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Are you learning the Forex and looking for a Forex strategy that is simple yet effective?

Many newer traders face the challenge of trying to identify the trend on the intra-day level in order to make their Forex strategy work.

This problem can be alleviated by using the 200 EMA – (Exponential Moving Average).

The 200 EMA is one of the most popular indicators of all time with Forex traders the world over, and for that reason alone is worth noting due to the psychological effect on the market place price can have when hovering around the 200 EMA.

How To Use The 200 EMA

Start using this effective Forex strategy by setting up charts on three different time frames:

4 hour

A 1 hour chart

A 15 minute chart

Now add the 200 EMA indicator to each chart for the 3 time frames. You could color it red or whatever you prefer to make it stand out.

Some like to tile the 3 chart windows in a vertical style so it is easy to compare them side by side. It can distort the chart a little but for this strategy you don’t really need to see the chart in full screen mode.

Now run your eyes over each of the currency pairs you have selected for this strategy.

There are about 9 different currency pairs with a pip spread less than 10, so many prefer just to trade these.

They are:

EUR/USD | GBP/USD | USD/CHF | USD/JPY | EUR/JPY | USD/CAD | AUD/USD | NZD/USD | EUR/CHF

Search through and see if price is going against the 200 EMA on the 15 minute chart on any of the currency pairs.

Take as an example the EUR/USD pair. Make a note of where price is in relation to the 200 EMA on the three different times frames.

If price is well above the 200 EMA on the 4 hour chart, well above the 200 EMA on the 1 hour chart, but BELOW the 200 EMA on the 15 minute chart, price is bucking the trend.

So price is temporarily going against the overall trend and is in a retracement mode.

Look for a good point to get into the market in harmony with the basic trading maxim of selling rallies in a down trend or conversely, buying dips in an up trend.

Using the EUR/USD example, you would look out for a distinctive candle that would indicate possible price exhaustion as it bucks the trend on the 15 minute chart. The probability is it would soon resume moving in the direction of the trend.

This is an easy exercise and it can be done once or twice a day, taking just a few minutes.

Look Out For Price Going Against The Trend

As soon as you see price crossing the 200 EMA on the 15 minute chart whereas it is well beyond the 200 EMA in the opposite direction on the 4 and 1 hour charts, FOCUS! Snatch the opportunity to get into the market and make a profit.

After a little practice you will see how extremely powerful this simple Forex strategy is – certainly deserving a place in your trading tool kit.

Charting:

The time frame used for forming a chart depends on the compression of the data: intraday, daily, weekly, monthly, quarterly, or annual data. Traders usually concentrate on charts made up of daily and intraday data to forecast shorterm price movements.

The shorter the time frame and the less compressed data is, the more detail that is available. While long on detail, short term charts can be volatile and contain a lot of noise. Large sudden price movements, wide high-low ranges and price gaps can effect volatility, which can distort the overall picture. Long term charts care good for analyzing the large picture to get a broad perspective of the historical price action. Once the general picture is analyzed, a daily chart can be used to zoom in on the last few months. Four of the most popular methods of displaying price data are by the following charts: line bar, candlestick, and point & figure. The line chart is one of the simplest charts. It is formed by plotting one price point, usually the close. For that matter, I don’t favor them because I personally consider the open, low, and high to be as important as the close in technical analysis. However, at times, only closing data are available for certain indices, thinly traded stocks and intraday prices. Bar charts are perhaps the most popular charting method. The high, low, and close are required to form the price plot for each period of a bar chart. The high and low are represented by the top and bottom of the vertical bar and the close is the short horizontal line crossing the vertical bar. On a daily chart, each bar represents the high, low, and close for a particular day. Weekly charts would have a bar for each week based on Friday’s close and the high and low for that week. Bar charts can be effective for displaying a large amount of data.

