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Posted on May 13th, 2010
by Rapid Forex
There’s tons of buzz for automated forex trading systems that provide various levels of opportunities based on an automated forex trading alert.
If you’ve looked on this blog lately, you’ll even see ads for some of these forex trading alert software programs. These type of programs are sometimes called “forex robots” or “bots.”
Never Blindly Trust a Computer Generated Forex Trading Alert
You’ve seen the outrageous claims like “See Forex Robot Nailing $363/day,” 100% No Loss Forex Robot,” & “From $5,000 to $35,000 (with a forex robot trading for you).”
Yeah, right ;P
Or is there actually something to these automated forex alerts….
WARNING: Never Let a Computer Trade For You
If you see ANYONE claim to give you a black box software that will automatically make you money, THEY’RE LYING!!!
Even though some of these forex robots are selling you automated forex trading systems that will trade for you, that isn’t the right way to use an auto forex trading alert. Letting a robot trade your money for you is a fancy way of setting your money on fire!
Tip: Use Automated Forex Trading Alerts to “Signal” Potential Trades
Before you give up on the forex robots completely, realize that there are some valid uses for them. A computer that closely monitors forex trading prices constantly can be a powerful ally…
For $100-$200 you can have one of these forex robots spotting trading opportunities for you 24 hours a day, 5 days a week (the forex market closes on weekends).
Remember Forex Trading Basics
When the forex robot generates a forex trading alert, you’ll still want to look for support & resistance, see if there are any consolidation in the forex charts, use technical indicators, forex trading wave patterns, & fundamental announcements.
The total basics of forex trading are fully covered in the 20 part free course at rapidforex.com.
There’s No Shortcuts to Forex Trading Success
If a computer could trade you from $5 to $5,000,000 within a decade, EVERYONE would be running that software! Don’t fall into the thinking that a computer generated forex trading alert will do for you what some of the smartest financial geniuses in the world haven’t been able to achieve – automated forex trading!
It’s an impossible fantasy that is unfortunately used as the basis for many forex trading scams.
Just because there are some forex scams out there, don’t be afraid to try to use software to let you “spot” forex trading opportunities.
Don’t use the automated forex trading alerts to trade for you, just to tell you when you might find a cool forex trading opportunity.
I’ll be discussing more legitimate ways to use a forex robot to find trades in future blog posts. If you don’t like forex robots, just stick with Forex Sailing and be in 100% control of your trading decisions!
Posted in
indicators
Posted on March 24th, 2010
by Rapid Forex
Stochastics, like MACD, are also momentum oscillators, reflecting the strength of market movement, which is helpful for online forex trading. Stochastics are one of the most important technical indicators for online forex trading.
Three fundamental ways to use stochastics for FOREX trading Online:
1. Compare the movement of the stochastics to the movement of forex trading prices. If forex trading prices are making new highs (solidly trending upward) or lows (solidly trending downward) and your stochastics are also making new highs (trending upward) or lows (trending downward) then the market trend will most likely continue.
Key Point: if prices and stochastics are in agreement, then currencies are being traded at what the market deems a fair value, and there is no immediate reason to believe that the market will change course.
If, however, prices are making higher highs (trending upwards) while your stochastics are making lower highs then the market is heading toward a reversal (toward a new downtrend). The stochastics, in this case, are saying that the market is overbought, that the currencies are being overvalued. The assumption, then, is that traders will realize that the currency is overvalued and sell, bringing the market into a new downtrend.
It is in this way that stochastics can forecast market corrections – adjustments that the market makes when the price of a currency does not actually reflect its perceived value.
If prices are making lower lows (trending downwards) while your stochastics are making higher lows, then the market is heading toward a reversal (toward a new uptrend). The stochastics, in this case, are saying that the market is oversold, that currencies are undervalued.
The assumption here is that traders will realize that the currency is undervalued and will buy, bringing the market into a new uptrend. Again, stochastics can forecast market movements to correct for undervalued or overvalued currencies.
Notice How the Stochastic Indicator Oscillates between 0-100?
2. The second way to use stochastics is to look at the interaction between the %K and %D lines. If the %K line crosses over the %D line it offers a buy (bullish) signal.
If, the %K line crosses below the %D line it offers a sell (bearish) signal. Be careful to not use this stochastic crossover indicator is markets that are in consolidation (moving sideways) because they will not generate reliable signals.
