Now when these economic reports are released, market compares the expected with the unexpected. The more these reports have the element of the unexpected, the more the markets become nervous. So, if you are a news trader or an economic report trader, you need to watch CNBC and Bloomberg constantly to know what the market is expecting. The most market moving reports are the Federal Reserve’s Beige Book, The Consumer and the Producer Price Index, The Gross Domestic Product (GDP). the monthly Employment Reports or what you call the NFP Report, the Institute for Supply Management (ISM). Now as said before if these reports have no surprise for the markets, nothing will happen. But in case if there is a surprise, markets can turn upside down in matter of minutes!

As a trader, your world is highly dependent on the economic calendar. Economic calendar is the listing of dates when these important reports are released each month. Each month, these reports are released by different government agencies and the private sector. These reports are a major influence on how the financial markets move in general plus a source of the repetitiveness in the markets.

Now, you never know how markets are going to react to each one of these economic reports. Some are given more importance by the markets. But this preferrence also keeps on changing. Now, FOMC Meeting Minutes are considered to be very important as interest rate changes are decided in the FOMC Meeting. FOMC stands for the Federal Open Market Committee. The other important reports can be the CPI ( Consumer Price Index) and the PPI ( Producer Price Index).

The US Department of Labor’s Non Farm Payroll (NFP) Employment Report is considered to be a major market moving report. It is released on the first Friday of each month at 8:30 AM EST. You should try to avoid trading at this time. However, there are many currency traders who now specialize in trading the NFP Report.

Now as said before, the market reaction is dependent on how muc surprise there is in the report. If there is no element of unexpected in the report, the market may react mildly. But if there is a big surprise in the report that the market did not anticipate, markets can be volatile for hours or even days before the importance of the surprise is digested by the market. These types of reports can also start a news trend in the market that might last for quite sometime!

NFP Report has become important in the last few years keeping in view the slow economic growth. Now, as the economy shifts gear from slow growth to high growth the state of employment figures can become highly important for the economy. This report is used by the traders, investors and Wall Street Analyst to anticipate any interest rate changes in the economy. In the end, it is the interest rates that stand at the center of the financial universe!

Moving averages can be simple, weighted or exponential. In case of simple, all the prices are treated equally whereas in the weighted and the exponential averages, recent prices are given more weight so that these averages are more responsive to the recent prices as compared to the old ones. These averages tend to smooth out the price action that is more easy to interpret and understand.

Now, longer time period averages tend to move slowly and have a long curve that makes them slow in giving trading signals. Traders use a combination of slow and fast averages in trading. A trading signal is generated when the two cross each other and hence the name crossovers.

Most traders use the combination of three averages. When the short period average crosses the medium one, this gives a trading signal but this need to be confirmed. Confirmation is obtained when the short and the medium move above the longer period average. Futures traders use the combination like 4,9 and 18 period averages. Stock traders use longer periods like the 40 day, 100 day and 200 day to generate trading signals.

Now next to trendlines, moving averages are the most widely used technical indicators. So when using moving average crossovers, when the short period average is above the long period average, you should be long. Similarly when the short period average is below the long period average, you should be short.

The crossovers of these short and longer averages provide the trading signal to act as they indicate that the momentum is shifting from one direction to another. Moving average crossovers are an important tool in the arsenal of any trader. Moving Average Convergence Divergence (MACD) one of the most popular indicator depends on them.

However, when trading with these crossovers, you should know this that these averages are lagging indicators. What this means is that they are giving a signal about the past price action something that has already taken place. These averages work very well in a trending market but do not work well in non trending or choppy markets

Over the last few weeks I’ve written countless indicators and expert advisers (ea’s) and I’m happy to say I’m really loving MT4.  Great platform, and it’s stable!   I can do 10 times as much and use 1/4th of the memory.   The indicators and support forums alone are worth it, but I gotta say I really like the flexibility of the MetaEditor and the available programming platform.

Now to those of you that are “anti robot”.  Good for you.  I am too!

I do enjoy writing indicators and strategies, and yes I’ve even been known to run my “Pip Monster” overnight while I sleep and wake up to profits.   Bottom line is that computers, indicators, and strategies are tools that make our technical analysis alot easier, and more fun.   For me that means creating semi-automatic “robots” that alert me and aid in my analysis, but hey if it runs by itself and makes good pocket money, why not?

