How to Pin Point Entries in a Trend Using Candlestick Formations

Being able to read candlestick formations is an important skill for trading successfully, and with a bit of practice you can spot profitable entry points.  Someone who is skilled at reading candles within a trend can win up to 75% of their trades, and even an unskilled one can win about 50% of them, which can still make an account grow considerably if risk is properly managed. 

First you want your charts to be set up properly and contain the information you want.  Often the charts available from your broker will  be blank when first downloaded, but those default settings can be changed.  You will want your candlestick chart to include both the 10 ema and 21 ema.  These are moving averages which change as price changes.  Once those are showing up on your chart, here are some things you will want to look for to get a great entry.

You want to see both moving averages pointing in a clear direction, either up or down.  This will give you confidence that the trend is strong.  Typically, I look at the daily and the 4 hour, but this will work for any time frame.  If the higher time frames are also pointing in the same direction, this will increase the probability that your trade will win.    If they are pointing sideways then that is a good indication that a clear trend is yet to develop.

You also want the 10 ema and 21 ema to be separated.  The closer they are can reduce the probability of the trade moving into profit. 

In a fast moving market, where price has taken off in a particular direction, price will tend to bounce off of the 10 ema, and in a slower moving market it tends to bounce off of the the 21 ema.  Once you have identified a pair with a clear trend, it is important to determine whether the market is a fast moving one or a slow moving one.  If the price goes past the moving averages too much, or the emas get close together and pointing sideways, that's when you should stay out of the market.

With the emas pointing clearly up or down and well separated, look for a spike in price against the overall trend.  In an uptrend, look for price to come down at or just below the 21 ema in a slow moving market, or at or just below the 10 ema in a fast-moving market.  In a downtrend you will look for price to move up to these levels.

Once that has occured, look at the formation of the most recent one or two candles.  You will want the candle formation to support the trend.  Look for pinbar or shooting star candles where the point of the pin or tail of the star is pointing down throught the appropriate ema in an uptrend, or point up in a downtrend.  Railroad, and bullish or bearish engulphing candles are formations that may also give evidence that a trade opportunity is developing.

If these conditions have been met upon candle close, you can enter the trade right away or hold out for a better price and wait for the price to come back 10 to 20 pips.  Your stop loss can be placed just past the last candle, so it's important to realize that on big runs you could be risking a lot of pips to get your stop to sit beyond the last candle.  In that case, it may be better to sit out of the trade or wait for a better price because the amount you must risk is too high. 

It is also important to move your stop to break even once price has started to move or has made another big run, or even reached a round number.  Otherwise, let your position run.  When you start to see indecision candles consider closing your position.  If you close too early you may be short changing yourself.

Using the emas and candlestick formations in this way can make for very profitable forex trading.  The key is to wait for these conditions to be met.  This can be a true test in patience, but remember that if you can stay out of trouble and losing trades in forex, you are half-way there. 

Practice this skill in your practice account, or get help trading using this technique from Dean, a guy who makes his living trading forex using this exact method.  Here is a video explanation again in his own words:
Access Video

Changes to "My Trading Journal"

I have had to make some changes on how I post information to my trading journal, and I think you will find that they are changes for the better.

Not only was it quite time-consuming to post the information in chart form like I had in the past, the information was difficult to read because the font was so small in order to squeeze in all the pertainent information.

From now on the Trade Journal will be more anecdotal. This will allow for much more information and commentary to be included. Each posting will contain a numbered list of the day's activities, observations and opportunities, as well as some information on the system, product or tool that I used to make that observation or identify the opportunity. Finally, I will add in any personal notes or comments.

As many of you are aware, I have been working towards having a live trading journal available. Unfortunately, none of the software that I could find is compatible with my current broker. I considered switching brokers for this reason, but it would adversely affect my brokerage fees and my level of leverage. It simply did not make financial sense.

I even considered opening up a small additional account with a different broker so that I could run the software from there, but that would require me to place trades in two different accounts. Some of the trades that I make are time-sensitive, and more-over, it becomes a bit of a logistical nightmare should I accidentally neglect to open or close a position in a particular account. It simply is not manageable.

Still, I love the transparancy that would come from having my account available to view so that my readers could see at any given time what positions I have open or have recently closed, and see the profit or loss right there in black and white. I will continue the search, but the prospect has been put on the back burner as, for now, I feel I have exhausted all avenues.

I do hope that you find the new format appealing as it does have the advantage of the commentary - an important aspect that would be lacking otherwise.

