FOREX TRADING 101: Forex Trading Signals - Building Profits

The Forex market is the place where currencies are traded (currencies are money that is used as an exchange medium). In other words, it is the place where currencies are being sold and bought. In the Forex market all currencies are traded in real time.

Trading with currencies always means that there are two simultaneous transactions taking place. If a currency is being bought, it is also being sold. To better understand this notion, think of currencies as both the goods you are buying AND the method with which you're paying for the goods.

Since the Forex market is the place where currencies are traded in real time, people may trade one currency for another and make a profit off of this transaction. Profits are made when one is able to determine which currency's value will increase by the end of a pre-determined time period (such time periods may be short or long). The Forex market is open 24 hours a day, five days a week and it is based in four major cities: New York, London, Sydney, and Tokyo. The Forex market is open to individuals over the age of eighteen.

While Forex trading may sound daunting, it really isn't. It can be easily comprehended and understood without prior experience in finance or economy. It is challenging and exciting, thought provoking and manageable, stimulating and filled with opportunities.

Here is the Basic Forex Glossary:

The ask price (right quote display) is the price at which traders can buy the base currency. If you think that the EUR value will increase then you can choose to buy it for USD at the price displayed in the ask quote.

Dealer slang for the AUD/USD currency pair.

The base currency is the first currency listed in any currency pair. Its value is determined against the counter currency’s value. For example, if the rate of the EUR/USD pair is 1.3525, then the EUR is the base currency and it is worth 1.3525 USD.

A Bear market is a pessimistic market with declining prices.

The bid price (left quote display) is the price at which traders can sell the base currency. If you think that the EUR value will decrease then you can choose to sell it for USD at the price displayed in the bid quote.

A Bull market is an optimistic market with rising prices.

Also known as Sterling. Dealer slang for the GPB/USD currency pair.

The counter currency is the second currency in any currency pair. Its value is determined against the base currency’s value. For example, in the following currency pair EUR/USD, the counter currency is USD.

A price quote consisting of any currency quoted against a currency that is not the USD. The quote is made up of the individual exchange rates of the two currencies against the USD.

The two currencies that the exchange rate is comprised of. One of the currencies is bought, and the other is sold at the same time.

The practice of opening and closing positions within the same trading day, so that at the end of the day the trader has no open positions.

The Fed is short for Federal Reserve, which is the central banking system of the United States. The Fed issues announcements regarding U.S. monetary policy which can have significant effect on the Forex market.

Forex, or FX, stands for Foreign Exchange. Forex is the simultaneous buying of one currency and selling of another. Since you purchase money with money, there are two transactions (buying and selling) happening at the same time.

This type of analysis focuses on the macroeconomic factors that influence the value of a country’s currency. Traders open positions based on how they think changes in these factors are bound to affect different economies.

The practice of opening several positions at once where one position minimizes the risk of another position.

Dealer slang for the NZD/USD currency pair.

Leverage is a loan from your broker, which enables you to trade with a small amount of capital. It can increase your potential profit, but it can also increase your risk.

Going long means opening a position in which the trader buys currency in hopes that this currency’s value will increase (buy low, sell high).

Dealer slang for the USD/CAD (US Dollar - Canadian Dollar) currency pair.  Canadian Forex trading is growing.

The standard unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units. eToro’s standard trade volume is the mini lot.

The minimal cash deposit that you have to put up for the transaction. Trading forex on margin increases your buying power, but it can also increase your loss.

Pip is the smallest price increment in the last digit in the rate – usually the fourth digit after the decimal point (apart from the USD/JPY).

A consistent movement of currency prices in a certain direction. Traders try to spot trends in order to capitalize on their potential.

Rate or quote, is the price of one currency in terms of another.

The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle.

Going short means opening a position in which the trader sells currency in hopes that this currency’s value will decrease (sell high, buy low).

The spread is the difference between the bid price and the ask price.

A trade order which automatically closes an open position at a specific price in order to prevent losses in case the market moves against your position.

Dealer slang for the USD/CHF currency pair.

A trade order which automatically closes an open position at a specific price realizing a specific amount of profit. Use this order to realize your gains.

This type of analysis focuses on chart patterns of currency movements. It assumes that a currency’s future movements can be predicted by looking at past behavior.

Your current potential account balance that can be realized by closing all your open trades. For example, if your actual account balance is $525 and you have an open trade for $50 with a $25 profit, your virtual account balance will show $600.

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Through it all, trading on Forex has offered hope. Hope of small
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>>> Forex Trading: Basic Concepts for Beginning.

Are you consdering getting started with Currency trading? It's actually not as complicated as it looks. If you can understand a price chart you've got half the battle won. In currency trading you can be profitable whether the market goes up or down. You can even gain if it's moving sideways.