Using candlesticks, 200 data points can take up a lot of room and look cluttered. Line charts show less clutter, but do not offer as much detail (no high-low range). The individual bars that make up the bar chart are relatively skinny, which allows users the ability to fit more bars before the chart gets cluttered. If you’re not interested in the opening price, bar charts are an ideal method for analyzing the close relative to the high and low. In addition, bar charts that include the open will tend to get cluttered quicker. If you’re interested in the opening price, candlestick charts probably offer a better alternative. The beauty of Point & Figure charts is their simplicity. Little or no price movement is deemed irrelevant and therefore not duplicated on the chart. Only price movements that exceed specified levels are recorded. This focus on price movement makes it easier to identify support and resistance levels, bullish breakouts and bearish breakdowns. Contrary to this methodology, Point & Figure charts are based solely on price movement and do not take time into consideration. The topic on candlestick charting is broad and beyond the scope of this article. This method of charting originated in Japan over 300 years ago, and have become quite popular in recent years. For a candlestick chart, the open, high, low, and close are all required. A daily candlestick is based on the open price, the intraday high and low, and the close. A weekly candlestick is based on Monday’s open, the weekly high-low range, and Friday’s close.

Trendlines:

Trendlines are an important tool in technical analysis for both trend identification and confirmation. The general rule in technical analysis is that it takes two points to draw a trendline and the third point confirms the validity. An up trendline is formed by connecting two of more low points. The second low must be higher than the first for the line to have a positive slope.

Up trendlines act as support and indicate that net-demand (demand less supply) is increasing even as the price rises. A downtrend is formed by connecting two or more high points. The second high must be lower than the first for the line to have a negative slope. Down trendlines act as a resistance and indicate that net-supply is increasing even as the price declines.

Forex brokers are more of a marketing machine than market makers. Forex brokers need a constant stream of new clients to keep making money since most of the new traders dont survive longer than a few months.

For enticing new clients, vast sums of money are spent on advertising by forex brokers. You can check this fact by going on Google and typing any forex related keyword. Almost all the ads will be by forex brokers. Each click costs them around $1.

One way is to announce forex trading contests that reward the winners with $2000, $1000 and $500 cash prizes. Who is the actual winner in these contests? Your forex broker!

This is like a lottery, only three win. The more you trade in order to win the contest, the more money your broker makes.

There is no check on the forex brokers. They can quote any rate to you. Forex brokers do this by adding 2 3 or even more pips to the interbank market pip spread

These 3 or 4 pips are the risk free profits that the brokers make for each round trip trade. You see why forex brokers are giving you free platforms and trading signals, only to make you start trading as soon as possible. Your broker will make more risk free money, the more you trade!

There is a practice used by forex brokers called Price Shading. For example, if the broker is convinced that Euro is on an uptrend and its price is going to rise, the broker will shade his price quote slightly higher to take advantage of the likely increase in Euro price.

One of the classic tricks used by many brokers is to trip stop losses with a single momentary blip. Brokers have all the information about stop losses placed by their clients. So, if he finds many stop losses at a certain level, there will be a momentary spike in the price feed that will trip most of the stop losses.

You cant do anything. It was a momentary spike, so small that it only tripped the stop losses.

Since, there is no central exchange to compare moment by moment prices, your broker can offer any excuse like there was sudden large order in the market or the broker feed is much faster and reflects true interbank rates.

Forex trading is an altogether a totally different beast as compared to stock trading. One of the major differences between the forex and stock markets is that forex markets are open 24 hour, 5 days a week while stock markets have fixed timings. For example New York Stock Exchange (NYSE) is open from 9:00 AM to 4:00 Pm. You can only trade stocks at NYSE during this time.

Continuous 24 hour action at the forex markets baffles many new traders. Forex markets have no central exchange. It is an Over the Counter (OTC) market that is spread over various locations in the world.

For a new forex trader, it becomes very difficult to understand when to trade and when not to trade as there is no formal open and close of the market. Many exhaust themselves by sitting in front of their computers all day. Fatigue them and make wrong decisions. An easy way is to divide the day between three 8 hour sessions.

Further divide each 8 hour session into two 4 hour sessions using a 4 hour chart. This division of 24 hours is logical as there are only three major money centers in the world that have the capacity to move the forex markets.

