Many professional forex traders have been using support and resistance levels as part of their forex trading strategies to trade the currency market. Besides currency trading, there are other financial instruments like stocks which also use support and resistance. It is considered to be one of the most powerful ways to trade forex as it is based on price actions itself.

Support and resistance trading is understood as once the price reaches a certain level, it may stop, find it hard to break through that level and then reverses. When traders are able to identify these activities, they will be able to gain huge profits from the forex financial market. Support levels are identified when buyers push the price up when price reaches a certain level which finds it hard to break through. Vice versa for resistance levels.

We will now look at how we spot resistance and support levels on the forex charts. There are a few forex trading techniques to spot those levels but I will list those that are more commonly and effectively used. The top five are Moving Averages, Trend Lines, Pivot Points, Chart Patterns and Fibonacci Levels.

Moving Averages: Some moving averages value may have an impact on the currency market and they are the 200 EMA (Exponential Moving Average), 100 EMA, 62 EMA and 23 EMA. When price reaches the EMA levels, sometimes it tests the levels, bounces off and reverses. That is why they are used as support and resistance levels and even used for forex day trading strategy.

Trend Lines: We draw trend lines to give us an idea on how trendy the market is when the price travels up or down. This is also known as channels and let us predicts how the price will move. For example, when the price is trending up, we draw a up trend line, so when the price breaks below the trend line significantly, we know that it is a breakout and the trend will change. Vice versa for trending down.

Pivot Points: This is one of the forex indicators that is based on previous period. It can be used by breakout traders or range-bound traders. For breakout trades, prices which are above the pivot are considered bullish while below are pivot are bearish. Using pivot in forex trading systems, after the range-bound traders identify the upper resistance or lower support levels, they will place sell or buy orders, and target profit at S1, S2 or R1, R2 respectively.

Chart Patterns: Some of the examples are ascending/descending triangles, double top/bottom, head and shoulders and reverse H & S. You can find examples in some of the few forex ebooks and learn how to identify the patterns from there.

Fibonacci Levels: When we draw swing low to high or swing high to low, we use the Fibonacci levels of 23.6%, 38.6%, 50.0% and 61.8% as support and resistance levels. For example, when it is swing low to high, traders may buy when the price hit one of the levels, as that is support in this case. Some traders may only trade when the price went out of the 61.8%, which means a reversal of trend.

The key to master these forex trading techniques mentioned above is to experience it yourself. You can start by doing demo trading before going live. Practice makes perfect.



By: Daniel S.

About the Author:

The ADX (Average

Directional movement Index) Indicator

The ADX is part of the direction movement system introduced

by J.Welles Wilder in his book New Concepts in Technical Trading Systems.

It comprises of the Directional Movement lines – the plus DMI line

and the minus DMI line – and the ADX line (the Average Directional

Movement Index)

ADX is created with reference to both positive and negative

directional movement and identifying sustained movement in one direction.

When this occurs ADX will rise (irrespective of whether the trend is higher

or lower). Trend direction is identified by whether positive movement

(DMI+) is above or below negative movement (DMI-). Once ADX rises above

a certain level a trend can be said to have been established.

Although the average directional movement index (ADX) isn’t used as frequently as some of the popular technical indicators the ADX line has definite advantages because it filters out a lot of the false oscillator signals which are frequently given early in a move.

A trader can stay with trending positions longer by following the simple guidelines for the ADX line. A climb by the ADX line above 40 followed by a downturn, signals an imminent end to the current trend (whether up or down).

The ADX is less helpful during sideways markets. During extended consolidation periods the ADX line will slip toward 10. When ADX approaches 10, a major move is usually about to take place. But the ADX line doesn’t tell you which direction it will go. You have to rely on other indicators for the probable direction of the next move.

In short, if the market is trending, the ADX line should be

rising. During an extended consolidation period the ADX line will slip

toward a low number.

To sum it up –



When the ADX starts rising from a low level it signals the beginning of a trend.

The trend is confirmed when the ADX has risen above the 20-25 value and the +DMI line has crossed the –DMI line (in case of an uptrend)

When the ADX has reached an overbought level of 40-50 and starts consolidating or turning down it can signals the end of the current trend.

The decline of the ADX signals the consolidation or indecision of the market.



The optimum use of this indicator would be to consider trades only when the ADX has started to rise from a low level, as it indicates that a sideways basing pattern has been formed and trends usually emerge from extended sideways periods giving highly profitable trades.

he chart example shows how the ADX effectively indicates a range bound area and the breakout forming the subsequent trend.