The fx market is the biggest on the earth, dwarfing all US stock markets combined. Total volume of forex trading now comes near $4 trillion a day. The forex is a de-centralized, over-the-counter market like the NASDAQ. It lacks a central place where trading takes place as the NYSE does.

The high volume makes the forex market the most liquid on earth. This is why trades can be executed so quickly. For every purchaser it's easy to find a seller. For each trader looking to sell a buyer is readily available. This market is open around the clock from Sunday evening (if you live in North America) non-stop through til Friday afternoon...about 5½ days a week.

Beforehand forex trading was only to be had by banks and other large financial institutions. Nonetheless due to the proliferation of the internet -and consequent advances in information technology- in recent years an vigorous 'retail' market has emerged where smaller companies and individuals currently have access to the forex marketplace.

A unique feature of forex trading is the leverage. This is the quantity of money you must put up to control a related amount of currency. When trading stocks you can trade "on margin" where you borrow funds from your broker to purchase stocks. This can give you leverage of 2:1. In forex the standard is 100:1. Some brokers offer leverage as high as 400:1. This can be a mixed blessinig. Yes, it can dramatically boost your profits; it can also magnify your losses also. The Commodity Futures Trading Commission (CFTC) is now (spring 2010) thinking of a new rule that would cut leverage in the forex market to 10:1.

Understanding these, and other principles, of the forex market is why it's crucial to have solid preparation and some know-how before trading the forex market with real capital. High-quality forex instruction is readily to be had from nearly any broker. You can also find paid training from numerous resources on the internet. Once you have the basics mastered you should open a "paper trading "or demo account offered by most brokers. This will give you experience in what actual trading is like. Paper trade until you're both comfortable and profitable. Only then shift into trading with real money.

To begin paper trading you'll have to choose a broker and become familiar with the trading platform they offer. One platform, used by in excess of 200 brokersis known as Meta Trader 4 - MT4. This platform is simple to learn and has loads of indicators accessible. This is why MT4 is a good choice for lots of traders. Learn the essentials of chart reading and how to understand different price patterns on the chart. This craft is called Technical Analysis. There are tomes of material written on this subject matter.

Each Forex chart is unique although they present the same price patterns. For instance, on the daily forex chart, you can evaluate market trends in the past 24 hours to help you make decisions on the upcoming 24 hours of trading. On the hourly chart, you can identify trends within the day. And, on the 15 minute chart, you get a picture of the recent short-termaction. Using the 5 minute chart gets you closer to the action and is used for very short term trading including scalping.

These are the basics on how to trade the forex market. Always take into account that apart from the earning capability that is accessible in the Forex market, there are also sizeable downside risks that you have to be aware of. You need to plan your trades and trade your plan. Set rules and guidelines for yourself and then follow them. Discipline is key. The psychology of trading is a matter unto itself that we will tackle in an additional commentary.

>>> Forex Options Trading: How to Get Started. 

Forex Options

Options exist on numerous financial assets: stocks, commodities as well as foreign currency pairs.

There are some characteristics that are common to all options. An option is a contract between a buyer and a seller. The buyer has the right -but not the obligation-, to buy -or sell- the underlying asset at a specific price on or before a certain date. An option to buy is a call option; an option to sell is a put option. In exchange for this option the seller is paid a premium. The price to buy or sell specified in the contract is called the strike price. The date on which the option expires is called expiry. All options generally decline in value as the expiry approaches - this is called decay.

Let's take an example in the Forex market: You expect the exchange rate of the EUR/USD to rise. You buy a call option on the EUR/USD pair with a strike price of 1.3500 and an expiry of June 1st. Let's further assume it's now mid-March and you've got roughly ten weeks before your call option expires. At any time up until the expiration date, you can exercise your option and buy from the seller the specified number of lots of EUR/USD for 1.3500.

If the price of the EUR/USD pair remains below the 1.3500 level, the call option is said to be out-of-the-money and is worthless to you. Most options do expire worthless which means the buyer gets nothing and the seller keeps the premium and goes on to sell -or write- more options.

However, if the exchange rate of the EUR/USD pair exceeds 1.3500 the call option is said to be in-the-money and is now valuable to the buyer. Let's say the exchange rate rises to 1.3650. This puts the call option in-the-money by 150 pips or $1,500 for one standard lot. At this point you, the buyer, have two choices: you can sell the option to another trader and realize a profit; or you can exercise the option and buy the specified number of lots of EUR/USD from the seller at 1.3500 yielding the $1,500 per lot gain. Either way you profit.

