When a double top or double bottom chart pattern appears, a trend reversal has begun. Let’s learn how to identify these chart patterns and trade them. Double Top A double top is a reversal pattern that is formed after there is an extended move up. The “tops” are peaks that are formed when the price hits a certain level…
Let’s discuss leverage and margin and the difference between the two. What is leverage? We know we’ve tackled this before, but this topic is so important, we felt the need to discuss it again. The textbook definition of “leverage” is having the ability to control a large amount of money using none or very little of your…
By now you have an arsenal of weapons to use when you battle the market. In this lesson, you will add yet another weapon: CHART PATTERNS! Think of chart patterns as a land mine detector because, once you finish this lesson, you will be able to spot “explosions” on the charts before they even happen, potentially making you…
Most professional forex traders and money managers trade one standard lot for every $50,000 in their account. If they traded a mini account, this means they trade one mini lot for every $5,000 in their account. Let that sink into your head for a couple seconds. If pros trade like this, why do…
Many forex traders use technical indicators as part of their technical analysis toolbox. We’ve gone through the two types of technical indicators based on the timing of the signals they provide. Here’s a quick recap of what we discussed in the previous lessons: There are two types of indicators: leading and lagging. A leading indicator or an oscillator gives a signal before the new trend or…
Be the casino, not the gambler! Remember, casinos are just very rich statisticians! It takes money to make money. Everyone knows that, but how much does one need to get started in trading? The answer largely depends on how you are going to approach your new trading business. It varies from person to person….
Traders are often so fixated on their winning trades that they totally ignore their losing trades. But it’s from your losing trades from which you stand to learn the most. Here are three ways to learn from the trades that didn’t work out. 1. Calculate your performance Look up your past trade transactions. If you can’t find them,…
So how do we spot a trend? The indicators that can do so have already been identified as MACD and moving averages. These indicators will spot trends once they have been established, at the expense of delayed entry. The bright side is that there’s less chance of being wrong. On GBP/USD’s daily chart above, we’ve put on the…
To increase your chances of profitability, you want to trade when you have the potential to make 3 times more than you are risking. If you give yourself a 3:1 reward-to-risk ratio, you have a significantly greater chance of ending up profitable in the long run. Take a look at the chart below as an example:…
An oscillator is any object or data that moves back and forth between two points. In other words, it’s an item that is going to always fall somewhere between point A and point B. Think of when you hit the oscillating switch on your electric fan. Think of our technical indicators as either being “on” or “off”. More…