Thank you so much for your patience these last several weeks as I know there was a disruption in the frequency of postings.

Regular daily updates will now resume. Typically the journal will be updated until after 12 noon Eastern Time (Toronto, New York).

Forex Trading Coaches Extends their Discount Pricing

The great folks at Forex Trading Coaches (namely Steve Cook and Wade Scott) have extended their discount pricing for a membership to their training and coaching membership website until the end of this month.

Regularly priced at $229 per month (and worth every penny), it is now available for only $129 per month.  And unlike every cable and phone company out there, this is not a temporary low price set to switch to the regular price after 3 months; Wade and Scott are grandfathering you in at this promotion price for the entire life of your membership. 

Your membership will give you unlimited access to:

• Training Videos.  The training videos that Steve and Wade have compiled teach people at any experience level the basics of their MacD Forex Trading System. All the information you need is contained in the video course, and you can watch and review them as many times as you need to. 
• Fast-Track Mentorship Group Training Webinars.  These online training sessions are held twice a week and you can attend as many or as few of them as you'd like.  Attending these webinars is the fastest way to learn their system because they will teach their system directly as you scan the live forex market with them.   You will see what to look for and have all your questions answered all in real time. 
• Daily Live Trading Webinars.  Even once you have learned the system, Steve and Wade never leave you to your own devices.  They know from personal experience that trading forex, no matter how knowledgable, takes discipline.  Even experienced traders appreciate joining Steve and Wade for their 3 hour daily live trading webinars.  The sole purpose of this webinar is to point out trades that meet the conditions of their system in the live market, in real time, as they develop. 
• Forex Trading Coaches Pro Chart Enhancements.  You will be able to access and download the charts and chart enhancements that can be a great asset in using their trading system.  It is the best way to ensure that your charts contain all the information you need to use their system properly.
• Video Archives.  You will also have access to their library of training webinars previously recorded.  That way, if you miss a training webinar, you can always watch it at a later time that is convenient for you.

All of these features are included in your membership fee.  There are no unexpected costs or add-ons you need to worry about.

In addition to those free features, you can also purchase individual coaching sessions, where you will get access to Wade or Steve one-on-one to help you with whatever aspect of trading you are missing, or to take your trading to the next level. 

The Goal

You don't have to be a member of Forex Trading Coaches very long to know that Wade and Steve have a vested interest in your forex success.  Their primary goal is to get you making winning trades the first day you sign up for their membership.  This becomes clear with the support they provide, and the way they have set up their service to be so accessible to everyone no matter their experience level or walk of life; they are priced so that the average Joe can afford their service and make pips. 

While every trading day is different, their goal during the Live Trading Webinars is to bag 30 to 50 pips on average. You can be as quiet as you like in these webinars, but if you do post a question, make a comment, or even say hello, they will often answer back, thanking you by name for your comment or question.  They are the real deal.

Find out what your Forex trading has been missing:  Forex Trading Coaches

Remember, the discounted price of $129 per month is for a limited time only.  This great price is only available if you sign up before January 31, 2011.Sign Me Up Now.

Commodity Prices and the USD: The Big Picture

We experienced a huge drop in commodity prices today falling more than 2 percent.  The question is: What are the implications of this decline?  Here's what the research says:

First, it was the catalyst for drop in the commodity currencies, namely the Australian, New Zealand, and Canadian dollars.  All three of these currencies lost ground today.

Second, the severity of the drop in commodity prices have some questioning whether a top has formed in oil, gold and copper.  If US data continues to be positive, the US dollar has the potential to rise further and push commodities prices lower still. 

But many experts aren't ready to call it a top quite yet though.  There is no indication that the Federal Reserve plans to raise interest rates anytime soon, and it is even possible that they don't raise them for the remainder of the year.  This can keep the US dollar valued lower, and a lower dollar usually means higher commodity prices. 

A further decline in commodities cannot be ruled out, certainly if the US data continues to surprise to the upside, but over all, my research suggests that commodities remain bullish in the long term.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

----------------------------------------------------

Support and Resistance Areas This Week

After a nice break away from my trading desk I am ready to get back into the swing of things.  Keep in mind though, that today is a bank holiday, and most of the big traders will not return until tomorrow.  The remainder of this week may remain a bit tricky to trade as trends sort themselves out. 

I've done my research though, and here are some areas of interest that can be pulled from the 4 hour and daily charts for those longer term traders out there.