Not all options that are out-of-the-money remain worthless to the buyer. Let's say you bought a deep out-of-the-money call option. Let's assume the current exchange rate on our EUR/USD pair is 1.3500. You buy a call option with a strike price of 1.4000. At this point the EUR/USD has to rise 500 pips before your call option is in-the-money. However, it doesn't. It only rises 400 pips to 1.3900 and remains out-of-the-money. The value of your call option will increase because the strike price is now closer than when you bought it. This appreciation may be somewhat offset by decay as the expiry approaches. Because the value of the option has increased you can sell it to another trader before the expiry for a profit...even though it's still out-of-the-money.

Why do traders like options? Two main reasons: Option buyers lose no more than the premium they paid if the option expires worthless. Their loss is limited to the amount of premium they paid to buy the option. Traders can limit their downside risk this way. Secondly, traders use options to hedge their other positions in the forex market. Some brokers will no longer allow traders to take opposite positions in one currency. You can't be both long and short at the same time. Say you were short the EUR/USD in the forex market....that means you expected the exchange rate of the pair to drop. You could buy a EUR/USD call option to hedge your position. In the event the pair goes south, your position gains, you earn a profit and your option expires. But if it goes north the market has moved against you. Your forex position is now losing. However, your call option is gaining value. This increase in the value of your call option can offset the loss you're incurring from your short trade in the forex market. Options can be a good hedge.

The limited liability aspect does not apply to the seller of an option. Selling options is also known as writing options. The seller is promising to deliver the underlying asset, whether it's a stock, a bushel of wheat, or a currency pair at a specific price up until the option expires. If the seller writes a call option on the EUR/USD with a strike price of 1.3500 and the exchange rate of the EUR/USD soars to 1.6000 the call option is then deep in-the-money. And the seller is in deep trouble because he has to deliver the underlying asset at a much lower price to the owner of the call option. When the seller does not own the underlying asset -he doesn't have it to deliver- that is called writing naked options....and exposes the option seller to great risk if the option is exercised. Sellers are gambling that the underlying asset will not reach the strike price and the option will expire worthless...as most do.

>>> Forex Trading: Using the RSI and Stochastics.

The Relative Strength Index (RSI) and the Stochastics oscillator are two of the most commonly used indicators on any trading chart. These two popular tools can be combined with a pair of Moving Averages to provide a simple, yet effective system for identifying profitable trades.

In this article we'll explore a Forex Trading Strategy using the RSI and the Stochastic oscillator combined with two Exponential Moving Averages (EMA). While not terribly complicated these indicators, when combined, put the odds of a profitable forex trade heavily in favor of the trader.

We know the RSI is a momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. The RSI crosses over a 50% line indicating a positive or negative bias. A reading above 70 is reaching overbought; while a reading below 30 is approaching oversold. Standard setting for the RSI is 14.

The Stochastic oscillator is a familiar old friend to all technical traders. It is a technical momentum indicator that compares a security's closing price to its price range over a given time period. The oscillator's sensitivity to market movements can be reduced by adjusting the time period or by taking a moving average of the result. It has a reading of 0 to 100. A reading under 20 is thought to be oversold; while a reading over 80 is considered overbought. Standard setting for the Stochastics oscillator is 14,3,3.

Now, let's combine these two indicators with two Exponential Moving Averages (EMAs). An EMA differs from a Simple Moving Average in that greater weight is given to the more recent data when calculating the average and hence is considered a more accurate, more timely indicator. When all these are pointing in the same direction, we have a set-up for a trade where the odds are heavily in the trader's favor.

This is a little tricky to explain without the benefit of graphics. If you're familiar with how these indicators work, it should be manageable.

The rules for entering a trade are:

1) the 5 EMA has to cross over the 10 EMA;

2) the RSI has to cross above or below the 50% line;

3) the Stochastics need to cross up or down as well, but not exceed the 20 or 80 levels. All three need to take place, all at the same time and all pointing in the same direction. It's also a good idea to check the higher timeframes, H4 and D1, to see that you're trading in the direction of the overall trend.

When you have your indicators line up like this...it's a pretty good indication that you're safe entering the trade. You could stagger your take profit levels as some signal providers I've seen recommend. Take one-third at 10 pips, another third at 20 or 25 pips and let the final third run with a trailing stop loss. 

>>> Forex Auto Trading: Automated Forex Trading Systems. 

There are not less than three distinctive ways to put your forex trading on autopilot.

Forex auto trading systems now existing can trade your account with minimal human involvement. You can participate in the forex market with one of these forex online trading systems.