The three major money centers that affect the forex markets everyday are namely: Asia, London and New York. We will call our three trading sessions, the Asian, the London and the New York Session.

Asian Session: Most of the turnover in this market session is handled by Sydney, Tokyo, Hong Kong and Singapore. Main players are the commercial exporters and the respective central banks. Since most of these central banks are in competition with one other, the price action during this session is jumpy and unsustainable.

London Session: London is still the forex capital of the world with deep and highly liquid forex market. Paris, Geneva and Frankfurt also are players in this session. The moves that originate in this session are very important keeping in view the amount of money needed to move a market this deep. These moves give you a lot of information about the market sentiments and positions.

New York Market Session: New York is second to London. Both New York and London overlap in the morning when New York is opening and London is closing. This is the best time of the day for savvy traders to trade as there is a lot of price action during this time.

The following table gives important times of the day that any forex trader needs to know: 00:00 GMT-Sydney Opens. 11:00 GMT-London opens. 15:00 GMT- London becomes very active. 17:00 GMT- London is active and New York opens. 18:00 GMT- London and Europe closes. 19:00 GMT- New York and Chicago getting ready for a close!

This overlapping between London and New York is when major price action takes place and new trends are formed or old trends are reversed. London is the market trend setter in fashion as well as forex.

The Securities Investors Protection Corp. (SIPC), often assumed to be analogous to the Federal Deposit Insurance Corp. (FDIC), insures retail brokerage accounts for up to $500,000 each in the event of a catastrophic firm failure. The SIPC is non-profit organization funded by its member securities brokers, created by congress in 1970 to promote confidence in the US securities markets. The coverage is event-neutral in the sense that it replaces missing securities and cash whether they disappeared in an earthquake, fire,flood, or were stolen by a broker. Missing securities are replaced at their current market value which may be a fractionof their previous value.

To meet its obligations, SIPC currently has $1.25 billion of capital which invested in US Treasuries as required by law. It also has a $1.0 billion private syndicated line of credit to draw on should its capital be exhausted. On top of that, it has $1.0 billion in line of credit from the US Treasury.

To cover losses beyond that, brokererage firms have arrangements with the following insurers:

1. CAPCO (Customer Asset Protection Co.), which is a insurer of 14 brokerages, claims that it has no dollar limit on excess SIPC coverage; yet, if you desire to specifically inquire what the financial backing is for each customer coverage, president Frank Lagerstedt labels such information as “proprietary.” Lagersterdt has legal backing for withholding the information. The New York State Insurance Dept has repeatedly denied my Freedom of Information Act (FOIA) request for CAPCO’s financial information.

In fact, CAPCO declines to provide any information about its capitalization. The New York State Insurance Department denied Bloomberg Wealth Manager’s FOIA to see the firm’s financail statement, citing New york Insurance Law, section 7003 (c) (3). Under New York Insurance Law, section 7003 (c) (3), the information filed by a captive insurer in its application for licensing is “given confidential treatment and shall not be the subject to public inspection… except to the extent the superintendent finds release of information necessary to protect the public…”

Furthermore, it is not known how much reinsurance CAPCO has or how much of the member premiums go to boosting the company’s capital. Also, CAPCO won’t disclose whether memeber firms are required to ante up addtional capital if a large claim drains its resourses. Moreover, none of the company’s officers explain how its “risk remote” potential liabilities are quantified. It is strongly believed that CAPCO is unable to quantify the risk for the same reasons the commercial insurers couldn’t. For that matter, the company is most likely undercapitalized.

Member firms belonging to CAPCO are: Robert W. Baird, Bear Stearns, Credit Suisse First Boston, A.G. Edwards, Goldman Sachs, Edward Jones, Legg Mason Wood Walker, Lehman Brothers, J.P. Morgan Chase, Morgan Stanley, National Financial Services, Pershing, Raymand James Financial, and Watchovia Securities.

