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Forex Market

The forex market is the foreign currency exchange in which an investor can exchange one countryís currency for anotherís. This market provides a way for investors to make money in a global currency market by buying and selling foreign currency from nations around the world. You have participated in some form of forex trading if you traveled to another country and cashed in your American dollars. You probably realized that the trade what unequal. This is fx trading but on a simpler level whereas trading on the foreign exchange means trading liquid assets at all times.

The forex market deals with three different levels of currency exchanges. These include the over-the-counter market (OTC market) at the very basic level, The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Forex can be traded 24 hours a day since it is a global currency market. The hours of operation are below.

New York (8:00 a.m. to 5:00 p.m. EST)
London (3:00 a.m. to 12:00 p.m. EST)
Tokyo (7:00 p.m. to 4:00 a.m. EST)
Sydney (5:00 p.m. to 2:00 a.m. EST)

Currencies are always price in pairs and all currency trades result in the simultaneous purchase of one currency and the sale of another. When trading currency an investor would only execute a trade when they expect that the currency they are buying will increase in value relative to the one being sold. If this doesnít happen and the currency being bought does not increase in value, then the investor must sell the other currency back in order to lock in any profit. In the forex market, an open trade or an open position is the result of an investor who bought or sold a specific currency pair but has not yet sold or bought back the equivalent amount to close the position. There is a lot to learn when looking at the trading strategies involved in trading forex.

When dealing with forex brokers it is important to note that they can set their own minimum accounts and they are also allowed to set their own fees and rate schedules. Keep this in mind when you are searching for a brokerage firm. Like most firms, many broker require a security deposit to cover any futures transaction fees so be sure to ask your broker how much money you need to put down initially. Just be sure when choosing a broker that you take a look at all of their fees, their rate schedules and their competencies very carefully before depositing any money.


Market Direction: Candlestick formations send definite information. This past Thursday, the Dow formed a Doji signal in the 'almost'  oversold conditions. Candlestick signals provide expectations that can be clearly analyzed. What was required to confirm a bottoming signal? The Doji needed to be followed by a bullish candle. Friday's trading was bullish, but not a decisive bullish candle. It formed a Spinning Top. Although the Dow finished positive on Friday, the SpinningTtop signal provided valuable information. The bullish sentiment was not of extremely strong conviction. The NASDAQ also was bullish on Friday but formed a Doji/hammer signal that appeared to be affected by the 50 day moving average. This made expectations for Tuesday's trading much more quantified. Confirmation that an uptrend had started required more bullish signals after the indecisiveness of Friday.

DOW

That may seem very simplistic, but the benefit of candlestick signals is providing very simple if/then criteria. The premarket futures of Tuesday indicated there was no bullish follow-through. This obviously made adding new positions very suspect. It also provided the information needed for closing out long positions that were showing bearish signals. The past few trading days have provided decent profits. These were derived from strong buy signals. Cashing in on those profits became a function of knowing what the general market was doing. This obviously is not rocket science. However, most investors do not have the benefit of clear investment decision information that is provided by candlestick formations.

Whether trading commodities, stocks, Forex, or any other trading entity, candlestick analysis allows the educated candlestick investor to take advantage of what the market trends are revealing. Each signal and pattern has a high expectancy of a particular result. Knowing what 'should' occur after specific signal setups allows investors to capture a large percentage of potential profits based upon what market conditions are conveying. It is very important that investors evaluate price trends correctly. It is just as important to implement a strategy that maximizes the potential but minimizes the risk of the evaluated price move. This can be done by altering the trading style/timeframe or utilizing option strategies that are correct for current market conditions. The Candlestick Forum highly recommends the trainings of Options University. Please investigate the magnitude of options knowledge that Options University provides. Whether you are an aggressive trader or a conservative investor, the application of options strategies, in combination with candlestick analysis, creates an extremely powerful trading program. Don't miss the opportunity to combine valuable information that can produce big and consistent profits. Click here for more information on the Options University training.

Todays hard selling on the close produces a downward target of the recent lows in November. For investors that are uncomfortable with shorting the market, buying the short funds has been advised strategy for the past few trading days. A major advantage of candlestick analysis is utilizing the body formations to get a much more clear picture of what is occurring at potential support and resistance levels. The combination of candlestick signals, conditions of the stochastics, at potential targets allows an investor to remain in trends/positions until the probabilities indicate otherwise.

Good investing,

The Candlestick Forum Team


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