Forex Day Trading- Two Step Trend Analysis

If you approach forex day trading by just looking at the 5 minute and 15 minute charts there is a strong possibility your account will evaporate sooner rather than later.

In order to get a feel for the market and an indication of the current trend it is necessary to do an analysis by looking at multiple charts on different time frames starting with higher level charts first.

Rather than having the charts cluttered with numerous indicators and signals which can cause signal paralysis, I recommend just two:

1. MACD (with default settings)

2. 200 EMA (Exponential Moving Average)

Now examine your charts using a top down approach:

• Daily
• 4 Hour
• 1 Hour

As you check each chart take note of these two factors:

1. Has MACD crossed down or up and is it above or below the water line?
2. Is price above or below the 200 EMA?

While it is not crucial to have them all lined up on these three time frames for successful forex day trading, if you want to be a cautious trader and go for high probability trades then certainly MACD on the 4 hour chart and 1 hour chart should be in agreement as also should price in relation to the 200 EMA.

The daily chart can be useful in seeing the larger picture and for noting key levels of support and resistance. They stand out on a daily chart so if price is within 100 pips of a crucial level of support or resistance as seen on the daily chart, make a note of the figure.

Then scale down to the lower time frames and see if this level matches with other indicators such as pivot points or Fibonacci levels.

Once you have done this groundwork, NOW you can look at the 15 minute and 5 minute charts for a suitable entry point.

Remember, for successful Forex day trading you need to adhere to the No. 1 commandment: Buy The Dips and Sell the Rallies!

So avoid chasing the market and going with the flow. Instead, wait for price to come the level you want, set your entry order, and let price pull you into the trade.

The Danger With Lower Time Frames

Just concentrating on the 15 minute and 5 minute charts will not give you the bigger picture. You could see what looks like a perfectly good trade and set your stops and limits only to find you get blown out within a few minutes.

By looking at the higher time frame you would probably have seen you were close to a key support or resistance level and either not gone into the trade or adjusted your stops and limits accordingly.

For the novice, Forex day trading can involve a huge learning curve. Include this simple daily top down analysis approach to your trading and protect yourself against making trades you wish you didn't!

Click here to learn how to use the 200 EMA in a simple yet powerful way:

http://www.vitalstop.com/Forex/Advisor/200EMA-forex-strategy.htm

For a free candle & chart pattern recognition reference tool click here:

http://www.vitalstop.com/Forex/Candle-Chart-Patterns

For the best free economic calendars plus a free pivot point calculator and Fibonacci calculator click here:

http://www.vitalstop.com/Forex/tools.html

Reuters - U.S. mortgage rates jumped to their highest levels since December in the latest week, complicating government efforts to bring mortgage rates down to levels that will spur demand and help the hard-hit housing market begin to recover.

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Currency Trading Charts - Traders Advice

Currency trading charts display the current and previous exchange rate for each currency. The real trick is knowing when to make an educated decisions on when to close a transaction in the foreign exchange market.

New technology has led to currency trading 'robots', which process all the vital information within the foreign exchange market. Detailed figures are stored and displayed as a currency trading chart. The 'robots' make mathematical predictions on any changes in the market.

Recently, software advancements allow these programs to enter and exit deals, with complete automation. Now you can trade currency while you sleep. With a simple PC and an internet connection, you can setup a business that requires very little maintenance.

Any software that produces accurate trading charts and predictions can be a vital resource for any home currency trading business. It's not going to be perfect for everyone; many professional traders do not rely completely on software 'robots', but it can be a large part of their organization.

Are you not completely confident in trading currency yet? Neither was I when I first started as a trader. If you're a beginner you can get a real benefit from currency trading software. Demo trade accounts allow you to trade with 'fake' money, as if it was your own personal investment.

When those figures start to rise, your confidence starts to build, a real campaign might now be an option. The majority of forex software is covered with a 60-day guarantee, this home business strategy is low risk and now possible for absolutely anyone.

Look how millionaires use forex software to run a business with low maintenance - Click Here!

Reuters - The Dow Jones and S&P 500 indexes ended lower on Monday as uncertainty about the Obama administration's plan to stem bank losses hit financial shares and a bleak outlook by Macy's fueled worries the U.S. recession is worsening.

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