Forex auto trading can be executed in a couple of various ways. First, you can purchase and set up a trading robot, also known as an Expert Advisor or EA. These tiny items of software generally cost, although some are offered without charge. Generally you'll set some variables in the software and it goes off and begins trading. A very well-liked recent EA is FAP (Forex Auto Pilot) Turbo. I've used this one for myself with assorted results. These EAs perform better with some brokers than others. You won't obtain the same results with all brokers...so selecting a broker is part of the process for profitability in using Expert Advisors. One point with this approach is that you have to leave your computer running always while the market is open. You can circumvent this limitation by using a VPS...Virtual Private Server. At this point you rent some space on a server, upload your trading platform (some come with it pre-installed) then you're able to access it from any computer on the net...very similar to web-based email. For lots of traders this is the best forex trading system.

A different way of implementing auto forex trading is to purchase accurate forex signals on a monthly basis. You can either execute them yourself (which lessens the automated characteristic) or you can get some software program from the signal provider that makes it possible for your computer to accept the signals and trade your account without human intervention in accordance with the signals it receives. This makes it entirely hands-off. Here again you will need to keep you computer on non-stop or get a VPS. There are tons of signal companies that work this way - many of them with good track records.

Finally, plenty of brokers and other firms have portfolios of traders to choose from. You can select any one or any number of these portfolios and allocate some or all of your investment funds into the portfolios you select. This is akin to buying mutual funds. You settle on the selection of funds you want to invest in, then you put your funds into them, and someone else trades them on your behalf. This does not entail use of your own computer other than to check on the performance from time to time...but no trading happens on your computer unlike the other two methods. There are a variety of these kind of investment opportunities.

These are the three key approaches you can apply an automatic forex trading system without making day-to-day or hour-to-hour decisions yourself about which currency pairs to trade. Either you set up a robot that trades your account in keeping with its programming. Or you profit from the expertise of skilled forex traders. Their trading judgements are despatched to you via email, instant message or text message - or on the other hand despatched to your computer automatically. You then have the option of entering the trades manually or having them executed automatically. Or you invest your assets into a managed portfolio of accounts where trading decisions are made on your behalf. Any of these methods will save you the time, effort and potential blunders of trading your account yourself. We discuss all of these strategies on our site.

>>> Forex brokers: Choosing one that meets your needs. 

Foreign currency trading companies have become plentiful since the great increase in retail foreign exchange trading. There are now dozens to choose from, both in the US and overseas. What features should you consider when deciding on a broker to trade forex ?

First, look at the spreads on major currencies - and the ones you're likely to trade. These spreads need to be competitive. Bear in mind, the spread is the difference between the buying and selling price, the bid and the ask. This is where FX trading companies earn their profits, not on commissions as stock brokers charge. On a common pair such as the EUR/USD you shouldn't have a spread greater than 2 pips. Some brokers, in an effort to slice it even closer, are offering fractional pips such as 1.8 - or they'll say "as low as 1 pip". Critical to remember: spreads will always grow in times of high volatility such as the publication of a major news announcement.

Second, check to see if the brokerage utilizes a dealing desk. There are a few benefits to using a company that does not utilize a dealing desk: there is no conflict of interest - brokers do not trade against their customers; every trader is offered equal access to the interbank market; trading is completed anonymously - your broker remains ignorant of your positions, your stops or your profit targets. Non-dealing-desk brokers are typically thought to be fairer towards their customers.

Third, are your orders executed rapidly and at the rates you spell out? If you place a stop loss is it honored? I've seen some trading companies say, "Your stop didn't take you out because the market was moving too quickly"... This is something you don't want.

Fourth, see if their customer service is satisfactory. When you call can you speak with a person without delay? Are you on hold without end? Do you have to go through a bunch of programmed menu choices? Is their staff able to respond to your questions competently?

Fifth, open a demonstration account and trade. Do you like the platform? Do they offer the one you desire? Is there good training and education presented? What other services are offered - market analysis, indicators, trading alerts, forums, live trading rooms.

Lastly, do a broad Google search. What is the history of the brokerage? Look into a couple of forums...just about all will have discussions of trading companies. How do other traders feel about the one you're looking at?

Choosing the right broker can be crucial to your trading profitability. It's a good idea to check around and evaluate what each offers. There are lots of internet sites that offer side-by-side comparisons. Use paper trading accounts to see how they truly work. You may not locate one that meets all your desired features, but many do a good job of providing dependable service to the forex trader.

>>> Forex Trading: Can You Successfully Trade the News? 

If you've traded the foreign exchange market for any period of time you know that news announcements are one of the primary movers in the market. Because the market is open for trading 5 days a week there is always some news announcement coming out. Which currencies are most affected? Which news releases tend to impact the market the most?

Traders should keep an eye on the main currencies: USD, EUR, GBP, JPY, CHF, CAD, AUD and NZD. On an average trading day there will be at the very least 5 or 6 items of news made public that impact these currencies. So there is ample chance for a trader looking to make the most news announcements.