4 Hour and Daily Charts Support and Resistance

Outlined below are the support and resistance areas I have found for most of the currency pairs.  If these areas break, a pullback may provide an opportunity to open a position.  This information is for informational purposes only.

EUR/USD has resistance at 1.3462, and support at 1.3057.
GBP/USD has resistance at 1.5665/70, and support at 1.5344
USD/CHF has never been this low, at all-time low, moving averages in the 0.94/40 area may provide insight into opportunities to short.
USD/JPY  support is at 81.00, alternatively moving averages may provide some insight into decent entries to short.
AUD/USD is at an all time high, it has already broken 1.0181, so pullbacks to that area could provide a trading opportunity.
USD/CAD has already broken support at 0.99750, so a pull back to that area could provide a trading opportunity to short.
NZD/USD has already broken 77.00, so a pull back to that area could proved a trading opportunity to long.  Alternatively, wait for it to break resistance at 0.7835.
EUR/GBP has resistance sitting at 0.8650
EUR/JPY has resistance at 109.52 and support at 107.562
EUR/CAD has support at 1.3060, and resistance at 1.333
NZD/JPY has resistance at 63.46
GBP/CHF is at an all-time low, previous support, now resistance, sits at 1.44
AUD/CAD has resistance at 1.0195, which is a triple top.
AUD/NZD has resistance in the 1.3170 to 1.3207 area.

Let me know if you find this information useful, I can certainly post my findings of support and resistance zones as a regular feature to my blog if there is interest. 
Thanks, and happy trading!

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

----------------------------------------------------

10 Things I Wish I Had Known Before I Started Trading Forex

Are you thinking about trying your hand at forex?  Think you might have what it takes to be successful?  Don't fall in the same traps that so many before you have fallen into.  Taken from successful and yet-to-be successful traders from all over the world, and some from my own book of forex blunders, here are 10 things most wish they'd known before they started to trade foreign exchange.  Print this out and hang it right beside your computer monitor!

