Article Forex Candlestick

If you are trading using the forex candlesticks chart, you definitely need to know how to read forex candlesticks as well as identifying important candlestick patterns. Therefore I am writing this post to do a quick tutorial on forex candlestick so that you know what you are seeing on the chart.

Here are some important reversal candlestick patterns you must know:

First of all, you need to know that reversal candlestick patterns are actually signaling to you that there will be a change in trend. This gives you a chance to anticipate the reversal movement before it actually happens and this will definitely make you money if you are able to enter a trade before the movement.

1) Railway Track/Tweezers Formation: The railway track pattern is one of the best reversal candlestick patterns you can get in a chart. It actually signifies that the traders realise that they got into the wrong position and then quickly get out of their position and then get into the opposite position causing the formation of the railway track. This is usually a strong indication of a reversal.

Railway Track/Tweezer

2) Morning Star/Evening Star: This is a formation that is made of one long up candle follow by a doji and then a long down candle for the evening star and vice verse for the morning star. This is a pattern that is somehow similar to the railway track pattern but with a doji in between.

Morning Star

3) Hammer/Inverted Hammer: This is a pattern where there is a long wick with a short body. This usually shows that there are traders who push the price in a certain direction and then hitting some support and resistance levels causing the price to retreat with a short body. Most of the time, this signifies a good reversal is coming.

Hammer

4) Head & Shoulder Pattern: This is another forex candlestick patterns that is reversal in nature. How this looks like is that it has one lower left shoulder follow by a higher high indicating a head and then a lower high right shoulder. You can enter a trade when the neckline is breached.

head and shoulder

5) Double Tops/Double Bottoms: This is a pattern whereby you will see a top pattern which eventually get resisted and then move down follow by another up movement that gets resisted again at the same price forming a double top. The shape of double top looks like M and double bottom looks like a W and this is also a good indication of a reversal.

double top

6) 1-2-3 Top/Bottom: The 123 top is formed when the price move up and then retrace back to a certain level and then move up again trying to overcome the resistance that is formed by the previous high but this time it did not reach the previous high point and then retrace back down again. This usually signifies a lack of momentum in an uptrend and the price will most likely reverse.

123 top

These are the 6 best reversal candlestick patterns you can get in a trade. Do note that these reversal candlestick patterns only work when the price is in a trend and not moving sideways.

Studying the forex candlestick is very important for your trading. Some traders may think that learning forex candlestick patterns is very basic and they usually do not want to spend time on them. However knowing them can help you to identify a reversal before it occurs

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What is Forex Trading

Overview
Forex, FX, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another. FOREXYARD offers leading online trading platforms for individuals that wish to speculate on the exchange rate between two currencies. In doing so, speculators purchase or sell one currency for another with the hope of making a profit when the value of the currencies changes in favor of the speculator as a result of events that takes place across the globe. This market of exchange has more daily volume - both buyers and sellers - than any other market in the world. The FX market is available 24-hours a day, five days a week. Furthermore, the Forex Market is the largest financial market in the world with daily reported volume of over $1.4 trillion changing hands between buyers and sellers across the globe, making it one of the most exciting markets for trading. Although currency trading is inherently governmental (central banks) and institutional (commercial and investment banks), technological innovations, like the internet, have made it easy for individuals to take part in the currency trading markets and to trade via intermediaries online.