2. Lloyd’s of London offers $150 million per customer but no more than a total of $600 million per broker-dealer for customer losses. Its client firms are Ameritrade, E*Trade, Merrill Lynch, Charles Schwab, Smith Barney, Citigroup, T.D. Waterhouse.

3. XL Insurance insures for up to $600 million in total customer losses. Its member firm is UBS Financial Services.

If brokerages are going to use excess SIPC coverage for their customers, don’t they owe an explanation of how they intend to provide it? It is highly suggested that excess SIPC coverage is little more than a marketing tool for brokerages that say they offer it. Most brokers claim that they purchase insurance for the sleep-at-night factor, and that excess SIPC has always been a nice enhancement for clients.

It is my personal adamant belief that rather than considering the amount of excess SIPC coverage a firm carries, an investor should place more emphasis on its financial strength.

You must have heard about George Soros; the man who made a cool $1 Billion profit in just a few days with a single currency bet. In the early 1990s, he speculated on the price of British pound being too overvalued.

He purchased $10 Billion of puts and calls forex options by gambling all the assets under his control as collateral on a single bet that in the end made history.

His knowledge of the currency markets was perfect. He was sure that his conviction that the Bank of England cannot sustain the overpriced British pound would come off right. Soon other currency speculators also joined. A huge selling pressure on British pound developed. Bank of England could not sustain the selling pressure too long and in a matter of 24 hours had to take British pound out of the European Monetary System and let it float freely.

British pound plummeted in the currency markets. George Soros had won his bet. He became famous as the man who broke the British pound with his pictures in all the famous newspapers and magazines.

Daily more than $3 trillion are transacted in the currency markets. You as a forex trader can profit from the volatility in the currency markets using a number of methods. Forex options is one of the methods

As a retail forex trader you can trade any of these contracts: spot, futures and options. Forwards and swaps are two contracts that are also traded in the forex interbank market between large institutions like banks, corporations and hedge funds.

What are forex options? Options are derivative instruments that allow you to buy or sell an underlying asset at a price known as exercise price before or on a certain date called strike date. There is no obligation on you to actually buy/sell the currency like that in futures.

In case of a forex options the underlying asset is the currency. Now, forex options give you the right to purchase/sell a certain amount of a particular currency on payment of a premium.

How do you profit from forex options? When the currency price is above/below the strike price, you can exercise your option to buy/sell that currency by buying/selling the currency at the strike price. The difference between the strike price and the currency market price is your profit.

However, in case, the currency market price is below/above the strike price of the forex options; you need not exercise your right to buy/sell. By not exercising the forex options contract, you only lose the premium.

There is a very good Non Directional Forex Options Trading Strategy that does not depend on the direction of the market. In other words you dont need to predict whether the currency price is going to go up or down and make your profit regardless.

This is a risk free method but it only guarantees 30-50% ROI. If you are satisfied with this much sure shot return you can try this method.

Have you heard about Forex MegaDroid? It is a revolutionary new forex trading robot that has been released just recently in the market. It is make so much buzz in the online forex trading community, you cant imagine.

Forex MegaDroid uses a new technology called RCTPA. This technology is so new that most of the other forex robots simply dont have it. RCTPA lets Forex MegaDroid see in the immediate future, how the market is going to change. It adjusts itself before the market changes. This is something totally revolutionary.

Forex robots are programmed to work according to a particular past market condition. It trades according to those parameters. As long as those market conditions prevail, it gives you winning trades.

Forex markets are volatile and every day brings new conditions. In the past, forex markets would react violently to the release to GDP news. Now they dont. NFP news is now more important. Underlying economic conditions keep on changing.

John Grace and Albert Perrie are the creators of Forex MegaDroid. They are real professional forex people who have an experience of working for the last 38 years in the interbank market. Interbank markets are where the actual professional forex traders work.

They developed a new technology RCTPA. They used this technology to develop a new robot- Forex MegaDroid. This robot has a capability to see ahead 2-4 hours in the future and predict how the markets are going to change.