View Chart

Trading With The Trend – ADX Strategy

The currency markets are known to trend well. At the same time, catching a trend and staying with it, is not as easy as it seems.

Price always moves in wave motion, forming impulsive and corrective waves and many a times a major retracement could be interpreted as a reversal, only to see the trend continue.

The market saying of “trading the pullback” would fit this situation well.

Hence, if we can identify a strong trend and correctly interpret the corrective waves of the trend as a retracement, it would make trading more profitable.

With this in mind, we shall make a system that gives us the ability to trade pullbacks in the direction of the main trend by combining 2 technical indicators.

The advantage is that the unique characteristic of each, gives us the

combined interpretation that we are looking for.

The first indicator is the ADX with the standard setting of 14. It is

a trend indicator, which identifies a sustained movement in one direction.

Once the ADX rises above a certain level a trend is said to have been

established. You stay with trending positions longer, simply by observing

that the ADX is not declining. An ADX reading of above 30 indicates that

a strong trend is in place and we shall use this parameter for our strategy.

The second indicator is the Exponential moving average with a look back period of 21. The basic use of the EMA 21 is that it often acts as a dynamic barrier of support and resistance. In an uptrend price will remain above the 21EMA and more often than not, find support on the average in a continuing trend.

By combining these unique characteristics of the above two indicators we now define our parameters for the system. We will define a long trade and the same rules apply for a short trade by reversing the parameters.

Initially an ADX reading of above 30 is needed, which indicates that a strong trend is in place.

Once this parameter has been met and price retraces back to the 21 EMA we have a buy signal.

We enter the trade on the break of the high of this pullback bar, and place the stop below the low of the entry bar. The exit would be when prices cross the 21EMA down.

View Chart

And as we can see in the chart we have both long and short trades completed successfully. It is a very simple strategy with a high probability of success. Since we are going with the trend we are waiting for price to confirm our trades. The basic drawback is that it works only in trending markets and should not be used when price is range bound.

Good Trading

Mark McRae



By: Mark Mcrae

About the Author:

Forex Trading is the short used for dealing in Foreign Exchange Market. Forex trading is the largest and the most liquid market of the world. The market has enormous opportunities, which are not offered without high risk. Keep an eye on Forex Trading in 2007 and follow certain strategies to make this market work for you. The key to start Forex Trading is to search for an appropriate FOREX broker without whom all positive workouts become negative. A trading podium of the broker will be an added advantage. A genuine broker gives money a flow based on a good strategy, technical skills and expert intuition. If you are relatively new to Forex trading try your hands on trading with virtual money using a demo account.

Around three trillion dollars swap hands daily at Forex. But it is necessary to know the fundamentals of Forex Trading before jumping into this sea of money and chance. There is nothing fixed- no particular rules, no sure-shot outcome as the Forex market is ruled by chance. So trading must be initiated with effective and mature trading tactics. Forex Trading requires new strategies are developed on the daily basis of market analysis and old ones should be renewed on day-to-day basis. In addition to this, money management strategies must be charted out. All depends on your trading technique and personal environment.

Another vital feature of Forex Trading is organizing instructions and positions. These comprise selecting proper entry points, particular assessment about exit points, ban-loss and increase-profit of the trader. To choose the right exit point should be the main focus of Forex trading. You should always aim at maximizing profit while limiting your greed. While in Forex trading you must keep updated with chief economic news releases, global world proceedings and technical indicators permutations.

Margin trading generally makes it tough to choose correct exit point as it is impractical to linger on with an open position. Moreover, open position restricts trading output of a trader so exit points are solid decisions for this volatile market and these points must be continuously checked against market data.

Money management must go hand in hand with your professional and basic strategies. You must have an aptitude to forecast future price movements by examining previous price data and graphical configurations. Get the graphical analysis of selected currencies. On the basis of this information you can predict where market is moving and then you can make decisions.

While trading, you can also adjoin technical pointers to the graphs. You can easily predict the future price progress of the currencies you want to trade on. A variety of indicators are available for Forex Trading and it is up to you to select the best one.

Some technical indicators that you can avail are the Pivot Points, RSI, Moving average convergence divergence indicator, Elliot Waves, Stochastic, Fibonacci, EMA etc.
These technical indicators are added to the graphics of the market. Then the brokers software carries out mathematical computations to divulge remarkable details and configuration about the market movement, which is just impossible to analyze without these indicators.