How can you keep an eye on news releases? Two good internet sites that I'm aware of are: Forex Factory and Daily FX. Each of these sites offers some important information: what the news bulletin is; when it's released; what currency is impacted; if it's expected to have low, medium or high impact; and what the anticipated number is.

The market always expects a number, based on estimates. It's an amount agreed on by economists. Then there's frequently another figure that's talked about by market pros and insiders. If the real number, when out, is near the expected number you could see only a small effect. If it varies, and varies appreciably, you can see a shock hit the market that moves the price significantly and very quickly.

What are some of the most important news releases? The one that has the greatest affect on currency pairs that include the US dollar is the Non-Farm Employment number that is made public the first Friday of the month. If the first Friday is also the first day of the month, then it's announced the second Friday.

Further critical releases include interest rate decisions by the Federal Open Market Committe (FOMC) of the Federal Reserve Bank. They meet eight times annually, approximately every six weeks. Significant announcements that affect the market also include: retail sales; inflation (as measured by the Consumer Price Index and the Producer Price Index); the trade balance; industrial production and surveys of consumers, business and manufacturers.

Can you profit with news releases? Currencies will often trade in a range before a news release. One approach could be to position pending orders above and below the trading range anticipating a break out. Currency pairs frequently move far and fast right after the statement, so don't try to place trades right after the announcement. Also remember that in times of higher volatility many brokers will boost spreads.

A trader can also use options to trade the market when a significant short term move is anticipated as a result of a news statement. These come in a couple different varieties: a one-touch option has simply one level that has to be met before it pays; a double one-touch has two levels, either needs to be hit to win; and a double no-touch where neither level can be hit before it pays. Make sure you totally comprehend the technicalities of these before buying.

It's a good idea to paper trade some of the major news announcements to get a feel for how the market, and your individual currency pair, are impacted by different economic news announcements. Get familiar with the sites Forex Factory or Daily FX. Get a feel for which news announcements have what impact on the market. Due to the swift and major moves that news releases produce, trading the news can be very tricky business.

>>> Forex Profits: Two Simple Indicators Anyone Can Use to Improve Trading. 

While conducting research for my website I came across a source of indicators for the MT4 platform. This one source offers over a thousand different indicators you can download for free and use on the Meta Trader 4 trading platform. I was originally looking to track down some information on forex trading schools and forex option trading...which I found...and in the process came across this goldmine of chart indicators. You can access all of these - for free - by visiting our site. Using the two indicators we discuss here you can develop your forex custom trading software. It's not exactly auto forex trading, because it requires some regular attention from the trader, albeit just a small amount of time, but this is not a set-and-forget forex trading system. I trade this on the daily -D1- timeframe and spend less than five minutes a day updating my trades.

The first indicator is called the Non-Lagging Adaptive Moving Average. An Adaptive Moving Average, or AMA, differs from other types of moving averages in that the AMA changes its sensitivity to price fluctuations. The Adaptive Moving Average becomes more sensitive during periods when the price is moving up or down significantly - that is to say when price is trending...and it is less sensitive when price is choppy. This means it's an excellent tool for identifying trends. You will find that the line produced by the AMA is 'smoothed' compared to that produced by an exponential moving average (EMA) until a strong trend develops. At this point the AMA overtakes the EMA in moving in the direction of the trend.

Now the great feature about the AMA that we offer through our site is that it can change color as the trends change...up or down. This capability makes it almost idiot-proof and enables the trader to very easily identify a trend. The default settings are red for down and blue for up. I prefer green for up just because that's how I set up my charts. You will also see short periods of yellow when markets are flat or trading within a range. These often disappear later on when price movement is re-assessed. What we end up with is a line the turns green when the market is trending up and red when the market is trending down. Quite simple, isn't it?

I then combined this Non-Lagging AMA with another indicator called the Beginners Alert. This alert is a series of dots. Again, default is blue and red that I changed to green and red. This one also has an optional audio alert that can sound through your computer speakers when a dot appears. You can also change the size of the dots if the smaller ones are hard to see - although I've noticed this change does not save when you close the chart screen - even if you have saved the settings in a chart template.

How it works is when prices make a peak and recede a green dot appears. Conversely, when price hits a bottom and reverses a red dot appears. The way I trade this combination is by looking first to the color of the line. If it's green, I then look for a red dot nearby. If both these conditions are met then it tells me two things: the market is trending up; and it's made a bottom and is reversing. This is when I enter long. I stay long until the next red dot appears. On the other hand, if the line is red I know the market is trending down. I look for a nearby green dot indicating a peak in prices. This is when I enter short...and stay in until the next green dot appears. Remember to trade in the direction of the overall trend. If the longer term trend is down, I do not take long trades as they tend to be brief and weak. We offer an exhaustive discussion of how these two indicators work in concert and how to trade this system on our website under Tools and Indicators/Indicators for the MT4. We also show you WHERE to obtain these two indicators absolutely free of charge.

