Recognizing Patterns In Forex Trading Markets

In order to become a successful Forex trader it’s important to develop a pattern of recognition. The forex markets often display a specific pattern that repeats over time across assorted time scales. Forex traders can develop an expertise by acquiring the information around the patterns and then discovering how to recognize these patterns for what they are.

An analogy of a medical student who is learning how to diagnose a disease will explain this better. Every disease, for instance, pneumonia, is defined by a distinct set of symptoms. By running the right tests and making ethical observations of the patient in question, the medical student will collect all the information needed to recognize that the disease is indeed pneumonia. A medical student can never become an expert doctor until he has seen a number of patients, thus gaining practice in putting the pieces of the puzzle together rapidly and correctly.

The brightest illustration of gaining the trading expertise is through pattern recognition and the large literature on technical analysis. Many of the technical analysis books look like the books that are carried around by medical students. They attempt to combine market symptoms into identifiable patterns that are aimed to help the trader diagnose the market. Some of these patterns may be chart patterns, while others may be based on identifying cycles and configurations, and so on. Like the medical student turned doctor, each technical analyst must cultivate a level of expertise by recognizing the various markets and by learning how to identify the patterns.

Notice how the pattern recognition and research answers lead to very dissimilar approaches to the training of forex market traders. The traders tend to learn how to improve their trading by doing their research by learning how to use more sophisticated tools, collect more data, expose the best predictors, and so on.

However, from a pattern recognition advantage point, being successful at trading will not come from conducting more research. Instead, gaining the knowledge directly from the experts and through a great deal of practice will lead to the solid development of competence. The research viewpoint fundamentally treats trading as a type of science. Like scientists, we gain our knowledge by unveiling new observations and pattern recognition through a perspective that treats trading as a functioning activity. Expertise is gained through mentors and by constantly practicing the trades.

Today's Technical News

EUR/USD

There appears to be a bullish cross forming on the daily chart's Slow Stochastic, indicating that an upward correction is expected in the near future. However, almost all other oscillators are stuck in neutral territory, signaling that this pair may be less volatile than expected. Going long with tight stops might be the right strategy today.

GBP/USD

A bearish cross on the 4-hour chart is forming, signaling a potential price drop, while the Bollinger Bands are also tightening, pointing to an imminent volatile price movement. However, the daily chart's Slow Stochastic indicates a recent bullish cross, signaling a possible upward movement. In the short-term traders may expect a downward correction, but longer-term traders may want to maintain their long positions today.





USD/JPY

The price of this pair appears to be floating in the over-bought territory on the 4-hour chart's RSI and there appears to be an imminent bearish cross on the Slow Stochastic, indicating a downward correction may occur soon. The price also appears to be floating in the over-bought territory on the daily chart's RSI which also lends support to this notion. Going short might be the right choice today.

USD/CHF

The pair has been range-trading for a while now with no specific direction. The daily chart's Slow Stochastic is providing us with mixed signals, however it's Bollinger Bands are tightening, implying that a violent breach may take place. Until that will happen, 4 hour chart reflects quite a stable fluctuation within a flat channel thus providing traders a chance to make profits from buying on dips and selling on highs.

Four Reasons To Start In Forex Trading

Forex trading on the internet is without a doubt the quickest way to use your investment capital to its maximum. The foreign exchange markets offer certain advantages to the smaller and larger traders, thus making the foreign exchange currency trading more preferable than the other markets such as stocks, options and all of the traditional futures. Here are some of the top reasons why you will want to use the forex trading on the internet, in order to become a more successful forex market trader.

1. The foreign exchange market is the largest financial market on earth giving forex traders unlimited flexibility and liquidity. That’s over three times larger than the equity market and over five times larger than futures.

2. Forex trading can fit into anyone’s schedule because it is available on the internet 25 hours a day, 7 days a week. There is no waiting for markets to open; they are always open day in and day out. This flexible schedule makes the forex market extremely attractive to those professional and potential traders and investors.

3. Forex trading on the internet encompasses buying one currency while simultaneously selling another currency; therefore you have an equal opportunity to make a profit no matter what direction the currencies are heading. Another great advantage to consider is that there are currently only fourteen pairs of currencies to trade. Compare those fourteen currencies to the thousands of stocks, options and futures when you’re considering the pros and cons of delving into the trading game.

4. Investors and traders are flocking to the forex internet trading as a way to gain a higher leverage to their investments. Some brokers even offer margin ratios of 200/1 in open forex trading accounts. There are also those mini-forex accounts that can be opened for a minimum of $200, offering a margin of 0.5%, where $50 in trading capital will control a ten thousand unit currency position.

The forex prices are often predictable, allowing the currency prices to create trends that can be followed to allow the technically trained forex trader to be able to spot, and even take advantage of, the many entry and exit points. One of the best parts about forex trading on the internet is that there is no charges for commissions, any exchange fees or any other hidden fees. The forex market is a very easy market to research the countries and currencies involved. The only fees come from the forex brokers, who only make a very small percentage of what the bid/ask price is. Plus, there is no need to calculate any commissions or fees when completing a trade and your transactions are made a confirmed within seconds. Also because this is all done electronically, with no people involved, there is not much that can slow you down.