Forex Fantastic

When you trade forex, sometimes keeping the analysis simple is so much better. Complicated technical indicators may be able to help you trade, but you can make similarly good trades using simple indicators and simple analysis. In this article, we are going to talk about how you can spot trends using nothing but the MACD oscillator and one additional exponential moving average for confirmation.

The first thing you need to do is set up your MACD indicator. If you are trading on longer timeframe, the best combination would be 12- and 26-day moving averages, while day traders may want to opt for 7- and 18-day moving average instead. With the indicator properly set up, you can now analyze trends using several simple theories. A 9-day exponential moving average is added as a momentum line so that you can confirm trends easily.

If you see the MACD line crosses the momentum line upwards, you are looking at an upward trend or a bullish; a possible reversal of the current bearish is also possible. To confirm the trend, check the signal line’s current direction and the position of the two lines — if they are under the 0 signal line, than the trend can be quite strong. You can also spot trend reversals by seeking for divergences in strength as measured by the MACD channel, or in other words the distance between two lines.

Combine this simple analysis with your own trading formula, and you can enjoy profitable trades. Just keep it simple and catch trend changes properly.

Forex is indeed a very volatile market, and you need to go the extra mile to determine market direction and make profitable trades. That is why I always remind new traders to have the right point of view; forex is not a get-rich-quick scheme and efforts are needed to be profitable. One of the things you can do to be more profitable in forex is to trade multiple timeframes.

Common forex trading software usually has different timeframe settings. You can set the chart to display movements in different intervals, from 1-minute to 1-months. A good rule of thumb is to have at least three charts if you want to trade multiple timeframes. Start with the lowest chart timeframe you usually use, and add two more charts to help you analyze market movements.

The lowest timeframe is called short-term, followed by intermediate-term and long-term. If you use 15-minute for the short-term chart, you can use 1-hour chart for intermediate-term — that is four times the lower chart timeframe — and 4-hour chart for the long-term analysis. If you generally use 4-hour chart, add 1-day and 1-week charts to help you.

You can confirm trends and analyze movements better with multiple timeframes. No matter what trading style you use, using multiple timeframes properly can help you be more profitable and catch more trends. Formulate your own strategy of how you can use the multiple timeframes to support your current trading style, and you will be much more profitable in no time at all.

I just finished hearing complains of a new forex trader. Among his biggest issues is the fact that the market turn against him as soon as he opened a position; I wouldn’t be surprised if some of you feel or experience similar things several times. The natural reasoning he used was that his forex broker scammed him; for the record, he is using the same broker as I’ve been using, and my trades are generally profitable.

When you experience similar situation, don’t jump to the conclusion of you being scammed by your forex broker just yet. Instead, try to analyze the situation objectively and see if the decision you made to enter a trade was properly calculated. First, start with determining whether you have a strategy in mind — entering a position without proper strategy, or in other words based on ‘intuition’ and emotions is definitely suicidal.

If you do have a strategy mapped, continue by assessing whether you enter the trade correctly based on that particular strategy you are using. If the answer is still (objectively) YES, then you can simply analyze the strategy that you use and see if this is a solitary issue or if the strategy needs further evaluating.

Last but not least, assess properly if you are entering the trade because you are emotional at the moment or because you have cleverly calculated the movement. By following these steps, you can generally discover if the trade was properly timed and that you made the right decision.