How an FX Trade Works
In the FX market you can buy or sell one currency for another. When you buy a currency, you are said to be "long" in that currency and when you sell a currency, you are said to be "short" in that currency. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies in order to make profits - since the objective is to earn a profit from their position. Placing a trade in the foreign exchange market is simple and the mechanics of a trade are virtually identical to those found in other markets. Because of the symmetry of currency transactions, you are always simultaneously long in one currency and short in another. An open position is one that is live and ongoing. As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. To close out your position, you conduct an equal and opposite trade in the same currency pair. For example, if you have gone long in one lot of EUR/USD you can close out that position by subsequently going short in one EUR/USD lot (at the prevailing bid price).
Quoting Currency Pairs
Currencies are quoted in pairs, such as EUR/USD or USD/JPY. The first listed currency is known as the base currency, while the second is called the counter or quote currency. The base currency is the "basis" for the buy or the sell. For example, if you BUY EUR/USD you have bought Euros (simultaneously sold dollars). You would do so in expectation that the Euro will appreciate (go up) relative to the US dollar.
Currency Abbreviations
Symbol Definition Symbol Definition
EUR Euro NZD New Zealand dollar
GBP Great British pound AUD Australian dollar
USD US dollar CAD Canadian dollar
CHF Swiss franc JPY Japanese Yen
EUR/USD
In this example Euro is the base currency and thus the "basis" for the buy/sell. If you believe that the US economy will continue to weaken and this will hurt the US dollar, you would execute a BUY EUR/USD order. By doing so you have bought Euros in the expectation that they will appreciate versus the US dollar. If you believe that the US economy is strong and the Euro will weaken against the US dollar you would execute a SELL EUR/USD order. By doing so you have sold Euros in the expectation that they will depreciate versus the US dollar.
USD/JPY
In this example the US dollar is the base currency and thus the "basis" for the buy/sell. If you think that the Japanese government is going to weaken the yen in order to help its export industry, you would execute a BUY USD/JPY order. By doing so you have bought U.S dollars in the expectation that they will appreciate versus the Japanese yen. If you believe that Japanese investors are pulling money out of U.S. financial markets and repatriating funds back to Japan, and this will hurt the US dollar, you would execute a SELL USD/JPY order. By doing so you have sold U.S dollars in the expectation that they will depreciate against the Japanese yen.
GBP/USD
In this example the GBP is the base currency and thus the "basis" for the buy/sell. If you think the British economy will continue to be the leading economy among the G8nations in terms of growth, thus buying the pound, you would execute a BUY GBP/USD order. By doing so you have bought pounds in the expectation that they will appreciate versus the US dollar. If you believe the British are going to adopt the Euro and this will weaken pounds as they devalue their currency in anticipation of the merge, you would execute a SELL GBP/USD order. By doing so you have sold pounds in the expectation that they will depreciate against the US dollar.
USD/CHF
In this example the USD is the base currency and thus the "basis" for the buy/sell. If you think the US dollar is undervalued, you would execute a BUY USD/CHF order. By doing so you have bought US dollars in the expectation that they will appreciate versus the Swiss Franc. If you believe that due to instability in the Middle East and in U.S. financial markets the dollar will continue to weaken, you would execute a SELL USD/CHF order. By doing so you have sold US dollars in the expectation that they will depreciate against the Swiss franc.
Buying / Selling
First, the traders should determine whether they want to buy or sell. If they want to enter a short order - whereby they will profit if the exchange rate falls - they simply need to click on the SELL rate. The opposite holds true for traders who enter buy orders: they can simply click on the BUY rate, and thus will profit if the exchange rate goes up.
Example of How Buying / Selling Works
As with all markets, there are two prices for every currency pair. The difference between these two prices is the spread, or the cost of the trade. In this example, the spread is three pips. On the 10k position, a pip on the EUR/USD currency pair is worth $1.
Margin / Leverage
FX accounts are margined: a trader can hold a market position much larger than the value of the trader's account value. The online trading platform which FOREXYARD offers has margin management capabilities, which allow lenient margin requirement of up to 1/2%. However, we do not recommend using leverage of more than 10 times your account value. Using leverage exaggerates both gains and losses. Even when market conditions are relatively calm, using leverage can generate large gains or losses. In the case where a trader surpasses the maximum leverage allowed (which can happen when account equity shrinks as a result of trading losses), the trading system will close all open positions in the account. This prevents client's accounts from falling into a negative balance, even in a highly volatile, fast moving market.
Example of How Margin Works
Since the trader opened 1 lot of 10k EUR/USD, his margin requirement or Used Margin is $50. Usable Margin is the funds available to open new positions or sustain trading losses. If the equity (the value of his account) falls below 20% of his Used Margin due to trading losses, his position will automatically be closed. As a result, the trader can never lose more than he/she deposits.
Account Balance Equity Day P/L Usd Mr Usbl Mr Usbl Mr% Gross P/L MC
008771 50.01000 50.01000 10.00 1000.00 50,010.00 98.00 0.00 N
50.01000 50.01000 10.00 1000.00 50,010.00 98.00 0.00 N
Rollover
In the spot forex market, trades must be settled in two business days. If a trader sells 100,000 Euros on Tuesday, the trader must deliver 100,000 Euros on Thursday, unless the position is rolled over. As a service to our traders, FOREXYARD automatically rolls over all open positions to the next settlement date at 5:00 pm New York time. Rollover involves exchanging the position being held for a position expiring the following settlement date. The positions being exchanged are usually not valued at the same price. The difference in amount varies greatly based on the currency pair, the interest rate differential between the two currencies, and fluctuates day to day with the movement of prices.
For positions open at 5.00 pm EST there is a daily rollover (interest payment) you pay for an open position depending on your established margin level and position in the market. If you do not want to earn or pay interest on your positions, simply make sure they are closed by 5.00 pm EST, the established end of the market day.

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Forex Trading Tutorial

What should you do before doing Forex trading.
1. Prepare your computer.
At Home: Find the most suitable location
Want to trade Forex in your home? First, you have to find the best place to put your computer and use good ergonomic desk and chair, you should be comfortable sitting on a chair. If you can, find a place away from public areas of your house, you can use a separate room or in your bedroom.

At Office: Check your office rules
If you want to trade Forex you should check your office rules, some companies do not allow their employees doing other work than their work, ask your IT Manager you can do Forex trade in your computer in working hours or only for lunch? 2005 - 2006 © Arisson Mercinova S.Kom.
2. Prepare your Internet connection.
Sustained access
Internet Trading Forex need a stable and fast Internet access, a dial-up Internet access is enough, but you better be faster access to the Internet, find the ISP that can provide quick and cheap access to the Internet. And the most important is that the Internet access is not interrupted or disconnected often.
Calculate your expense and your income
Calculate your internet access charges as in Forex trade may be necessary to see chart display hourly each day trying to get more income than his expense. Perhaps at the beginning of training time you get a small income than expenses.
3. Prepare you physical and mental.
You must have healthy body
In Online Forex trading you must have a healthy body suits, because once you have to trade until the end of the middle of the night because Forex Trading complete 24 hours daily rounding on each country trading time zone.
Ready to get loss 2005 - 2006 © Arisson Mercinova S.Kom.
The most important is your mental, as Forex Trading is not always profitable, once you will be losses, so prepare your mind and not anger and depression. Be safe play Forex, not to be greedy and want to get more profit in rapid time. Allocation little percentage of your deposit to get a little profit, after a few times, you get more profit.
Forex is not same as HYIP
If you usually play the HYIP before such as Autosurf, PTC, PTR, etc., so you must understand Forex Trading is not the same as a HYIP, if the HYIP you can get money allocated for the HYIP site and make a profit immediately, and then in Forex trade, you must manage your own money, you must practice more before becoming an expert in Forex Trading, learn a lot Forex Literature and many articles on the internet, even you should buy Forex books to expand your skills.
Not surrender easily
Maybe during training, you get lost, even in a large amount of loss, but please be patient is only temporary, and after learning of other Forex trader, you become an expert. So, always using virtual money before using real money.
4. Expand your environment
Use Marketiva chatting facility
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