1. Make Money with a Practice Account First.  Don't trade a single penny of your own money until you've had ample experience with a practice account.  I first started trading forex in college and thought I was smarter than the hundreds of people who had failed before me.  I did open a practice account, but apparently thought I was ready to trade for real after a short three days.  I've come along way since then, but that mistake cost me a small fortune to a college student.  It translated into many missed nights out with my friends as I slowly tried to recoup what I had lost.  Had I known what I do now I would have used a practice account for a month or more, gotten confident with my strategy, and wouldn't have lost track of orders that should have been cancelled because they were no longer valid.  You won't make money during that time, but you won't lose money either, and that is half the battle.  You'll find that out soon enough the hard way if you don't heed this important advice.  
2. Trading With Real Money is Different.  As much as opening a practice account is good, trading with real money on the line is different.  Try as you might to trade the same way with real money as you did with pretend money, the reality is that it just isn't the same when you've actually got something at stake.  Seeing your account increase or decrease with each pip can be taken in stride when playing for fun, but can be excruciating when it's your money on the table.  One way that helped me get over this was to think of each trade as the cost of doing business.  For example, a business might spend money on an ad which is either going to make them money or it's not.  Either way, the money spent on the ad is gone, so you should have done your research before spending the money to determine whether or not it was a good idea.  It's much the same with forex.  When you place a trade with a stoploss, consider the money at risk the cost of doing business.  If you are not prepared to lose it, then you need to think twice about taking the trade in the first place. 
3. Forex is a Mental Game.  There is a psychology to trading.  There are mental and emotional states that can help your trading, and ones that can be extremely detrimental.  You don't trade if you have been put-off by a loss and are looking for vindication, nor do you trade when you've come off a win and you think you are invisible.  You don't trade when you are bored and you've got an itchy trigger finger, nor when you are tired, having a bad day, and especially not when you are thinking about how much you need the money.  Trading with dollar signs in you eyes will result in taking trades that you shouldn't.  Mindsets like these are a recipe for disaster.  I thought I was a pretty even keel, more  pragmatic than most, and level-headed.  I didn't think I was going to be vulnerable to the emotional side of the game.  Here's what I wish someone had told me:  Expect to be emotional, but know that not keeping your emotions in check will be your demise. 
4. Don't Lament the One that Got Away.  Don't sit on the sidelines watching some grand move in the market wishing you were in the trade.  Chances are you'll convince yourself to get in and you will get burned.  It's like trying to catch a falling knife; let it fall.  Watching a pair make a big move that you missed is hard.  Expect it to be.  It sucks.  But watching the pair go and thinking about getting in is like trying to cross a one-way street by looking the wrong way.  Watching cars go by and seeing big gaps in traffic where you could have crossed provides no insight as to when you can cross.  Just because you are looking at a painful gap in traffic that was definitely would have given you ample time, doesn't mean there's not a transport isn't yards away.  Train yourself to look the other way.  Look at what's coming, the set ups that are developing, not the ones that already developed.  Begin to recognize when you are looking the wrong way down the Forex street, and force yourself to think differently. 
5. Plan the Trade, Trade the Plan.  Have a trading plan before you press that buy or sell button.  Know at what price you'd like to get in at , how much you are willing to risk, and where you'd like to see the price go.  Know why you are taking a trade, and understand why your stoploss and target price are where they are.  If you don't know why you are taking a trade, or don't know ho wot plan a trade, then you've got more learning to do.  Take a free course at a site like http://www.babypips.com/.  Just be sure to have a really clear understanding of your trading strategy before you begin. 
6. Have Respect for the Profession.  Professional traders spend years in school, have mentors and work with other professionals in the field, and have the most advance tools and software at their finger tips to help them perfect the skill of trading foreign exchange.  Don't expect after a month or two of trading that you know even a fraction of what these guys know.  If you think you've got it all figured out how you can make a million dollars in the next three months on forex, think again.  Trading forex takes some humility.  You are a tiny fish in a big big pond.  Did you know that professional traders have a track record that usually just above 50 percent?  That means they make winning trades approximately  (on average) between 5 or 6 times for every 10 trades they make.  That is because of what is called trade management.  Stoplosses and targets are intelligently placed so that while they may lose 50 pips on a losing trade, they make 150 on a winning one.  If you can do that 50% of the time you are making money.  Don't waltz into the forex world thinking you can change the game, or be that one in a million that can make a few uninformed choices and you get lucky.  Don't think you've got it all figured out or have an edge on the guys who make a career out of doing this.  It's that slow and steady that wins the race.   
7. It's All About the Trades You Don't Make.  Be a trading snob.  Once you understand the basics of any given trading strategy (there are many), be a picky trader.  Trade only when all your criterion for taking a trade are met.  A big part of trading forex successfully is knowing when not to trade.   I can't emphasize this point enough.  To be successful at forex you have to first not lose your money, and that means staying out of losing trades.  Make staying out of losing trades a priority, this goes back again to being a picky trader. 
8. Don't Be a Maverick, Be a Follower.  To make money in forex you need to be doing what everybody else is doing, when they are doing it.  It's not the time to re-invent the wheel, or get ahead of the curve.  That will only result in lost pips.  It doesn't matter what you know about currency, or the state of a country's economy.  What matters is what the market is actually doing, not what it should be doing.  Trying to find the bottom or top of a huge move or a trend is more like gambling than trading.  If you are tempted to trade like this, do yourself a favour and go to Vegas where at least you can enjoy free drinks and catch a few shows while you lose your money.  It's not a good sign if you are trying to time the markets.  If you are, you are in need of an intervention.  Don't bother placing the trade; take out the middle man and just send a big fat cheque directly to your online broker.  The goal is not to get in when the market has bottomed.  The goal is to get in when there is solid evidence that the market is going to go in a particular direction.  That is rarely 10, or even 100 pips from the low.  The key is to get in when there are indicators that it will go, not when you think its' the bottom.
9. You're Going to Be Glued to Your Computer.  At least chances are you will be.  And I am not saying that's a good thing.  Just know that this is a real possibility as you try to make money.  It's easy to become obsessed with watching the markets, looking for opportunities, and making trades, smart ones and stupid ones.  While it is important to put in face time, watch the markets and do analysis, if you are making smart trades you should essentially be able to make a trade and walk away and be ok with whatever happens.  Be aware that it's easy to become a slave to forex, and take measures against becoming one by educating yourself on a trading style and strategy that you are comfortable with so that you don't fall that trap.
10. Don't Just Learn, Get Help.  It's just not enough to read about trading forex or to take a course, free or otherwise.  If you want to implement a strategy effectively, it's simple:  Get help.  Learning and knowing what to do is not enough.  You need the help and experience of a forex expert.  A good coach is money well spent.  You can get some basic seminars and coaching programs for free such as the weekly analysis available at LMT Mentor (to access the free weekly analysis decline the paid service and get on their mailing list), but the daily coaching you get from membership sites that offer it like LMT Mentor and Forex Trading Coaches cost you a bit up front, but can make you thousands as you make your way through the forex learning curve.  Once you have the knowledge, working with the coaches available at such sites will give you experience all while having your hand held.  There are a number of excellent services out there.  If you need some help deciding what type of service might be the best match for your goals and financial situation, click on the "Advanced Support" tab at the top of this page.  There are some forex robots that can work reasonably well, but be wary, some are completely ineffective in the long-run and shouldn't be used unless you have good understanding and can look for further evidence that the trades are good ones.  As a general rule, be wary of any system taht leaves you to your own devices to implement the system. 

