be parsing the FOMC statement on Wednesday for clues regarding the future of monetary policy, which naturally will affect the valuations of all asset classes including currencies, stocks, and commodities. The first thing that any Fed watcher does is to look for changes from the previous statement, so let's break it down to the three main areas of interest.

Interest Rates

No one expects interest rates to change on Wednesday, but it will be important to see if the language regarding the need for "exceptionally low levels of the federal funds rate for an extended period" is retained. The odds are that it will be however, expect to see the dollar gain as traders in Fed Funds Futures price in a rate hike perhaps as soon as December if It isn't. One of the world's great Fed watchers, Bill Gross of PIMCO, is of the belief that the Fed won't be making a move on rates until well into 2010, if then.

Because of the output gap, the difference between potential and actual GDP, the Fed is of the belief that "substantial resource slack is likely to dampen cost pressures," and that "inflation will remain subdued for some time." (By "resource slack," the FOMC is referring to the amount of workers who are unemployed).

Be aware that when the Fed talks about inflation what they really are most concerned about is the potential for a wage-price spiral as seen during the 1970's. The reality is that there's very little chance of seeing that occur anytime over the next several years. For one thing, there are much fewer unionized workers. Second, and even more important, there obviously is an oversupply of workers relative to the amount of jobs available which means there's little pricing power among employees. Third, companies don't need to hire more workers because contrary to what usually happens when companies eliminate jobs, productivity (worker output per hour) is rising (6.4% in Q2 on an annualized basis according to Tuesday's report). Aside from that, the report also indicated that labor costs fell the most in eight years over the period.
Economic Growth

Most economists, including such luminaries as Paul Krugman and Nouriel Roubini, believe the economy has bottomed although in the case of Roubini the opinion is that the economy will remain in recession through the end of the year. The Fed itself was fairly sanguine about the prospects for economic growth in June, saying that "policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability." Nothing has really happened since June 24 to change that outlook given the improvements seen in the ISM's, housing, Q2 GDP along with the July jobs report and unemployment rate, so expect to see a similar opinion expressed in Wednesday's statement.

Putting these three together really indicates that a sweet spot exists for stocks, because the economy is set to improve while policy looks to remain expansionary as inflation remains low. The latter point is especially important because it means that in real terms (taking inflation into account) any percentage gains will be that much higher, i.e. that the purchasing power of the dollars you receive when you cash in your investments will not have eroded to an appreciable degree.
Those factors certainly have been great for stock investors; the S&P has gained nearly 12% since the FOMC met on June 24. The problem is that for forex traders, the concurrent movement in the dollar (short) against the euro, pound and A$ hasn't been quite as pronounced during that period although those currencies did make significant moves against the yen (they have made significant gains on the USD overall since March). Also of note is that USD/JPY, which basically mirrored S&P movements for several years, hasn't done anything of note since the March rally although it the yen does gain rather dependably on days when stocks retreat.

The Fed may also make a decision regarding whether to extend its $300B program to purchase Treasuries. If they choose not to continuing purchasing U.S. debt it could cause interest rates to rise, which will tend to put downward pressure on the dollar. Also, Congress wants the Fed to extend its program to purchase commercial mortgage backed securities for another year, so look for the FOMC to comment on that.

Commercial real estate is likely to present the biggest obstacle to economic growth over the medium term. There's a crisis looming there because of the inability of property owners to refinance debt which is coming due. Rents and property values have fallen dramatically, which means that there will be less income available to service the debt and that banks will require any loans they do make to have lower loan to value ratios. Property values are forecast to remain depressed which means that many owners are underwater on their mortgages, another recipe for rising foreclosure rates.

Tuesday, August 11, 2009

Being Succesfull Trader ...

There are 3 general things you must have in order to be a successful trader :

1. You must have a good system !
The system should be profitable over the long term and must be easy to implement.It should be of a mechanical nature,allowing and requiring little or no discretion or judgment on the trader's part.This is especially important if you are starting out in trading and it is critical that you follow mechanical hard-and-fast rules : IF A=B then you do C=D .
There are lot of emotions which come into play when trading..If you have set of rules to follow then you know exactly what to do and no matter what your feelings are telling you,you can ignore them and simply follow the precise rules dictated by your system.