>>> Forex Trading Signals: A Shortcut to Profits? 

A quick Google search on "forex trading signals" returns over 2 million responses. How are we ever to sort through all that? Sure, the idea of taking your cue from an expert trader sounds good - in theory. But how does it really work out in practice? And what about those 'free' signal providers - are they any good? How about those services that claim to automate the trading process by using their signals?

There is a lot to consider. Some of the larger forex brokers offer signals. Nearly all offer some kind of market analysis, at least from a technical perspective if not both fundamental and technical. Signals offered by brokers are, for the most part, free. There are also a number of non-broker providers of free signals. You can subscribe to get them in your email every day. You place the trades -often pending orders- with stops and profit targets. This is often an ancillary service to their main product...but still valuable nevertheless. You should try paper trading some of these and see how they work out. I've found a few pretty good ones.

There is another variety, however, that is really intriguing to me. With this kind you pay for the signals. They offer an optional piece of software you download onto your MT4 and that provides the capability for the trading platform to automatically receive and execute the signals issued by the provider. This is where it gets really interesting. You have the option to modify the signals parameters...for example how many lots you want to trade. Or you can choose to have the signals execute automatically...often you can specify in the set up how many lots you want traded and other variables, others not.

One thing to keep in mind here is that you'll need to keep your computer on nearly all the time with this type of arrangement. Hence the need for a VPS system. A Virtual Private Server is an arrangement where you load your MT4 trading platform onto someone else's server and it's up and running 24/7 with roughly 99% reliability. This completely eliminates the need to worry about keeping your computer on...is there going to be a power interruption...what if your battery back-up system doesn't work right...any number of things could go wrong. When you've got money riding on the trade you probably don't want to take that chance. This service starts at $35 a month - for a good one.

We've looked at a number of paid signal providers, most of whom offer the automatic execution option. Check out our site - particularly the Tools & Indicators/Forex Trading Signals section. We also have a page devoted specifically to Buying Forex Signals accessible from the homepage. We cover free and paid signals - - a couple have turned in really impressive returns of late. You'll find many of these sites offer a choice of several "portfolios" from which you can choose or mix and match. The best portfolio from one of our favorites earned 6,500 pips just last week and averages 6,800 pips weekly. Now some of these have not been in business for years and years...in fact some of the track records are pretty short. But if you could achieve anything close to these kinds of results - would it at least be worth a look? I think probably so.

Our goal is just to bring together in one place the useful information traders want and need to increase their profits: signals, chart indicators, trading ideas and set-ups even sources of automated trading systems...a topic for an up-coming article

>>> Currency Trading: When do trends begin?  

As a forex trader you probably have your preferred pair, or pairs, that you trade frequently. After trading a while you appreciate that currency pairs have a tendency to take on something of a personality. You likewise begin to get a feel for how they act in response to specific news announcements. In this commentary we'll make clear the features of a particular forex currency market article - and then inform you where you can acquire your own copy totally at no cost.

Do you believe it would be advantageous to know at what time trends in your currency are likely to start? What if you were able, determined by years of statistics, to discern what days of the week are optimal to trade in your specific currency pair? This could amount to forex secret trading because you have an advantage by knowing when these developments are probably to take place. Studies have revealed what the most active trading day for a currency, and the best hours within that day to trade - including what are the most active trading hours within that day.

This information does not tell you HOW to trade forex, but rather WHEN to be able to make best use of your potential for a profitable trade. We provide you with some guidelines as to how far the price is likely to go through this trend, how much of that move you can logically expect to capture, and ultimately how long the trend is likely to last.

Let's start with the GBP/USD. Trading the four-hour (H4) bars reports show 31% of trends initiate on Thursday. Why use the H4 you ask? H4 offers the benefits of intra-day trading without having to be glued to your laptop all day. Also, it filters out much of the "clatter" of the lesser timeframes.

And what are the optimal hours to trade within those days? Records shows that between 1 and 9 am eastern time is the best, the most active. This should come as no great surprise because this period includes much of the time that the London market is operating. Hour of greatest activity, where trends are most likely to begin is 5 am eastern...which is 10 am in London.

Remember London is habitually five hours ahead of eastern time in the US. There is a short time in spring and fall when the difference is four hours...and this is because Britain and the European continent do not go on and off Daylight Savings Time on the exact same day the United States does.

Consequently now we see the very best day and time to trade the GBP/USD is Thursday during the 5 am eastern hour.