A good know-how and practice enhances your knowledge of the trade, hence the decisions. With initial knowledge you can then move on to follow more advanced strategies, thus bigger profits. So there is a lot to explore in foreign exchange in 2007, just dive into it.

Copyright 2007 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

By: Joel Teo

About the Author:

In the 1920s, the United States experienced a big blow when the stock market crashed. This event is now known as Black Tuesday. This started a series of problems for the country and created widespread social problems. The Great Depression, this period is commonly called, lasted for almost a decade, was believed to have been caused by an extensive stock market speculation and the unequal distribution of wealth.

Before this historic market crash, different kinds of people were getting rich due to the high return of investment (ROI). The “roaring twenties” as the decade was termed, was a period of growth for the US. Unfortunately, with limited information, speculation on the stock market during this time was comparable to gossip, and this was the very reason why the Black Tuesday happened. Sure, people read the newspaper, but this wasn’t enough, as people didn’t have a good picture of the whole stock market.

Nowadays, trading in the stock market is both complex and simple. Before a traders and investors decide to invest in certain stocks, they need to know a lot of information. Firstly, they have to determine the trend that the stock market will take – whether the market will experience a period of growth (a bull market) or if it will experience a decline (a bear market). By knowing the trend of the market, the investor can then decide how long he will retain the investment and how much he will invest. To determine whether the stock market will continue its trend or it will reverse its course, investors use indicators such as the Simple Moving Average (SMA) or Exponential Moving Average (EMA), Relative Strength Index (RSI), Moving Average Convergence/Divergence (MACD), Bollinger Bands. These indicators use the price of stocks to determine the direction of the market.

Just like the market of goods and services, the stock market also relies on the price and demand, in this case, it is called volume. Price refers to the trend of prices of stocks while volume refers to the amount of stocks being traded. To determine the volume, traders and investors look at the daily volume of stocks sold in the stock market. In most cases, trading tools combine these two information to find out if there are more sellers than buyers in the stock market, which could then, inevitably affect the price of the stock and the amount sold each trading day.

There are cases when there is high volume of sales but the prices in the market have dropped. For some investors, this could mean that the bigger players have backed out and it is a sign of a downward trend. Smaller players will soon follow suit causing lower sales. On the other hand, a stock can also experience a high-volume day and high prices. This means that the stock is up and bigger investors such as institutional investors and mutual funds will buy more, thereby boosting the market even more.

High-volume, low-price days don’t always mean that the market is going to continue on a downward trend. These down days can sometimes be a precursor to a reversal of course. Institutional investors and mutual funds can sometimes take advantage of the low price of stocks to purchase at bigger volume. If this happens, the market can move to the opposite direction making stock prices to go up and the stock market starts a new cycle.

In order to trade in the stock market, one doesn’t have to know all of the technical details in buying and selling stocks, in most cases, a basic understanding of the stock market is more than enough. But due to the amount of information that one has to consider, stock trading requires a lot of time and effort in order to become a profitable activity. Thanks to technology, the transfer and retrieval of such information is so much easier. The Internet is a powerhouse of all sorts of information and is accessible at all times. There are a lot of sites like

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A solid currency trading strategy consists of entering a trade at the right place, having a stop that is properly calculated, and setting a reasonable profit target level that works time after time after time.

Many newer traders set too ambitious profit targets expecting the trade to be “the big one” and hoping it will help offset the losses they have accumulated.

However, a far more effective currency trading strategy is to set a reasonable profit target each time, not expecting the home run, and being satisfied with smaller profits which on a consistent basis will build the equity in the account surprisingly quickly once the compounding action kicks in.

Here is where the Fibonacci tool comes in.

This article assumes a trader knows how to use the Fibonacci tool which comes as a standard technical analysis tool on most charting software packages.

While the key retracement levels are 38, 50, 62 and 70 percent, two extension levels are commonly used – 1.27 and 1.62 percent.

The Importance Of Fib 127

It is the 1.27 level we are interested in.

Why?

Because price regularly gets to the 1.27 level, or at least within a few pips of it. Price also gets to the 1.62 level fairly often but not nearly as often as the 1.27 level.

So if you are trading with the trend, always a safe currency trading strategy, and price has pulled back to the 50 or 62 retracement levels, there is a very reasonable chance price will reach the 1.27 target.

If price pulls back to the 79 retracement level it may not go so far. If you trade from that retracement, you will want to take the first profit at the end of the swing as price may not extend beyond that point to the 1.27 or 1.62 level.

