Currencies Trading Introduction

Currencies trading is also known as forex trading and is the most liquid market in the world. Forex markets are bigger in daily volume than any other market including the stock market, bonds, and futures markets. A trader can enter or exit the market whenever they prefer and there are no commissions, daily trading limits, and there are no lock limits.  When trading currency online they are always bought and sold in pairs.  A currency pair that is very popular and traded a lot is the Euro vs. the U.S. Dollar (EUR/USD).   Currencies trading is the fastest growing division of the online trading community.

There are basic order types that forex traders must know in order to trade successfully.  These include terms such as market order, limit order, stop order, trailing stop order, take profit order, and many more. These are actions taken when currencies trading and some of them are explained below.

1) Market order – this is an order to get in or out of a position at the current market price. The price is not guaranteed, but it does guarantee that you will get in or out of the market.

2) Limit order – this order specifies that a trade must be executed at a specific price in the future. It can be used to enter or exit a position when trading currency but the execution of the order is not 100% guaranteed.

3) Stop order – this order again does not guarantee execution and price, and it is used to protect against incurring additional losses when currencies trading. It is most commonly used to set an exit point for a losing trade in order to try and limit the risk of a specific forex trade.

4) Trailing stop order – this is not considered a “hard “stop like the regular stop order. This order allows the trader to configure the stop order to continue to follow the price movement in real-time by specifying the distance in pips that the trader would like the stop to move. This depends on the market direction in the forex exchange at that time when currencies trading.

5) Take profit order – this is a limit order that traders can use to attempt to capture incurred profits and exit a position.

6) Day order – this order is in effect until the end of the trading day. Since the fore market is a 24-hour market, the end of the day is either a set hour or until the opening of the Asian market.

There are additional terms that an investor must learn to become a successful forex trader such as the terms order cancels order and good-till canceled order.  If you are interested in learning how to conduct currencies trading, check into online resources to broaden your education about the currency exchange, and also read a lot of books on forex currency trading for beginners.  It is also wise to work with someone who is experienced in the market and who can act a mentor. Lastly, it is important to keep on top of new information and current technology available for traders. 

Despite the bad news, the Bulls started buying again today. The bullish day today was somewhat expected. This is not being said in hindsight. Remember, the candlestick signals illustrate a change of investor sentiment. Although the Dow technically did not form a Bullish Engulfing signal on Tuesday, it opened one point above where it closed on Monday; it could definitely be considered a Bullish Engulfing signal.

DOW

More compelling, the NASDAQ formed a Kicker type signal on Tuesday. This provides the information that would have alleviated any major nervousness today. The Kicker signal is the most powerful of the candlestick signals. When it occurs, there is a definite change of investor sentiment. That sentiment usually does not dissipate a day or two after the candlestick signal. The lower trading of the Dow and the gap down in price for the NASDAQ today created the prospect for another candlestick signal to form based upon the strength of the Kicker signal.

The candlestick formations are the visual depiction of investor sentiment. After this morning's economic news, there was no conceivable reason for the Bulls to step into this market, but they did! That demonstrates the fact that today's economic news is not the overriding influence. The markets are evaluating other factors. Let the market tell you what the market is doing.

Do you buy when the bad news is out? That is another aspect of candlestick signals. It immediately tells you what the response is to news. As illustrated in the AKNS chart today, earnings were announced. The price gapped down dramatically. But without a candlestick formation, this would look like a very bearish day. The bullish candle reveals that once the selling was over, the buyers were stepping in. The question always needs to be asked, who is buying at the bottom on bad news. It is usually the smart money that was selling in anticipation of the bad news at higher prices. Today's bullish candle reveals valuable information. The selling should be gone; the buyers are stepping back in.

AKNS

The advantage the candlestick signals at each formation can be analyzed and rationally interpreted. Take the time to learn what each candlestick signal represents. When you understand the fundament that formed the signal, you can make dramatically better analysis of price movements.

Commodity corner - World Cup advisors returns = - 6.2 percent.

Investing is the process of learning how to make and keep profits for an account. Unfortunately, part of that learning process involves understanding what to do after a devastating or unanticipated large loss. Whether in stocks or commodities, a severe loss can alter an investors thinking. This has to be averted. To become a successful investor, one needs to have a trading platform that works successfully. Fortunately that is what candlestick signals provide. But with the most successful trading programs there are going to be situations that will create large losses. Whether a trade error or a world event, there will be circumstances when investors will experience a large loss. How to react to that loss is extremely important.

If the trading program works successfully, the future trading process is very simple. Take a deep breath and continue to do what you were doing successfully. The charts will continue to reveal information that they have revealed for the past for centuries. After experiencing a large loss for whatever reason, get your mind set back to doing what is the correct thing to do on the next chart signal or pattern.

Free training session - Saturday, March 15, 2008, Stephen Bigalow will be speaking in the Los Angeles area. If you can come and join the session, please do. Click here for information on location.

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Good investing,

The Candlestick Forum Team