2. You must have a good set of money management rules
i have come to appreciate that success in trading is not only about having a good trading system (of course that is VERY important) but also about having a good set of money management rules and principle.Trading without following these precise money management rules is a sure to fail.
For those of you that are new to the business of trading,let me explain what I mean by money management.The term refers to the principles and discipline you use in order to control your risk total exposure when to entering trade-how much of your total capital you will risk on any individual trade,where your loss,where your profit target,the ratio between your profit objective, and your loss,etc..

3. You must be able to control your emotions.
This is a VERY important rule and something that a trader must learn to master,Whilst trading, you are constantly presented with feelings such as fear, GREED, and excessive excitement(for example, as a result of winning streak)
The reason many trader experience these type of feelings is simple - they don't have good trading plan.They don't have a good and clear set of rules to follow.They will trade based on emotions rather than on signal issued by a robust and profitable system.They will not respect losses,profit objective or any other important parameters essential for profitable trading.

I strongly believe in EMOTION-FREE TRADING. It is essential for success and that is how you will be the best of the best - by following a precise set of rules that are both easy to implement and require absolutely no descretion.

Monday, August 10, 2009

Time to Trade !!

The FX market operates 24 hours a day and as a result it is impossible for a trader to track every single market movement and make immediate response at all the time.Timing is everything in currency trading.In order to device an effective and time-efficient investment strategy,it is important to note the amount of market activity around the clock in order to maximize the number of trading opportunities during a trader's own market hours.Besides liquidity,a currency pair's trading range is also heavily dependent on geographical location and macroeconomic factors.Knowing what time of day a currency pair has the widest or narrowest trading range will undoubtedly help traders improve their investment utility due to better capital allocation.Table 5.1 tabulates the average pip range for the different currency pairs during various time frames.

As a short cut,bare in our mind this tools :

1. Asian Session 0700 LT - 1600 LT : best trade at 1200-1400 LT

2.European Session 1400 LT - 2300LT : best trade at 1500LT,2030LT

3.US session 2000LT - 0400 LT : best trade at 2030LT-2200LT

4.US and Europe Overlap 2000LT - 2300LT

5.Europe and Asia Overlap 1400LT-1600LT

Saturday, August 8, 2009

An Introduction

As of January 2009, there is an excess of $600 million in customer funds trading on platforms offered by FXCM. Over 125,000 live accounts trade through FXCM's trading platforms from nearly 200 countries, with an average of 7,000,000 trades executed each month via its trading platforms; moreover, customer support is provided in over a dozen languages.Download MT4 platform now! and start with DEMO account...

FXCM has received numerous awards from the investment community, including Best Currency Broker from Shares, Best Retail Foreign Exchange Platform from FX Week and Best Foreign Exchange Specialist from Technical Analysis of Stocks & Commodities. In addition to currency trading, FXCM offers educational courses on forex trading, and provides research through Check out

My name is Mohd Zaid Redhuan Bin Mohd Zainuddin, graduated from local university,UiTM in 2005 with the qualification in Electrical Power. I have developed my career as a trader probably in 2007.
I've learned it by myself with the help from professional traders over the world via chat.

On 1st April 2008,i've been offered as a trainer in Rapid Merchant Capital Bhd. Work with full commitment but have to leave as the company ignoring the staff welfare and didn't pay all the staff salary since Feb 2009 until now and a report has been made to Labour Department for futher action. Mohd Norazam Dato Muhammad, the CEO of the company who also claimed himself as a master trader is the responsible person for the maltreatment that all the staff and myself experienced.Thus,we can only pray for God punishment for him. That will be enough for me to say it here even there is too many I can say about him.

The Challenge which motivates me ! Now I come up with this type of technical indicator which can help further in my trading. I was developing them since Feb 2009 and now I am satisfied with them. There are 9-types of technical indicator inside and I don't think it will be difficult since the indicators are differentiated by colour on it...So,here I will be your trainer and this is what trading all about,continuous learning and improving.Many people simply never come to realize that. My template was given to some previous student as beta version,and they easy to understand.Anyway,it took long time before we can find out what type of trader I am...what suits my personality..what brings out the best in me! So that you know,I am a day trader - I need to see result quickly.Win or lose.I can't stand waiting and see how my position will turn out.It makes myself like a weak trader when I have to wait.

Listen closely my dear traders...Our biggest enemy in trading is OURSELVES ! not the market,not the system we use..because the best trading system in the world is YOUR SYSTEM !
Ask yourself what you have learned about yourself ?
If you are new to trading,what do you still have to learn about yourself and,more important, what are you doing in order to achieve that most important objective :