Now, how long can we suppose a trend to last? Again, with the four-hour bars we discover that 48% of the time the trend lasts between 6 and 11 bars. Six H4 bars equals a full day - 24 hours. 11 of those bars equals 44 hours, nearly two complete days.

To finish, how much of a move can we anticipate that trend to make and how much of it can we logically expect to seize? In our GBP/USD example Thursday is yet again the winner showing that the average pip gain is 147 of which we can anticipate to capture around 85% or 125 pips.

Equipped with this data, do you suppose it would enhance the odds of your currency system forex trading? While not an precise forex currency market report, this information will help put the odds on your side.

>>>Average Directional Index (ADX): Can it be used to trade Forex profitably? 

As technical indicators go, the ADX often gets lost in the weeds compared to the more popular MACD, RSI and Stochastics. However, if used properly the ADX can be a big help in trading the Forex profitably. The Average Directional Index was developed by Welles Wilder, a prolific researcher and writer on the financial markets. Investopedia describes the ADX as an indicator that is "used to determine when price is trending strongly". There are three components to the ADX: the DI+ line tells us when there is a positive, upward trend prevalent in a given market; conversely the DI- line tells us when there is a negative, downward trend.

The last component is the ADX line itself which tells us the strength of the trend. I like to make the DI+ green and the DI- red...since on my charts green bars show upward moves and red bars show downward moves.

The ADX is used like this: when the green (DI+) line crosses above the red (DI-) line, then a positive, upward trend is gaining dominance in the market and you can expect prices to rise. When red crosses above green, just the opposite happens, a negative/downward trend is coming into play. Now, if the ADX line is rising as well, that tells you the strength of that move is increasing.

If the ADX registers a reading of 20 or below, we say there is no trend in place. A reading between 20 and 25 suggests a weak trend. When the ADX is above 25 a strong trend -up or down- is present. Remember, the ADX doesn't tell which way the market is moving, only the strength of the trend. Look to see whether the green or red line is on top to get the direction. That's it in a nutshell. There are other considerations such as which time frame is best to use...which currency works best with this, what are the optimal settings, what are the best times to trade...and more. Do you need to keep your eye on the chart all day?

>>> Forex Trading: ADX Method Showing Results.

We are pioneering a method of trading the Forex using the Average Directional Index (ADX). We are beginning to see some results. Starting with an initial investment of $5,000 in early April we're up 60% to $8,000 thus far - just four trading sessions later. I detailed in an earlier article the basics of the ADX. It's a trend identification indicator...and it tells the strength of that trend as well. It's not science, not an art...more of a craft. There are some variables: which currency to trade, what hours of the day to trade, which timeframe to trade, which settings to use, where to set profit targets and so on. This approach does take a modicum of time and attention from the trader. It is not a set-and-forget system as the many purveyors of the latest and greatest Expert Advisor claim their system offers. I have yet to see an EA that does not eventually fail. It is far better to spend a few hours a days focusing on your trading than depend on a robot to handle the whole matter for you.

Of all the currencies, the Euro is the most liquid - although liquidity is hardly a problem in a market with a daily trading volume of nearly $4 trillion, according to the Bank of International Settlements. The London market accounts for roughly 36% of global currency trading, New York 16% and Tokyo about 6%. Another chunk is traded in derivatives such as futures contracts. Among the banks Deutsche Bank is the king with almost 22% of the market, then Swiss UBS with nearly 16%. In addition to these the top ten are rounded out by three British banks and five US banks.

The most active hours for the Euro are when the London and New York markets are both open. Normally London is five hours ahead of New York, and the European continent (France, Germany) is six hours ahead of NYC. However, Europe does not go onto and off of Daylight Savings Time at the exact same time that the US does...so there is a short period when the time difference between London and NYC is only four hours. In any event, you are safe to assume that from roughly 8 am eastern time to about noon eastern time (US) will be the period when the Euro is being traded in both London and New York...and hence see the most active trading. There have also been studies done to pinpoint what day of the week trends most often begin.

>>> FAP Turbo: Is there an Achilles heel?  

I was one of the first to jump aboard the FAP Turbo bandwagon. There were a lot of things I liked about it: there were independent review sites available that provided weekly performance updates; the documentation was comprehensive yet understandable by someone who was not a computer whiz; you could get the system up and running in less than an hour, if that. In fact, my main challenge was finding a broker who had spreads small enough to allow the system to trade every day. Since starting with FAP Turbo I'm now on my fourth broker. Some have started to go to five-digit quotes which they claim will reduce spreads. One thing to look for is a US-based customer service center. One broker I tried was located in the Baltic Republics with a customer service number in Switzerland - not exactly user friendly.

