Yep i'm still here learning to trade. This week turned up an interesting video from a trading guru on youtube.
I have to warn you I was a bit shocked when i saw this, some of it is a tad controversial. It's nice to see someone who speaks their mind and gives good content in their vids.
Checkout the tips on supply lines and fib extensions. Useful observations for anyone learning to trade and watching the eur/usd.
Loz's official site is at http://dailytradingsystem.com if you want to check it out
09 February 2011
Measuring Volatility
Been looking at volatility today, specifically some indicators to measure it. Volatility in my ever so simple view is a measure of how much price is jumping up and down over the time i've set, be it days, months, hours, etc.. Depending on the scenario you're looking for, high volatility can be a good thing as price moves quickly in your favour or a bad thing if it reverses and slaps you in the face before you've had time to make a coffee. Personally i'm looking at breakout trading today, where price is about to "breakout" of a channel. This seems to involve volatility moving from a low point to a high and the indicators to watch.
So what can we use to get an idea of volatility? Here ya go.
Moving Averages
Let's chuck a 20 day simple moving average on a daily chart. As you look back over the last few weeks take note of the times price has clung to the moving average and the other times it's shot wildly above or below it. How do those swings up and down compare to the last few days? is price movement more or less volatile?
Bollinger Bands
Adding Bollinger Bands to your chart can give you a nice indicator of volatility. Look at the times when the top and bottom bands are close together. When the bands are contracted together like that price is less volatile. When the bands start to spread out, boosh! Along comes some volatility and some funky moves in price to match.
ATR (Average True Range)
Take a look at the blue line at the bottom of this chart. It's the ATR and gives us the average trading range over the time you specify. Usually the platform used will ask the period you wish to calculate the ATR over, e.g. on a daily chart and you set it to 20, then you'll get the average true range over the last 20 days.
On the example below we show the ATR over 10 days of the USDJPY pair, when the ATR is going down it's an indication that volatility is decreasing and when it goes up, well you can guess the rest.
So what can we use to get an idea of volatility? Here ya go.
Moving Averages
Let's chuck a 20 day simple moving average on a daily chart. As you look back over the last few weeks take note of the times price has clung to the moving average and the other times it's shot wildly above or below it. How do those swings up and down compare to the last few days? is price movement more or less volatile?
Bollinger Bands
Adding Bollinger Bands to your chart can give you a nice indicator of volatility. Look at the times when the top and bottom bands are close together. When the bands are contracted together like that price is less volatile. When the bands start to spread out, boosh! Along comes some volatility and some funky moves in price to match.
ATR (Average True Range)
Take a look at the blue line at the bottom of this chart. It's the ATR and gives us the average trading range over the time you specify. Usually the platform used will ask the period you wish to calculate the ATR over, e.g. on a daily chart and you set it to 20, then you'll get the average true range over the last 20 days.
On the example below we show the ATR over 10 days of the USDJPY pair, when the ATR is going down it's an indication that volatility is decreasing and when it goes up, well you can guess the rest.
06 February 2011
Bollinger Bandtastic
Here's a technique i've seen today to help identify good entry points and judge price action. Ideally this appears to be best applied in a ranging market and is another tool to be used in conjunction with other indicators. If you've never seen it before, then it's worth more investigation. Found in the majority of charting platforms have a look for the Bollinger Band indicator and add it to your chart. When asked for the standard deviation, set it to 2.
Here's a simple vid from Mike at informedtrades.com that gives you an insight.
If you prefer to learn from the man who invented Bollinger Bands then I suggest you pickup a copy of his book or visit his site at bollingeronbollingerbands.com. Have added this to my reading list. Johns contribution to technical analysis is globally renowned and his book has been translated into 8 different languages. Quite tempted to pickup his DVD seminar as well, but will see how I get on with the book first.
Here's a simple vid from Mike at informedtrades.com that gives you an insight.
If you prefer to learn from the man who invented Bollinger Bands then I suggest you pickup a copy of his book or visit his site at bollingeronbollingerbands.com. Have added this to my reading list. Johns contribution to technical analysis is globally renowned and his book has been translated into 8 different languages. Quite tempted to pickup his DVD seminar as well, but will see how I get on with the book first.
