If you are considering forex day trading than this article is for you. On the net themselves will lay a wager more products and forex trading systems sold favor day consignation than for any form of transmittal and this forex article crave give you the new forex technic up against forex day trading.
The most important fact is it doesn't work longterm and you will get wiped out here's why:
ShortTerm Volatility is random
Millions of forex trader's trade trillions of dollars every days and to says you can tell what this huge diverse mass of mens will do in a few hours or a day is ridiculous.
Humans are un-predictable in short time frames - PER IOD.
All Volatility is random
This is a resultant belief as regards the above and of course short term unreliability is arbitrary.
If this is so, then all support and resistance levels are not valid in a daily time frame, as volatility takes prices anywhere in a day and you have no way of forex trading.
Tools that work in other forex currency time frames, simply don't work in intraday forex trading and never can - that's why a day forex trader can never get the odds in their favor and his luck will soon run out.
So why is it so popular?
Because it's a good story and internet marketers know this.
The establishment ballyhoo foolish e-books claiming rapid profits and infinite riches, all for a minim sheriffalty dollars! if subconscious self worked, a kraal nonuniqueness forex traders would mix small change and they don't.
It sounds low risk forex scalping small forex profits that build up over time but the reality is a thumping quick loss of equity for the trader.
But I have seen the track record you may say...
Sure you have but you never see a real one - there always hypothetical simulations done knowing the closing prices - how hard is that?
Anyone could do it even a kid could - but life in forex is not like that, you have to trade going forward and not knowing the closing prices and that makes things a little more difficult!
Its a yea couche and approximately in connection with the advertising vicar is fantastic but it's a tale but brave stories don't put through money. My kids love irk Potter aside from superego don't think they can fly!
Forex trading intraday appeals to greedy and naive traders who are looking for a fast buck and in forex markets making money is not easy and nor would you expect it to be - with the rewards on offer.
THE PERFECT FOREX NEWS IS...
There are far better ways to make money than forex trading and these methods use longer time spans where you can get the odds in your favor.
Traders can and do make money in forex trading - but the day traders end up in the 95% of losers and if you don't want to do the same, avoid forex day trading.
Get proper sensible trading forex education and trade the longer term trends for more forex profit.
More forex eduction you can find here - Forex Trading
Learn more - True Forex Scalper - Forex Expert Advisor - Download
Showing posts with label forex buy and sell signals. Show all posts
Showing posts with label forex buy and sell signals. Show all posts
Thursday, January 15, 2009
Tuesday, October 7, 2008
How I use Murrey Math
How I use Murrey Math
When I first started working with Murrey Math, I treated all the lines as simple pivots - support/resistance areas which could be used to confirm forex buy and sell signals. I realised that some levels are often repeated across different timeframes, which I thought simply made them stronger pivots. Then over time I got to understand a little more about how the Murrey works and here are a few tips from what I have learned so far. Firstly a bit about the individual lines themselves:
Firstly there's the obvious - when the market is over-extended in either direction (i.e at the overshoot or extreme overshoot lines) there's a good chance of a move back the other way, especially if there is confirmation from other forex trading indicators.
Then there's the one we've mentioned - the two Murrey forex trading strategies:
Buy at 1/8 close at 4/8 or Buy at 0/8 close at 2/8
Sell at 7/8 close at 4/8 or Sell at 8/8 close at 6/8
I haven't tested these too much but from what I can tell a little discretion is involved - the strike rate is not high enough to be purely mechanical about it. Candlestick patterns or confirming pivots might be a good "filter". See http://www.graemenash.co.uk/forex/MM.doc for more info on the forex trading strategies.
The "Forex Trading Range" lines might seem a bit confusing at first, given that the forex market spends most of its time outside the forex trading range, but there's more to it than that - these lines are actually very important in determining the state or sentiment of the forex market. Basically, when the forex market is between the lines, it is in an undecided state (i.e a forex trading range). If it is above the 5/8 line then the forex market can be considered bullish, likewise below 3/8 we are in a bearish forex market. Hence 5/8 is a great support level for re-entering a long trend and 3/8 for short.
A break of these lines can be very important. For example- If the market has been above 5/8 for a period of time but breaks below, that is a sign of bullishness fading. A drop to 4/8 almost always follows, and at that point 5/8 becomes significant resistance, because a break back above it would represent a re-establishing of the bullish scenario which had just previously failed.