I was impressed, initially, with the performance. Small, steady gains...it all seemed to go along with the advertising...forex profits on auto-pilot. I found a good site that recommends specific settings...not too hard to figure out. Even though I'm thoroughly versed in MT4 and have used zillions of Expert Advisors...this one seemed pretty good. I have found that it tends to trade from the late afternoon to the early evening hours Rocky Mountain time in the US. The literature says it's geared to trade during quiet periods of the day...hours of low volatility...and strive for just a few pips profit on each trade. Makes sense to me.

The nightmare scenario for any trader is to get upside down in a trade. You go short and the market takes off north. As you see those green bars climb you watch the losses mount before your eyes. I know I've been there. Of course, we should all use a stop loss...that's the only sane thing to do...and a take profit target as well. Watching FAP Turbo perform for a period of several weeks I noticed one significant weakness. After a week or two of small steady gains, those profits are washed away by a tsunami-sized loss. FAP Turbo gets upside down in a trade and losses your shirt, wiping out all the profits you've not worked too hard to accumulate in one fell swoop. Then your balance is down below what you opened the account with. I've seen this happen over and over. You can reduce the Lot Risk Reductor, you can specify the lot size if you want...there are a number of precautions you can take to manage the risk... The Achilles Heel with FAP Turbo seems to be that when it gets upside down in a trade...it does not cut its losses...it holds the trade. Bad practice.

Artificial intelligence ~the ability to program a computer to think, reason and use logic as the human mind can do~ as it's applied to the financial markets has a ways to go. Sure, Expert Advisors are supposed to eliminate emotion from trading...and being objective is a good thing. Now if we could just get FAP Turbo to abandon the nasty habit of hanging onto losing trades, then we truly would have an automated money maker...and we'd all be Warren Buffet!

>>> Forex Trading: Useful Indicators to Improve Your Results. 

One of my favorite indicators to trade the forex markets is the Signal Bars. It tells you at a glance the trends in multiple timeframes according to various technical indicators. Let me say right from the get go that I did not invent this, but I have put it to good use. The features and benefits, and how to best use them, are what I want to share in this article. The Signal Bars indicator resides in a corner of your MT4 screen. I prefer the upper right because I have the chart shift moved to about one-third the way from the right towards the left, so the upper right corner remains uncluttered.

The Signal Bars indicator consists of three horizontal rows of colored bars, green for up, red for down, orange for no clear direction - and these colors can be customized. The rows are divided into timeframes: M1, M5, M15, M30, H1, H4 and D1 - and these can likewise be customized. Each of the three rows represents a different technical indicator. The top row is the MACD with settings of 8/17/9. Middle row is an Exponential Moving Average (EMA) with a cross of the MA5 and MA9. Finally the bottom row is labeled STR and consists of Relative Strength Index (RSI) with a setting of 9, the Commodity Channel Index (CCI) with a setting of 13 and Stochastics set at 5/3/3 and all three of these indicators need to be in agreement before a signal is generated. What I particularly find valuable is that without having to look at the lower timeframes, you can tell when the M1 and M5 are beginning to move in another direction. If you're trending down and that is about to reverse, you'll see a dull green first, then as the trend becomes stronger it turns to a bright green. Yes, there are shades of red and green to show the strength of the move. Very useful.

The Signal Bars can be configured to show different kinds of data. These three rows of bars are the essence of the indicator. You can also display a large-font current price of the pair -again in green or red depending whether the move is up or down- which is very handy. It can also display the current spread on the pair and how many pips it's moved up or down since the open. Further, it can show the overall daily range and the average daily range. Of all the indicators available, this Signals Bar is one of the most useful and handy available. A search of popular forex forums will likely turn up the most current version of this valuable tool.

==>> John Houston has been trading forex for nearly six years. He has recently developed a website for traders of all levels. It offers a wealth of trading tools and indicators including some specific trade set-ups. Visit Forex-Trading-Power for details.  "My name is John Houston. I am a retired military officer. I spent 20 years in the national intelligence community, mostly in Washington, DC. My first tour was just over 3 years in Germany which was absolutely terrific. I've taught school, both public and college. Forex has been my hobby for over six years...and now I'm taking it more seriously as I approach retirement."

A new trading methodology using the Average Directional Index (ADX) for trading the forex market has doubled a $5K account in just 9 trading days to $10K. During the same period the popular expert adviser FAP Turbo has decimated a similar account. The ADX is an indicator to identify market trends and the strength of those trends. When used cautiously with a few guidelines, it can stack the odds decisively in your favor. If you set appropriate profit targets, based on the timeframe you're trading, chances of hitting those targets are quite good. Visit Forex-Trading-Power for details.

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