Some traders just focus on this currency trading strategy when going with the trend:

In at the Fib 50 retracement Out at the Fib 127 extension

Why is this such a sound currency trading strategy?

Because the Fib 38 retracement level does not offer such a good risk reward ratio many times. There is always the risk price will pull back further and take out your stop.

On the other hand, price frequently fails to reach the 62 or 79 retracement levels so the trader is left on the sidelines as the trade fails to get filled.

The 50 level is frequently reached so the trader has a good chance of getting his order filled.

On the other hand, the 127 extension is not too ambitious. In at 50 and out at 127 will often net a profit of somewhere between 25 and 40 pips. With a 20 to 25 pip stop the risk reward ratio is satisfactory.

How To Use Fib 127

Here are some other factors to consider when using the Fib 127 extension:

Look to see if this level coincides with other factors such as

A previous key level of support or resistance on the higher time frames such as 1 hour, 4 hour, daily, or even weekly.The 200 EMA (Exponential Moving Average) on the 1 hour or 4 hour. This often provides quite a strong level of support and resistance.A pivot point (Central Pivot Point, R1, R2, S1, S2, or M1-4 levels ) calculated from the previous day’s High, Low and Close.


Even when targeting the Fib 127 as the profit taking point, it is wise to trim a couple of pips of the limit order. So often price will nearly reach Fib 127 and pull back.

Yes it might go on to touch it later but in the meantime price retraces and you have to have the mental stamina to be able to handle that.

Many traders would rather just take a slightly smaller profit and save themselves one or two hours of price consolidation with the risk they may lose the profit altogether.

A solid currency trading strategy develops over time. A key ingredient is not being too ambitious. The Fib 127 extension level is a reasonable profit target you can use regularly to extract your wages from the Forex market!

By: Michael A Jones

About the Author:

A bit about www.systemsfortraders.com and who we are

We are a group of 4 traders with over 50 years trading experience between us. All of us have been full time traders at some time or another, two of us still are, the other two still trade on a part-time basis. We set up and now run this new forum in our spare time with a specific purpose in mind.

Many people find it extremely difficult to find completely independent and honest reviews of trading systems and services. This is because many products do not live up to their expectations (as advertised on their own websites) and many product reviews are carried out by other websites promoting and benefiting from selling that product. Our intention with this site is to facilitate a 100% independent and honest forum for such products.

We use our spare time and our experience to produce initial reviews of as many of these products as we can. Reviews are based on our limited exposure, limited because we just do not have the time to review each product for months upon months and trade them all in parallel. However, this fits with our intentions, which is not to test each product to its extremes but to use our experience to get a general feel for it so as to be able to produce our initial review. To achieve this, for each product, we endeavour to do some form of back-testing/result verification and also run the product in real-time (on a small account) for at least a few weeks. Not ideal, however we believe our experience permits us to produce what we consider a reasonable initial review.

Our intention is not to be Judge and Jury, our limited exposure does not permit this. Following our initial review, the hope is to promote further (hopefully honest) discussion and feedback within the forum from those with more experience of the product, who will add further value. All being well this will result in a forum that the whole trading community can come to rely on and benefit from, not just based our experiences but from the experiences of the collective.

We police (moderate) every single post on the site so all forums will stay on topic. It will not become another clogged up forum for others ego’s or for off-topic unrelated discussion.

Regarding affiliations, we are completely open and honest about this too. We do not and will not ever endorse or promote any of the products we review. Nor will we ever accept payment or otherwise for a favourable review. We do however set up affiliations where possible and ask, that, should anyone decide to purchase any of the products we review that they use our links. The commissions we receive from purchasing via our links (where available) will allow us to fund the future purchase of new systems and services to review as well as keep the site free.

We also ask that users return to the forum from time to time and provide their own feedback. It is only through this interaction that the site can be of benefit to all of us.

SYSTEMS AND SERVICES WE REVIEW

Systems

These usually come in the form; peruse the website, part with your cash, receive a manual (usually in pdf form), read the manual, set your charts up, learn the strategy, trade the system, make the same profits advertised on the website, never look back.

Most of these systems are mechanical in use, thus, a certain set of criteria (indicators) have to meet certain conditions before placing a trade. For example, MACD (12,26,9) has to turn up, 10 Day Moving average has to be sloping up and RSI(14) must be less than 70 on a 15 minute chart. Please dont trade this system, its an example. But basically, most systems are rules based (mechanical) and need to be set up and “learnt”. To us this involves reading the manual, setting up the charts, observing historic charts (back-testing) and live-running on a small (or demo) account. We will never use a system out of the box based on the claims on the website and we would never advise anyone else to do so.