If the forex market does indeed re-test 5/8 and fail, that confirms that the bullish sentiment has pretty much gone and an attempt at a move to 3/8 can be expected. If the forex market then breaks below 3/8, it has definitively turned bearish - and 3/8 then becomes strong resistance as a break back above would represent another change in sentiment, this time back to indecision.
Note that sometimes the re-test doesn’t occur and the market will break one forex trading range line and head straight for the other!
People often ask what timeframe to use Murrey on - but I use it on almost all of them. I have 1m/5m/30m/1h/4h charts on-screen with murrey lines. When you understand more about the forex market context murrey can give you, it's useful to have them all up as it can give good clues about where the forex market is likely to head.
A good example would be a forex trade I did a while ago which used nothing but murrey lines to get me in. Now I'm doing this from memory so it may not be totally accurate, but will still give a good idea of what I'm on about (I hope!) :)
Cable had bounced strongly off the 0/8 line on the 4h chart, a move targeting 2/8 (according to the forex trading strategy above), which was at 1.8250.
When it started approaching that level, I looked at the 1h chart, which had broken above it's 3/8 line, suggesting a move to 4/8 was coming. 4/8 was also 1.8250.
When it got to there, I dropped down to the 5min chart to "zoom in" on the action a bit more, and saw that cable had broken above 3/8, retested and bounced off, targeting at least 5/8, which was also 1.8250 - it then broke this and went to 6/8 at 1.8265
By this time the upward move was running out of steam - the 4h and 1h targets had been hit, and the 5min had made a sizeable up-move and overshot the target by one level, suggesting it may need to pause and retrace a little.
When the price hit that 6/8 at 1.8265 I dropped down to the 1min chart to try to pick the exact entry for the reversal, and I saw that the 7/8 (stall and reverse) line was at 1.8272. In the context of what the other timeframes were saying, it seemed highly likely that if the forex market hit this level it would bounce straight away.
The forex market went up to 1.8272 exactly then bounced off, giving me a +50 trade!
So that's how I use murrey math - to give context on what the market is doing and where it might go. I think it's important to have all the timeframes up as once you get used to it they give great info, and sometimes when they all say the same thing you don't need much else!
** As I write this I've just closed a cable short (from 1.7792 - 0945am UK time, closed 1.7777 at 0957), which was signalled well enough by divergences, price channels, moving averages etc.
But a great confirmation for me was the fact that when I entered the forex trade, the 5min forex chart had risen up to test the 3/8 line at 1.7792 - as I said earlier if market is below this it represents strong resistance because it means a change in sentiment. Simultaneously, the 1min chart was on +1/8 (extreme overshoot), which meant there was not much room above and a bounce off was likely.
For the exit there were again good divergence/boll/price channel/pivot forex signals and the confirmation for me was the 1min chart sitting just above the 5/8 line at 1.7769 - strong support because it would have meant a change from bullish to undecided sentiment. I took the exit there because in my view the forex market was short-term bullish, having risen 80 points in an hour, so that level was likely to hold as support.
** update again – I then reversed to long (at 1.7776 – 10am) with the target for the trade at 1.8222, which has just been hit, because:
The 1min bullish scenario was intact after that 5/8 line held
If price broke above the 5min 3/8 the target would be 4/8 at 1.8222
Right down at the bottom (1.7723) cable had bounced off 1/8 a move which targets… 4/8!
When I first started working with Murrey Math, I treated all the lines as simple pivots - support/resistance areas which could be used to confirm forex buy and sell signals. I realised that some levels are often repeated across different timeframes, which I thought simply made them stronger pivots. Then over time I got to understand a little more about how the Murrey works and here are a few tips from what I have learned so far. Firstly a bit about the individual lines themselves:
Firstly there's the obvious - when the market is over-extended in either direction (i.e at the overshoot or extreme overshoot lines) there's a good chance of a move back the other way, especially if there is confirmation from other forex trading indicators.
Then there's the one we've mentioned - the two Murrey forex trading strategies:
Buy at 1/8 close at 4/8 or Buy at 0/8 close at 2/8
Sell at 7/8 close at 4/8 or Sell at 8/8 close at 6/8
I haven't tested these too much but from what I can tell a little discretion is involved - the strike rate is not high enough to be purely mechanical about it. Candlestick patterns or confirming pivots might be a good "filter". See http://www.graemenash.co.uk/forex/MM.doc for more info on the forex trading strategies.