30 January 2011
Free market analysis videos
Having a twitter account is starting to turn up great info. Today, i found a site containing weekly market analysis videos. Now, while some may yawn at the prospect, i'm quite happy to spend 12 minutes being brought upto speed. Nice to hear an experienced traders thoughts. Gonna keep this one in my schedule for sunday nights from now on.
Todays video pointed out the monthly candles to watch as they close tomorrow and offered some words of caution in view of the heavy news week ahead. To top things off I got to see the charts with trendlines, triangles and a smattering of indicators, including opinions on important levels to watch.
Bookmarking alone wasn't enough, it's earned a blog post.
The site offering this info is www.forex-fxtrader.com and the forex analysis vids can be found here
Todays video pointed out the monthly candles to watch as they close tomorrow and offered some words of caution in view of the heavy news week ahead. To top things off I got to see the charts with trendlines, triangles and a smattering of indicators, including opinions on important levels to watch.
Bookmarking alone wasn't enough, it's earned a blog post.
The site offering this info is www.forex-fxtrader.com and the forex analysis vids can be found here
29 January 2011
Ask yourself is it trending or ranging?
As you look at the chart of a currency pair, do you consider if it's a trending or a ranging market yet? If not, then think of it simply as the difference between price making a steady move in one direction or bouncing up and down in a horizontal channel.
It does seem to be a pretty important tip and is echoed by many traders as I continue my learning curve. It appears that this is important criteria to bear in mind before applying a strategy, so I thought it's worth a mention.
As I zoom out into longer timeframes things get a bit more complicated but I did pickup a few tips from the video below. It shows the use of the ADX indicator to get things into perspective. Looks like it also helps give you an idea of upcoming trends and trend reversals. Pretty sweet eh? Also found some free trading courses and videos on the informedtrades.com website which I will be digging into.
It does seem to be a pretty important tip and is echoed by many traders as I continue my learning curve. It appears that this is important criteria to bear in mind before applying a strategy, so I thought it's worth a mention.
As I zoom out into longer timeframes things get a bit more complicated but I did pickup a few tips from the video below. It shows the use of the ADX indicator to get things into perspective. Looks like it also helps give you an idea of upcoming trends and trend reversals. Pretty sweet eh? Also found some free trading courses and videos on the informedtrades.com website which I will be digging into.
27 January 2011
Developing divergence awareness
Today's been all about divergences, specifically that of price action and the MACD not conforming to give an indication of a major move on the way. Whilst I appreciate that divergence alone isn't enough to make a reliable trading decision, i'm starting to notice it and the price moves that follow. A pretty darn sweet leading indicator. Now if only I could settle on the timeframe and those confirming indicators then perhaps I would be getting somewhere. Anyways, I'll keep learning and see what turns up.
Here's a great vid from Andy Skinner to show divergence in action. Although his emphasis is on stocks it's really worth a watch, especially take note if you're new to the subject like me.
Hadn't considered divergence of the histogram until I saw this video:
Here's a great vid from Andy Skinner to show divergence in action. Although his emphasis is on stocks it's really worth a watch, especially take note if you're new to the subject like me.
Hadn't considered divergence of the histogram until I saw this video:
26 January 2011
Dabbling in Elliott wave theory for the first time
Well today i've been getting to grips with the basics of Elliott wave theory over at the babypips school of pipsology. Here's the link where I started off embracing some new forex principles. I'd heard about Elliott wave theory but had no understanding of it beyond that it was something to do with 5 waves of price movement. It's still early days for me, but for many this is a popular trading methodology concerning price swings that can give high probability entry and exit points (or so the theory goes). 
I get the feeling it's essential to understand this subject in more depth and need to practice picking out the patterns still. Been a pretty heavy day of subjects from fractals to Fibonacci ratios, ABC corrections, flats, triangles and waves within waves, I can only hope some of it's sunk in. Further reading and practice is definitely required. The intention is to reach a point where I can spot the patterns that other traders have become so familiar with and factor them into my decision making process.
Here's some links if you're interested:
Link: Where I'm upto on the babypips site
Link: Info on Wikipedia about the same subject
Here's some links if you're interested:
Link: Where I'm upto on the babypips site
Link: Info on Wikipedia about the same subject
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