Occasionally a system will come with an EA, this is short for Expert Advisor. These EA’s are usually pre-programmed indicators that are downloaded and applied to Meta Trader charts (they will only work on Meta Trader charts). This is quite a standard charting package offered by many of the Forex brokers out there so is usually not a problem for most. The EA is usually incorporated into a systems rules. E.g. it is basically another indicator that has to be a certain value, shape, etc. in order to place a trade. The advantage of some EA’s is that they create an audible alert when a trade is setting up/has set up and thus saves the trader some trouble and hopefully, some screen time.

Most systems we come across are Forex related, this makes sense, as its the largest (most traded) market and most flexible (its open 24×5 typically). Some systems are designed specifically for indicies, e.g. FTSE, DOW, S&P and occasionally we come across some commodity based systems too. However, it is fair to say that for every system we come across 2 out of 3 will be Forex based.

Services

This category could also be called Signal services at the moment as to date we have only really encountered Signal services in this category. There are though, two quite distinct (Signal) services, “Standard” and Fixed Odds.

By “Standard” we are referring to signals which are executed, as trades/orders, using a standard brokerage (trading) account or, particularly in the UK, with a Spread betting company. Fixed Odds is a newer form of trading than the “Standard” form and involves placing a trade direct with a Fixed Odds broker or with a Spread betting company which offers Fixed Odds functionality.

In the main, both types of service tend to fall into what we class as, Set & Forget. This means one receives a signal (by email and/or sms), enters a trade/order and walks away. The intention here is to emulate the results advertised on the website, to which you will have signed up. Effort should be minimal. The user should have to do little more than translate the signal into an order/trade with their broker and walk away until instructed to do otherwise by the provider.

Robots

There are many of these in the market. For those of you that do not know what a Robot is, in basic terms, its a piece of software that runs on your brokerage account (usually via Meta Trader) and trades automatically without any human interaction at all. All you have to do is buy it, set it up, run it, walk away, and it makes money whilst you eat, sleep, drink, etc.

We are not interested in them at all and have no interest in ever reviewing them. Those wishing to pursue Robots will find many (sales) websites which are neither independent nor honest (in our opinion) featuring reviews. We will continue to focus on providing independent reviews of trading systems and services only, no Robots.

We have our reasons for this, most of them based on the horror stories we read all too often. In the main we have also found that most (sensible) traders (rightly in our opinion) are just not interested in them either, we may be wrong but we think not.

WHAT MAKES A GOOD SYSTEM

A question we are frequently asked and one we took some time to agree on, in order of importance:

Mechanical Profitable Proven Technically Sound & Usable It Works In Practice Being A Little Bit Picky

Next month we will focus on what, in our opinion, makes a (Signal) Service good.

Mechanical

Many are surprised that this is the most important factor, more important even than Profitability.

If a system is not Mechanical, in our opinion, it cannot be operated consistently (according to a specific set of rules) and thus cannot be easily measured. If a system cannot be easily measured, it is difficult to even consider claiming that it is or can be Profitable.

How do we apply the term Mechanical? What we mean is that a set of clear rules must be in place for Entry, Stop(s) and Target(s). For example, x, y, z has to occur for Entry, Stop is xx and Target is yy, Exit if zz occurs. This is a very broad example, however it illustrates our point. Human intervention and discretion should be minimal thus negating emotion completely, or as best possible.

Profitable

This is self explanatory, a system must be Profitable.

This is demonstrated in a number of ways. Some websites provide previous results, some are actual, some are from back-tests, some are account (usually demo) snap-shots, etc. A lot of websites provide examples of the finest trades from the last few years and most are also backed up with some glowing testimonials.

The point here is that every system has some form or another of demonstrating its Profitability. We take none of these as a given as it leads onto our next criteria.

Proven

The 3 key criteria now come together. A system cannot be Proven unless it is Mechanical and there is no point in proving a system unless it is Profitable.

We do and we also recommend that everyone else, do their own homework here and remain cautious in doing so.

We approach this in a number of ways. If we can back-test a system, we do. If we can have access to a list of actual trades we take them and verify them. If we can have access to live accounts we take that opportunity. The idea here is that whatever historic data we can get our hands on to examine and verify we do it.

We dont listen much to testimonials, choosing more so to have a competition between us on who can find the most hilarious.