The "Forex Trading Range" lines might seem a bit confusing at first, given that the forex market spends most of its time outside the forex trading range, but there's more to it than that - these lines are actually very important in determining the state or sentiment of the forex market. Basically, when the forex market is between the lines, it is in an undecided state (i.e a forex trading range). If it is above the 5/8 line then the forex market can be considered bullish, likewise below 3/8 we are in a bearish forex market. Hence 5/8 is a great support level for re-entering a long trend and 3/8 for short.
A break of these lines can be very important. For example- If the market has been above 5/8 for a period of time but breaks below, that is a sign of bullishness fading. A drop to 4/8 almost always follows, and at that point 5/8 becomes significant resistance, because a break back above it would represent a re-establishing of the bullish scenario which had just previously failed.
If the forex market does indeed re-test 5/8 and fail, that confirms that the bullish sentiment has pretty much gone and an attempt at a move to 3/8 can be expected. If the forex market then breaks below 3/8, it has definitively turned bearish - and 3/8 then becomes strong resistance as a break back above would represent another change in sentiment, this time back to indecision.
Note that sometimes the re-test doesn’t occur and the market will break one forex trading range line and head straight for the other!
People often ask what timeframe to use Murrey on - but I use it on almost all of them. I have 1m/5m/30m/1h/4h charts on-screen with murrey lines. When you understand more about the forex market context murrey can give you, it's useful to have them all up as it can give good clues about where the forex market is likely to head.
A good example would be a forex trade I did a while ago which used nothing but murrey lines to get me in. Now I'm doing this from memory so it may not be totally accurate, but will still give a good idea of what I'm on about (I hope!) :)
Cable had bounced strongly off the 0/8 line on the 4h chart, a move targeting 2/8 (according to the forex trading strategy above), which was at 1.8250.
When it started approaching that level, I looked at the 1h chart, which had broken above it's 3/8 line, suggesting a move to 4/8 was coming. 4/8 was also 1.8250.
When it got to there, I dropped down to the 5min chart to "zoom in" on the action a bit more, and saw that cable had broken above 3/8, retested and bounced off, targeting at least 5/8, which was also 1.8250 - it then broke this and went to 6/8 at 1.8265
By this time the upward move was running out of steam - the 4h and 1h targets had been hit, and the 5min had made a sizeable up-move and overshot the target by one level, suggesting it may need to pause and retrace a little.
When the price hit that 6/8 at 1.8265 I dropped down to the 1min chart to try to pick the exact entry for the reversal, and I saw that the 7/8 (stall and reverse) line was at 1.8272. In the context of what the other timeframes were saying, it seemed highly likely that if the forex market hit this level it would bounce straight away.
The forex market went up to 1.8272 exactly then bounced off, giving me a +50 trade!
So that's how I use murrey math - to give context on what the market is doing and where it might go. I think it's important to have all the timeframes up as once you get used to it they give great info, and sometimes when they all say the same thing you don't need much else!
** As I write this I've just closed a cable short (from 1.7792 - 0945am UK time, closed 1.7777 at 0957), which was signalled well enough by divergences, price channels, moving averages etc.
But a great confirmation for me was the fact that when I entered the forex trade, the 5min forex chart had risen up to test the 3/8 line at 1.7792 - as I said earlier if market is below this it represents strong resistance because it means a change in sentiment. Simultaneously, the 1min chart was on +1/8 (extreme overshoot), which meant there was not much room above and a bounce off was likely.
For the exit there were again good divergence/boll/price channel/pivot forex signals and the confirmation for me was the 1min chart sitting just above the 5/8 line at 1.7769 - strong support because it would have meant a change from bullish to undecided sentiment. I took the exit there because in my view the forex market was short-term bullish, having risen 80 points in an hour, so that level was likely to hold as support.
** update again – I then reversed to long (at 1.7776 – 10am) with the target for the trade at 1.8222, which has just been hit, because:
The 1min bullish scenario was intact after that 5/8 line held
If price broke above the 5min 3/8 the target would be 4/8 at 1.8222
Right down at the bottom (1.7723) cable had bounced off 1/8 a move which targets… 4/8!
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