Remember that there have been hundreds of forex traders before you that have had their accounts wiped out.  Don't be one of them.  If you take all the things that traders wish they knew before they started trading, then it not only save you a lot of money, it can make you a lot of money while you learn too.  Keep this in a handy place, and read it often.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

----------------------------------------------------

Currency Focus: Looking at the AUD/USD

The AUD/USD is meeting resistance at the 1.00 level, and there some clues suggesting that this level will hold.  It's always a good idea to look at gold for confirmation, and price has rejected the $1372 area a couple of times now which plays in our favour.

The potential is for this pair to fall to the 97 area, possibly even as far as 96.  Buying interest should be strong enough at these levels to bring the pair back up to the 99 level, and could offer some opportunity to long the pair once the targets on the downside are reached.

For my trading idea on this pair with specific entry and exit points, click on the my "Trade Journal" link above.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

----------------------------------------------------

A Checklist for Successful Trading

Making smart trading decisions isn't rocket science, but it is there is a lot you need to think about.  Here is a checklist that you can use to make sure you are making good, sound trades. 

• The Risk-Reward Ratio is at least 1:2.  This means that  if you risk 50 pips on a trade, the realistic target is 100 pips.
• Look for areas of previous support and resistance.  Either horizontal, ema psychological areas or fibs.  When several of this converge in an area, price is even more likely to react.
• Look to trade with the trend.
• Look for the macd to support your trade idea.  There should be divergence.
• Look at stochastics to be in favour of you trade idea.  It should show that that pair is either overbought or oversold.
• Risk only 1% of your account.
• Trade with discipline and patience.  Make a plan to place a trade at a certain price based on the checklist above, and wait for the price to come to you. 

If you need assistance understanding or implementing the points above, then I would recommend you click on the "Start Here" tab.  The help there should point you in the right direction.  Alternatively, you can take some tutorials at babypips.com.  Best of luck with your trading.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

----------------------------------------------------

Currency Focus: Looking at the EUR/JPY

The 112.00/20 area is an attractive area to long the pair.  There is good support in that area and the pair looks to be successfully challenging resistance. The pair looks capable of reaching 1.1470/80, and we can expect the pair to struggle there.  The key is whether it can eventually blast through, opening the door to 120.00 and beyond.

With the pair respecting the 112.20 support area, I am going to long the pair at current market levels.  At the 1.145 area I will look at whether it's time to take some profit, hold the pair, or short it if it looks like the pair has lots all momentum. 

Please see my Trade Joural for current entry and exits.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

Have you caught yourself saying: "If only I had .... I would be a better trader"?

Let me know what that something is.  If I can provide it to you, or let you know

where you can get it, I would be more than happy to do that for you.
I want your success in forex to keep you coming back!

----------------------------------------------------

Currency Focus: Looking at the EUR/USD

There are a couple of takes on the USD that can be taken into consideration when analysing the EUR/USD. 

One take is that the consolidation that the pair has been experiencing is not yet over.  In that case, we can expect a bounce in the 1.3830 area and bring the pair back up to the 1.39, even 1.40 area, and then fall away yet again before experiencing several months of USD strength.  Alternatively, the consolidation could be complete and we can expect to see a prolonged period of USD strength sooner rather than later.

Either interpretation, we are looking at USD strength in the medium term, when it sorts itself out is another matter.

For now, I am going to trade what I see.  At the moment, the pair is very close to the 1.3830 support zone, so until it closes below, I like trading the bounce because I can keep my stops relatively tight.

You can check out the details of my trade by clicking on the "My Trade Journal" tab at the top.

Happy trading.

----------------------------------------------------

Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

Have you caught yourself saying: "If only I had .... I would be a better trader"?

Let me know what that something is.  If I can provide it to you, or let you know

where you can get it, I would be more than happy to do that for you.
I want your success in forex to keep you coming back!

----------------------------------------------------