Now, before moving on. Just because historically something looks like the best thing since sliced bread, as mentioned above, we still proceed with caution. For example, we have encountered indicators which repaint themselves or repaint after the event. They look fantastic on the screen and highly profitable but this does not mean this is how they behave in a live environment. Having proven a system, by whatever means, does not mean one can or should jump in without first using that system.

Technically Sound & Usable

What we mean here is two-fold. First a (mechanical) system must be simple enough to be used and secondly it must not take up 10 hours of our day 5 days a week, staring at a screen waiting for a setup.

Even the most mechanical of systems can be overly complicated, the chart can look like spaghetti junction and the criteria for trade entry can be so convoluted that 6 or 7 different events all have to occur at the same time. We are not interested.

Also, we are not interested in trading say, a 5 minute chart, for 10 hours a day. Trading is about making a profit and having a life. As a matter of note, most of the systems we trade at www.systemsfortraders.com require less than 15 minutes a day on our part.

This is not to say we do not mind putting in the effort, we have put in a lot of effort over the years to get to the point we have. Our point is that now, once we have decided upon a specific trading approach, our effort, in terms of executing our strategy and our screen time, should be minimal.

We say this because in our opinion, there are enough opportunities in this environment across the many different timeframes we can chose to trade. We do not need overly complicated systems nor do we need to be tied to our screens all day.

We also like a system to be what we call, Technically Sound. By this we mean that we like to agree with the principles by which it operates and everyone will have their own baselines here but we can give a couple of examples. A system that goes long when RSI(14) is over-sold would not be Technically Sound in our opinion, nor would one that has a 100 point stop and a 10 point target. Anyway, the premise here is that we at least agree the systems fits within some sensible trading boundaries and guidelines.

It Works In Practice

So, finally, once we are reasonably satisfied with our main criteria we always determine a systems credentials by trading it in real-time, usually on a small account, we just prefer this to Paper trading, personal preference really. Paper trading is fine but even with a small account at least there is something to be won or lost based on your trading decisions. As a tip, we usually imagine there is a zero on the end of our ’s per point when trying out a system on a small account, just helps us to involve some emotion that will always be there if the system is used for real.

Of course, some systems fall by the way-side before we get to this point. For example, we may deem it too complicated, it may not be mechanical enough, it may require too much screen time, we may have deemed it as not profitable, etc. We may be wrong in our judgement but we generally go with our experience and gut feeling here. If we are incorrect and do not progress we hope that we will soon be put right in the forum by our users. If we are we will of course revisit a system and offer a follow up review.

Being A Little Bit Picky

And, really we are. But sometimes we just get fed up with poorly written manuals and untimely customer support. Believe it or not over 10% of those systems we review never respond to support emails, remember, we have already parted with our cash at this point. We will now avoid reviewing any product where we receive no response to our initial enquiry, we suggest this is a sensible option for others to adapt. Well, if someone is not interested in selling you something, what makes you think the product will be any good or that they will be interested in the slightest after they have your money.

Summary

So, we like Mechanical systems which are Profitable. We like to perform some form of Proving exercise and to ensure the system is Technically Sound and Useable. Lastly our final steps are to use the system in a real environment using a real account.

Only after we have taken the following steps do we make our only real judgement. This is never a recommendation but if any of us use a system (without modification) after writing our review we will give it a “Systems We Use”. We will also, typically, update a live journal on the forum of all the trades we take using that system.

SYSTEMS IN FOCUS

To date only one system has made it into our “Systems We Use” category and that is the LMT System by Dean Saunders.

LMT System - Works For Us!

This is a system we liked as it is about 95% mechanical and takes about 2 minutes to operate 3 or 4 times a day. This should be once a day but we cannot trade the Daily candles as they close when we are asleep so we trade the 4 hour time-frame instead. The system slipped up in the month of July but before this it ticked all our boxes; Mechanical (95%, some exception rules to be applied that require some judgement), Profitable and Proven (on back-testing and live running), we agree with the principle of the system which is trend based and obviously we are happy with its usability as one of us is trading it and using it on our own trading accounts. See our site for our real-time journal.

5 EMA’s Forex System - Complicated!

A Mechanical system based on 1 hour and 15 minute time-frames. Although titled 5 EMA’s, the system actually uses MA’s, Williams, MACD, RSI, amongst others. Just way too complicated for us. Back-testing was really hard (impossible) and attempting to trade this is real-time well, there was just too much going on for our liking. We just prefer systems to be more straight forward than this. This is not to say this system cannot work, it’s just not for us. We welcome feedback from others that have experience of this product particular those that are actively trading it.