3. Stochastics are plotted on a scale of 0 to 100. The third way to use stochastics to generate useful information about market movement is to look at the movement of the two stochastic lines (%K and %D) across different levels. The levels between 0 and 100 reveal the strength of price movements in one direction or another.
When either stochastic line (%K or %D) is above 80 it’s signaling strong upward price movement in the market. If either stochastic line crosses above 80, then reverses to fall below it, that offers a strong sell signal because it is a sign that the uptrend is reversing. When the stochastic is at 80 or higher but the market is trending downward, that sell signal is called a sell crossover.
Conversely, when either stochastic line is below 20 it’s signaling strong downward movement. If either stochastic line crosses below 20, then reverses to rise above it, that offers a strong buy signal because it is a sign that the downtrend is reversing. When the stochastic is at 20 or lower but the market is trending upward, that buy signal is called a buy crossover.
There are two additional trading strategies to consider when trading with stochastics on a 0-100 scale:
Strategy #1: a buy 40/40 is a buy signal to trade purely on the momentum of the trend. When the stochastic is at about 50 and trending upward, trade in the direction of the uptrend with a 40-50 pip stop loss and profit limit order.
Strategy #2: Conversely, a sell 40/40 is a sell signal to trade purely on the momentum of the trend. When the stochastic is at about 50 and trending downward, trade in the direction of the downtrend with a 40-50 pip stop loss and profit limit order.
Posted in
indicators
Posted on March 18th, 2010
by Rapid Forex
In the past few days I’ve blogged about technical indicators for online forex trading. Along with moving averages, the MACD is one of the valuable forex trading tools you’ll have online.
MACD, which is an acronym for moving average convergence divergence, is a momentum oscillator, meaning that it reflects the strength at which the market is oscillating (remember that the market moves in price swings, or oscillations). The MACD is one of the most popular technical indicators for online forex trading.
Components of the MACD
First, the MACD includes a line that represents the difference between the 26-period exponential moving average (the slow EMA) and the 12-period exponential moving average (the fast EMA); this line is often referred to simply as the MACD.
Second, the MACD includes a line that represents a 9-period exponential moving average; this line is known as the “signal” or “trigger” line and is used in conjunction with the first line.
The first indicator that the MACD reveals is based off of those first two lines. When the MACD (the difference between the fast and the slow exponential moving averages) crosses over the trigger line it offers a buy (bullish) signal.
When the MACD crosses under the trigger line it offers a sell (bearish) signal in online forex trading.
The smaller circles highlight points where the MACD crosses 1) over the trigger line (the buy signal) and 2) under the trigger line (the sell signal). As it is in this chart, the MACD is usually represented by a red line while the trigger is usually a blue line.
Another aspect of the MACD indicator is the histogram (which you can see in green in the following screen capture image). The histogram is a good momentum indicator, offering information about the strength of price movement. While the histogram does not reveal any direct buy or sell signals, it is a useful tool to use in conjunction with other indicators when analyzing possible reversals (if the market is slowing down it may be headed toward a reversal; this slow down would be reflected by lower bars in the histogram).
The MACD used in Online Forex Trading
A third aspect of the MACD is that it is plotted against a zero line. In essence, the difference between the fast and slow exponential moving averages is converted mathematically into an oscillator that fluctuates above and below a zero line.
MAC Signals For Online Forex Trading
The MACD gives the following signals that can be used in forex trading online:
- When the MACD line crosses over the zero line it offers a buy signal.
- When the MACD line crosses below the zero line it offers a sell signal.
Take a look at the MACD forex chart shot to see these signals. The two larger circles represent the market 1) crossing under the zero line (sell signal) and 2) crossing over the zero line (a buy signal).
The fourth aspect of MACD is that its trends (swings) can be compared to the price swings (trends) in the online forex trading market.
MACD divergence is when the MACD line is trending (swinging) in one direction while the market is trending in another.
This divergence can offer information about the future movement of the market. If the divergence is positive (MACD is trending upward while the market is trending downward) the market may be headed toward a rally (that, then, is a buy signal).
If the divergence is negative (MACD is trending downward while the market is trending upward) the market may be headed for a price drop (that, then, is a sell signal).
Looking at the movement of the histogram can also reveal divergences between prices and the MACD (the histogram may reveal those divergences before the MACD does).
In addition to the MACD, stochastics are also commonly used in online forex trading. I’ll be posting about stochastics in the next rapid forex blog post.
Posted in
indicators
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