Forex MegaDroid can double your money every single month consistently. Before its release, for the last many years, it has been just doing that for its developers. Every month it gives 100+% ROI. If you use Forex MegaDroid, you can make your first million in forex trading on autopilot.

Let me show how. You dont need to start with lot of money. Open a mini account. Start trading with only $500. Forex MegaDroid doubles your money every month so do the calculations: First Month; $1000, Second Month; $2000, Third Month; $4000, Fourth Month; $8000, Fifth Month; $16000, Sixth Month; $32000, Seventh Month; $64000, Eight Month; $128000, Ninth Month; $256000, Tenth Month; $512000, Eleventh Month; $1024000. So you see, in just 11 months, you are going to make than $1 Million.

A better way would be to use two robots. This will hedge your risk. If one loses, the chances are the other will give you a winning trade. Forex MegaDroid and FAPTurbo are two forex robots that have a very good consistent trading record.

Hey there and welcome to this article on the day trading robot. I’m sure you already know that the robot is priced at 100k which none of us can afford but it is likely that most of us can afford the day trading robot newsletter that is far cheaper.

When you checkout the day trading robot website you can see straight away that the newsletter is worth the money.

It may interest you to know that this day trading robot thing is all about and what you will get. When you subscribe you will be told via email whenever the robot makes a new pick, you will then know what to buy and will also be told when to sell.

The fantastic thing about the day trading robot sales page is that you can see that from the video the robots pick went up over three hundred percent over night.

So after seeing that amazing question it begs the question can the robot ever lose? Well from what I have seen with it the success rate is roughly 90% which is amazing.

The great thing about the day trading robot is that it is different from all anything else out there. With this thing on our side all we need to do is to buy and sell when the robot tells us to.

In the past we have become accustomed to just seeing some sort of ebook with rehashed strategies that may or may not work on any given day.

Having the day trading robot on your side will get rid of all the previos work you had to do, now we can let the robot do the work and follow it’s instructions.

To be honest this sounds quite hypey and you will have to do somethings to make this work.

So what work wil we have to do with the robot? Firstly you will need to open the email and read the recommendation, secondly you will need to buy the stock and thirdly you will need to sell the stock when it tells you to and lastly collect the profits.

When you buy the day trading robot you will learn how to control your bankroll and to multiply it many times over very quickly by only trading with your profits.

Forex traders need to know about their forex brokers if they want to really start trading forex trading. There are many myths and scams that need to be exposed. Many retail forex traders are too simpleton to understand the games the forex brokers play with them.

There is a difference between the interbank forex market and the retail forex market. Interbank forex markets are where big players like banks, multinational corporations, hedge fund and other institutional investors operate. The size of the transaction in the interbank market is large due to which it is not open to small retail traders.

The internet revolution made retail forex trading possible. Anyone can open an online margin account with a forex broker and start trading forex from the comfort of his/her home. But the problem is this that retail forex market is loosely regulated. Being not well regulated lets the forex brokers do whatever they like with you.

You should be beware of those games. You need to know the following facts while trading forex:

Nontransparent pricing: Since, forex market is over the counter market with no clearing central exchange, the prices that your forex broker quotes to you is the price that you get. It is really difficult for you to know whether the quoted price is fair or not. You have to just accept it.

Use of Leverage: Your forex broker will love you to use a high leverage like 100-1 or 200-1 in your trading. Since most of the small forex traders are unsophisticated, they easily overexpose themselves and get wiped out in the market making gains for the broker in return.

Brokers trade against you: Since most of the retail forex trades are too small in size, forex broker is not immediately able to offset this position in the interbank market. This provides them the chance to trade against you. Most of the retail traders dont know how to trade. So you lose and your broker wins.

Unfair practices: Just like Casinos, Forex Brokers dont like winner. If you are winning too much, your forex broker may resort to denying the service to you or complicate execution of your trades so much as to make it impossible for you to trade.

Once you know these facts, you can use a scorecard for evaluating different forex brokers. Bill Poulos, a veteran forex trader has developed one for you. Visit my Blog to read about it.