The Technical Parameters of the Forex Market

The technical indicators of the Forex market don’t take information from the air; they are all based on some of the market’s parameters and the appropriate calculation methods. Each indicator is calculated according to its own rules and there is no need to describe them all. In this article I’ll try to describe only the actual Forex market parameters that can fully describe the technical side of the Forex trading.

1. Trend — a direction of the price movement. Forex market can be in some kind of trend or go sideways. The trend itself can be measured by its direction, starting/ending point, ranges and the inner volatility.
2. Volatility — a statistical measure of the number of the price changes over a certain period of time.
3. Momentum — a measure of price movement strength in a term of pips per tick.
4. Cyclicality — it’s hard to be measured, but it still exists on the financial markets (and on Forex too) and describes the cyclical nature of some price movement.
5. Volume — the number of the transactions (price changes for Forex) in a given amount of time.
6. Support and resistance levels — they can be hard to spot, but Forex market generally bounces off of them or breaks them with a significant price action.
7. Traders’ expectations — they can’t be seen from charts, but they are the part of the technical picture of the market. Stop and limit orders are the important parameters of the market that should be taken seriously.
   

Some technical indicators use only one or two of these parameters; very few of the standard MetaTrader 4 indicators use more than two technical parameters. And I don’t know any indicators that are based on cyclicality or trader’s positions.

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How to manage your risk?

Risk Management

Once you have the facts it is decision time. You can choose to do nothing or seek to reduce the exposures or to hedge them in whole or in part. The unforgivable sins are to fail to consider the risks or fail to act on any decisions.
The risk culture of your business is critical and must be established at the most senior level. Above all it calls for honesty. Too often individuals are criticized for decisions that, at the time, were in tune with the organization’s perceived appetite for risk. But it is never easy to set down effective guidelines and the range of exposures for even a simple transaction can be extensive.

For example, an exporter needing to borrow to finance a sale in foreign currency may have to consider counterparty credit risk, funding risk and interest rate risk. The permutations are endless and the costs of hedging transactions to reduce or eliminate every possible exposure could potentially swallow any profit from a deal.

While losses are likely to be quantitative, the potentially infinite number of risk combinations means that the skills needed to make good decisions are usually qualitative. Even a computer programmed to consider every conceivable permutation of risks needs to be told what level of exposure is acceptable. Any program is only as good as the parameters and data fed into it by people who have themselves been conditioned by experience.

But what of the improbable, the wholly unexpected or the never-seen-before?
Effective risk management requires thinking the unthinkable. This does not in any way lessen the great value of the many sophisticated risk-management systems available. The problems come if people start to think of them, and the models they are based on, as infallible.

It is also common for the development of control systems to come after any new risk-related products. Be careful not to bet the business until the exposure is known. To be in business you must make decisions involving risk. However sophisticated the tools at your disposal you can never hope to provide for every contingency. But unpleasant surprises should be kept to a minimum.

Ask yourself…

1- Can the risks to your business be identified, what forms do they take and are they clearly understood - particularly if you have a portfolio of activities?
2 - Do you grade the risks faced by your business in a structured way?
3 - Do you know the maximum potential liability of each exposure?
4 - Are decisions made on the basis of reliable and timely information?
5 - Are the risks large in relation to the turnover of your business and what impact could they have on your profits and balance sheet?
6 - Over what time periods do the risks exist?
7 - Are the exposures one-off or are they recurring?
8 - Do you know enough about the ways in which you exposures can be reduced or hedged and what it would cost including the potential loss of any upside profit?
9 - Have trading and risk-management functions or decisions been adequately separated?

Where to place stops

We stop out of a trade when we no longer want to hold onto that particular position. The question that arises is: WHY do we want to get out of that trade?

There can be 2 reasons for stopping out of a trade. EITHER the market tells us that our intrinsic View or Directional Assessments itself was wrong. OR we stop out of a trade (even if we still believe in our basic Bullish or Bearish reading) because we think we can establish another position at a better level than the previous one.

The effort should be to choose a meaningful SL which is neither too close to the entry to get activated soon after entry (only to have the market go back in the original direction thereafter), nor so far away from the entry that we have no time or space left for follow up action.
The difficult part about the paragraph above is that it requires us to have a Trading Plan or Strategy and to choose our Entry much more carefully than we tend to do, in accordance with that plan.

Follow through action required we come back to the reasons for wanting to stop out. In the first case, when our directional reading has been proved wrong, we should look to enter into a trade in the opposite direction - a case of Stop-and-Reverse (SAR). It needs to be pointed out here that it is NOT necessary to SAR at the same instance and level all the time. If you are an intra-week (or longer) trader, you can enter into a reverse trade after stopping out of the original trade, allowing yourself time to reformulate your strategy.

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forex software trading to day trading

The forex software trading to day trading

If you want to earn with forex software trading high repeat in forex software trading you must to decide the tf you wish to tradhere we will compare forex day trading w/ forex trend following and with forex software trading ...

Forex trend following and forex software trading.

Before forex software trading compare the 2 lets get rid of the myth day traders make money without software. You have seen all those fantastic track records. You must checking forex software trading.

So forex software trading other self meet up with other self - the drift records are assured of success up with forex software trading and that\'s baffling problem you see a titillative track record. Of course if you have forex software trading read the above doing a forex software trading track record looking backwards is easy, doing alter terrifically time is hard.

forex software trading data simply is not. Why?

All volatility within a day or a few hrs is random. You can't trade forex software trading no matter how good your forex software trading is. Support and resistance in periods is notvalid, day price moves can go anywhere for forex software trading.

Once you move to trend following the propositional forex software trading function is all bets off long enough periods over against multilateral forex software trading the odds and that\'s exactly what you need with forex software trading, in transit to feel a question of extensiveness trading success.

trading system you can enjoy trading success with high forex software trading

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SniperFox Scalping EA & Price Action Bar Indicator

Use scalper system only on EURCHF, EURGBP, GBPCHF, USDCAD timeframe M1, M5 or M15


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