- Economic Data And Forex: Profitable Strategies For Colombian Traders
- How To Trade Forex On News Releases
- Trading Strategy Hi Res Stock Photography And Images
Economic Data And Forex: Profitable Strategies For Colombian Traders – A Forex trader can create a simple trading strategy to take advantage of trading opportunities using only a few moving averages (MA) or related indicators. MAs are primarily used as trend indicators and also identify support and resistance levels. The two most common MAs are the simple moving average (SMA), which is the average price over a period of time, and the exponential moving average (EMA), which places more emphasis on recent prices. Both of these form the basic structure of the following Forex trading strategies.
This moving average trading strategy uses the EMA because this type of average is designed to respond quickly to price changes. Here are the strategy steps.
Economic Data And Forex: Profitable Strategies For Colombian Traders
Forex traders often use the short-term MA crossover of the long-term MA as the basis for their trading strategy. Play around with different MA lengths or time frames to see what works best for you.
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Moving average envelopes are percentage-based envelopes placed above and below the moving average. The type of moving average set as the basis for envelopes does not matter, so forex traders can use either simple, exponential or weighted MA.
Forex traders should experiment with different percentages, time frames and currency pairs to understand how they can best apply the envelope strategy. It is most common to see envelopes on 10-100 day periods and use “bands” that have a distance of 1-10% from the moving average for daily charts.
If there is day trading, the envelopes will often be much less than 1%. In the one-minute chart below, the MA length is 20 and the envelopes are 0.05%. The settings, especially the percentage, may need to be changed from day to day depending on the volatility. Use the parameters below to adapt the strategy to the day’s price action.
Ideally, trade only when there is a strong general directional trend in price. Then, most traders only trade in this direction. If the price is in an uptrend, consider buying when the price approaches the moving average (MA) and starts to break below it. In a strong downtrend, consider shorting when the price approaches the middle band and then begins to move away from it.
How To Trade Forex On News Releases
After pulling short, place a stop-loss pip above the last swing high that just formed. After a long trade is taken, stop a pip below the newly formed swing. Consider exiting when price reaches the lower band in a short trade or the upper band in a long trade. Alternatively, set a target that is at least twice the risk. For example, if there is a risk of five pips, set a target 10 pips away from the entry.
The moving average band can be used to create a basic forex trading strategy based on the slow transition of the trend change. It can be used with a trend change in either direction (up or down).
The creation of the moving average band is based on the belief that more is better when it comes to charting moving averages. A tape consists of a series of eight to 15 exponential moving averages (EMAs) ranging from very short-term to long-term averages plotted on the same chart. The resulting ribbon bar is designed to show both the direction of the trend and the strength of the trend. A steeper angle to the moving averages—and a greater separation between them, causing the band to stretch or widen—indicates a strong trend.
Traditional buy and sell signals for a moving average band are the same type of crossover signals used with other moving average strategies. Multiple crossovers are involved, so the trader has to choose how many crossovers are good trading signals.
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An alternative strategy can be used to provide low-risk trade entries with high profit potential. The strategy below aims to catch a decisive market bounce in either direction, which often occurs after a long period of market trading in a tight and narrow range.
The moving average convergence divergence (MACD) histogram shows the difference between two exponential moving averages (EMAs), the 26-period EMA and the 12-period EMA. Additionally, a nine-period EMA is depicted as an overlay on the histogram. A histogram shows positive or negative readings relative to the zero line. Although it is most commonly used as a momentum indicator in Forex trading, MACD can also be used to show market direction and trend.
Guppy multiple moving average (GMMA) consists of two separate sets of exponential moving averages (EMA). The first set contains EMAs for the previous three, five, eight, 10, 12 and 15 trading days. Daryl Guppy, an Australian trader and inventor of the GMMA, believed that this first set highlighted the sentiment and direction of short-term traders. The second set consists of EMAs for the previous 30, 35, 40, 45, 50 and 60 days; long-term EMAs are modified if adjustments need to be made to compensate for the nature of a particular currency pair. This second set is meant to represent longer-term investor activity.
If the short-term trend does not gain any support from the long-term averages, it may be a sign that the long-term trend is tiring. For a visual, refer to the ribbon strategy above. With the Guppy system, you can convert short-term moving averages to one color and all long-term moving averages to another color. Follow two sets for crossovers, as in tape. When the short-term averages begin to cross below or above the long-term MA, the trend may reverse.
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Many short-term traders base their decisions solely on technical analysis and price charts, no matter what markets they trade. It is common for traders to completely ignore fundamentals and instead follow price trends, analyze support and resistance levels, and gauge various signals from technical indicators.
However, fundamental analysis is as important as technical analysis in today’s trading world. News releases such as earnings reports and changes in interest rates and inflation can have a significant impact on markets. Trading with news releases can therefore be very beneficial for traders and can significantly enhance their trading strategies by adding economic announcements to their purely technical and charting approaches. Learn to trade the news and find potential trading opportunities in the financial markets.
Forex Compounding Strategy
To read news events, you need to be familiar with economic indicators, which are macroeconomic factors that affect all financial markets, be it forex, stocks, or indices. These may include changes in interest rates, inflation, unemployment or retail income for a particular country, all of which have a significant impact on financial markets and the overall state of the economy.
Economic announcements often include these specific factors when advising traders about recent changes in the markets. This can affect market sentiment, especially if the announcement is not in line with traders’ expectations.
A news trading strategy involves trading based on market expectations before and after a news release. Trading on news announcements can require you to make quick decisions, as financial markets can be affected almost instantly. Therefore, you will need to quickly decide how to trade the ad.
When trading news releases, it is important to know how the financial markets work. Sometimes news is already included in asset prices. This is because traders try to predict the outcome of future news announcements and therefore the market responds by changing the price of the asset. News-based trading is particularly useful for volatile markets, such as oil trading.
Trading Strategy Hi Res Stock Photography And Images
Read more about using fundamental analysis to consider external factors as part of your news trading strategy.
As with other asset classes, forex trading news can be particularly active before and after major economic events. However, there are significant differences in the type of news that differentiate currencies from other financial markets.
Forex markets are most responsive to macroeconomic news—events that reflect or affect the broader economy. In general, forex traders can look at economic news to gauge its impact on interest rates and monetary policy. News that offers a
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