Easy Trade Forex System - Dont Get It!

A manual we feel may not have been written by someone who’s native language is English, nevertheless, it is comprehensible enough. The recommended time-frame for this system is 4 hours (so a timeframe we like) and it “has been successfully tested for any time frame”. The system itself is based on a rudimentary version of Fibonacci which is used to forecast a “Power Turn Point”. However, the methodology behind this system just didn’t make sense (was not Technically Sound) to us and we didn’t back-test or attempt to use this system in real-time, just for that reason. It would be interesting to hear from anyone actually trading this system to determine its usability and profitability.

London Rush - Just About Made It!

The only other system we have come across that has almost made it to “Systems We Use” category. Claims of “Only 2 Hours A Day Is Required” actually equates to about 2 minutes a day around 08:00 (UK local time) most days. The system is pretty much 95% mechanical and our live running in July produced a nice return of about 6-7% risking 3% of account balance per trade. Even though we have an outstanding issue (and receive no response to any of our emails) we continue to run with this system and its on our “Systems We Use” list. See our site for our real-time journal.





By: Jon

About the Author:

Forex scalping is similar to day trading in the stock market, with a few major exceptions which makes it much more profitable and a consistent winner. The currency course named Forex Trading Made E Z is one of the most popular and longest lasting programs of its kind in the industry and teaches this method of trading better than any other program I have ever come across.

This class was developed by a lay person and not an investment banker that spent fifteen years on Wall Street. What that means to you is that it is written in an easy to read and understand format. It is very simple to implement and trade with after spending only a short time studying the program.

What the developer discovered was what we in the industry call a “Forex Indicator.” This indicator over time has proven to be one of the most accurate of all factors you can look at to determine which way a currency will move in the future. All you do it watch this one little thing at a particular time of the day. If it tells you to buy, you buy. If it tells you to short, you short. Don’t worry if you don’t know what short means, the teacher will fully explain it so you fully understand it and how to do it.

If you are new to the markets and are looking for a quick foolproof way to start making some good money, then this is perfect for you. It is a very low risk method of trading while at the same time offering exceptionally high rewards. What you try to do is enter and exit the market quickly, always in one day and make a five percent return on your investment. Remember, five percent is in one day, not a week, month or year. So it is quite possible, if not probable to double your initial investment in less than one month.

As with all investment or trading techniques you will have losing sessions. The great thing about this method, is that since you are not holding your currency overnight when something catastrophic could happen to your currency the losses you suffer are usually on the small side and have little effect on your overall account. In addition, due to the reliability of the indicator you are basing your investments on you will experience very few losses.

Forex Trading Made E Z is one of my favorite currency courses of all time. To tell you the truth, it is what started me on my career path as a professional Forex trader and investor. If you have a few minutes when you’re not doing anything productive why don’t you check out its website and determine what you think for yourself. Hopefully, it will be able to do the same thing for you as it has done for me, which is to greatly improve my financial position.

By: William Alheim Jr

About the Author:

Forex trading has become a widespread activity around the world these days. Since the introduction of the internet, the access to the currency markets has become a work at home activity that many people has embraced and converted into their main income source.

But Forex trading is not easy. It may be hard work sometimes, but no one can deny that trading the forex has a huge profit potential for the initiated trader. The amount of work depends on how much you know about the currency markets and the tools available to you.

As a forex trader you will need to have a trading compass in order to successfully trade the market. The usual thing for the forex trader is to have a number of indicators that will serve as the compass in his trading activity and efforts for profitable trades. There are indicators as Bollinger Bands, EMAs, Elliot Waves, Fibonacci levels, Pivots, etc. Ive known of traders who have tested more than 100 indicators!.

Once you understand and learn the language of each of these indicators you must be ready to read the forex charts for a while and start making decisions based on the information you get from the number of indicators you may be using at the moment, and these can be many indicators that you will have to use at once when you are facing a no very clear market.

The work involved in using these indicators is one of the main reasons most forex traders dream with a tool that would let them trade without spending too much time reading the charts and that would also help them reduce the stress of the trading decision. All this would involve the use of a Forex Trading Machine, a tool that, believe it or not, nowadays exists and which use has been spreading in the forex trading world.

By: Adrian Pablo

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If you’ve been looking for an unparalleled business opportunity, then the forex market might be right for you. Forex is short for foreign exchange market. That is, the market that traders use to exchange various forms of currency from over ninety countries. This is the market in which these currencies are traded. For example, a euro is traded for a dollar or a franc is traded for a pound.

