subject: The Great Guide to Forex Trading [print this page] The Great Guide to Forex Trading The Great Guide to Forex Trading
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FOREX trading relies on less technical market information than other markets. With no true central clearing exchanges, reporting is done at the will of banks that report trades and volumes. While price is clearly known, FOREX volume can be difficult to find and trust. Your broker may have a source for 'volume' but do not assume that is anything more than an indication of market interest. Even tick volume may represent only a portion of actual trades worldwide. So traders have access to current and past information on price and perhaps some indication of interest that is labeled 'volume.' all of this information can be presented to us graphically in various time frames.
Each trader has control of the data time frames that they trade. My accounts allow me to trade on tick, 1 minute, 5 minute, 30 minute, 1 hour, 4 hour, daily, weekly, and monthly charts. Yours are probably similar. I like the 15 minute chart for my primary view. However, I use ALL of the time frames above for various purposes related to my choice to day trade along with my 'volume' indication.
The present market, mid November, 2008, has levels that have not been visited recently. That alone accounts for using so many of the time frames for data analysis. Along the way we will consider some reasons various time frame assist in data analysis. But first consider some risks, rewards, and frustrations available for trading various time frames.
Various styles of trading will fall into fewer categories: 1. Day Trading - meaning no positions held overnight, whenever you sleep, 2. Swing Trading - meaning you may hold an occasional position less than a full day, but typically hold for a few days to a week, 3. Position Trading - a style that holds a position intentionally for several days to a few weeks, 4. Long Term Trading - indicating you may keep a position several weeks to some months.
A Day trader wants to book profits quickly and move on. This has some technical advantages that reduce risk: profits are quickly removed from market risk, there is a speedy mental reward on each success, and overnight risk is avoided which keeps the trader in control duringtheir working hours. It also has some added risks that generally involve trader personality and psychology: rapid market shifts can be mentally deleterious, trading may become difficult to impossible during some periods of a 'workday,' and frequent counter-trend trading can lead to mental distortion of market conditions. My choice is to watch the 15 minute chart to locate a trade, use the longer time frames to locate support and resistance, and use the shorter time frames to detect a change in character of current market participants. These shorter times, including the tick chart can alert you to some of the fast changes before they show on the longer times. I will exit a trade before it hits my targets or stops when the market has clearly changed.
If you want to learn more secrets and techniques that really helped me make profit with Forex, Click Here!