The market was started in the 1970′s. However, for most of its existence, only large banks and licensed brokers had access to it. That has all changed now. With the rise of the information age, the internet has made it available to everyone. Even the smallest trader can take advantage of this amazing global exchange. That means 24-hours a day, traders from all over the world are gathering at their computers and using the internet to bring in huge profits.

Unlike the stock market, currency trading doesn’t require an advanced degree to trade. That means with a little research, you can become a trader yourself. There’s no fees either. Because you’re doing all of your trading for yourself, you won’t owe a broker any percentage and there’s absolutely no hidden fees. What’s even more amazing is that it takes only a small investment to begin trading on the market. While many advisers suggest that you begin with around $2000 to start trading. But most forex traders are able to start with as little as $300. That’s a very small investment for all of the potential profits that it can offer.

When you trade on the forex market, you are exchanging one country’s currency for the currency from another country. That means you want to acquire currency when its value is low and then trade it away once its value rises.

By: Greg Maynard

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What do we mean by pivot point trading? It simply means that Forex traders take into account pivot points calculated from the previous day’s trading range and use them as reference points to identify support and resistance levels.

Taking the high, low, close and open values of the previous day’s price action, strategic levels can be identified which may or may not have an influence on price action. Pivot point trading puts emphasis on these levels, and uses them to guide entry and exit points for trades.

However, as with any technical indicator, there are limitations and pivot point trading, to be high probability, needs to stay within certain parameters. The following 7 guidelines can help pivot point trading be more profitable:

No. 1

Pivot points should not be used as a standalone indicator. Do not enter or exit trades purely on the basis of pivot points. Use them in conjunction with other indicators such as candle patterns, Fibonacci levels, MACD, and moving averages to identify and confirm key levels of support and resistance which may provide trading opportunities.

No. 2

While some traders living in various parts of the world may calculate their pivot points according to the time zone in which they live, a fairly safe standard for calculating the levels of pivot point trading is to use GMT (Greenwich Meantime).

Midnight GMT is a very quiet time in the market with very little volatility and provides a good opportunity to calculate more accurate pivot levels going from midnight GMT to midnight GMT the following day.

No. 3

It is good to understand what is going on behind the scenes when it comes to pivot point trading. Rather than just staring at candles on a chart, understand what they actually represent.

Thousands of traders around the world, some working for large institutions and handling millions or even billions of dollars worth of currency, are taking positions according to previously established highs and lows in the market.

Pivot points draw attention to these key levels which will often be strongly defended by traders who have a lot at stake. This is the reason pivot point trading can be so successful, once a trader understands underlying reasons for price action.

No. 4

It is good to calculate mid levels in addition to the S1, S2, R1, and R2 pivot levels. Sometimes there is a significant gap between these levels and calculating a mid point gives another point of reference. Price will often be seen respecting M1, M2, M3, or M4.

To calculate mid levels, simply subtract the level below from the level above and divide by 2. (see the resource box for a free pivot point calculator)

No. 5

Pivot point trading can be a useful strategy for entering and exiting trades at the right time. A pivot point can provide a key level of support or resistance where price is likely to bounce for a 10-20 pip profit.

Or in the case of a trend, price may retrace to a pivot level before continuing its run. The retracement point at the pivot level would be a good place to put an entry order to be taken in when price comes back to retest at the pivot level.

No. 6

The Euro – US dollar pair often puts in a daily average of between 75 and 100 pips. Watch for specific behavior around the time of the London market open. Price will often come back to test a level which is a pivot point and form a distinctive candle pattern such as tweezers, or a hanging man, and then reverse and go on its 75-100 pip run for the day.

If price comes back to the M1 level check your other indicators to see if they confirm this would be a good level to go long. Likewise, if price, just around London open, tests the M4 level, check your other indicators to see if this would be a good place to go short. You may be able to get a slice of the 75-100 pip run for the day.

No. 7

Pivot point trading helps mentally in establishing the buy zone and the sell zone. Traditionally, anything above the Central Pivot Point is a Sell area, and everything below the Central Pivot Point is a Buy area.

If you go contrary to that, make sure you double check your analysis and have very good reasons for doing otherwise.

Pivot point trading is just one of an arsenal of weapons available to Forex market participants. However, it must be stated that many successful traders use just a handful of tools that become their favorites. After all, too many indicators can lead to decision paralysis.

For many traders, pivot points are a key element in their overall trading strategy. Use the 7 guidelines above to use them safely and responsibly.

By: Michael A Jones

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