Happy Pipping!

- Honore de Balzac

Quite fitting for Forexyard…  worst broker I’ve dealt with.  And apparently I’m not alone in thinking so…

The first question. How do you identify whether this is a Hanging Man or a Hammer? Hammer and the Hanging Man both have a very small candle body accompanied by a long wick either on the bottom. If this type of pattern appears at the top of an uptrend with the long wick at the bottom, it is a Hanging Man. And if it appears at the bottom of an downtrend it is a Hammer.

In less than ideal cases, you might also find a small wick at the top of the candlestick. When the Hanging Man or the Hammer appears, you need to look for the confirmation on the next day.

If the opening price on the next day is less than the previous day’s close, you have a true Hanging Man. If not, then that was not a true Hanging Man. Now suppose, you think that you have spotted the Hanging Man in an uptrend. Wait for the confirmation the next day with the opening price.

A Hammer should have a very small candle body with a long wick at the bottom. Similarly suppose, you think that you have correctly spotted the Hammer in a downtrend. You should confirm this with the opening price on the next day. If the opening price is higher than the closing price the previous day, you have a true Hammer. If the opening price is not higher than the closing price the last day, it is not a true Hammer!

The best chart for these candlestick patterns is the daily chart. Once, you get the confirmation, trade these patterns. They can be highly profitable. But in case, you don’t get the confirmation the next day with the price action, simply ignore the pattern as not true. Whenever, you trade candlestick patterns, first spot them correctly than wait for the confirmation on the following day.

Spinning Top is a signal that the battle between the bulls and the bears ended in a draw. It will start next day again with ony side giving in. What this means is that an explosive move in the price action can take place the following day. Spinning Top is just like the Hanging Man and the Hammer.

Spinning tops appear much more frequently and are very easy to spot with a very small body in the middle of the candlestick and almost equal wicks on the two sides. A spinning top is a nice indication that the trend is about to change direction. Knowing about a trend change early is a highly profitable trading signal.

It has two bands on either side that indicates overbought as well as oversold circumstances, much like the Bollinger Bands forex indicator.

An exception to an oscillating forex indicator is the MACD which does not have an upper and lower band present. As far as banded oscillators are concerned, the RSI is the probably the most widely used version in technical analysis.

Simply put, the RSI is a technical indicator that measures momentum of a specific instrument as well as pointing out extreme overbought along with oversold circumstances. The RSI accomplishes this by comparing the size of recent gains of a financial instrument to the size of its recent losses.

It fluctuates between 0 in addition to 100. Bands are placed at the values 70 plus 30. Should the RSI indicator reach 70, this means situation are overbought. Conversely, should it reach 30, market circumstances are oversold.

The center line is at 50. The RSI can be utilized in several ways in a forex traders trading system. The easiest use is of course, identifying overbought and oversold conditions.

Market reversals are possible once the RSI line touches the 30 or the 70 line. Another system employed with the RSI is called RSI divergence. If the indicator is trending in a direction opposite that of the price, this could be an indication that momentum is dying in addition to could signal a trend reversal.

The RSI can also me utilized as a cross over system. This technique is not the most consistent. The system involved is easy. Enter a long trade if the RSI line rises above the 50 line. In reverse, if the RSI dips below the 50 line, enter a short trade. When the market is ranging, steer clear of implementing the RSI cross over.

For If you need a thorough tutorial on RSI and other major Forex indicators, please Click Here or visit the authors forex portal at www.i-forex-trading.com

When you use a virtual private server you are using a server that is operating within a different server. This means that every virtual private server is very similar to a dedicated server. However, you are able to avoid having to pay the expense of dedicated server hosting because it actually shares the resources of the master server. You will be glad to know that a virtual private server (VPS) offers you a high level of security, reliability, scalability, and flexibility. These are the benefits that make VPS hosting a great solution for any e-businesses trying to find hosting that gives them more features and greater control at a cheaper price.

Here are some vital things to consider as you think about getting virtual private server hosting:

Via Media: Shared server hosting is the typical configuration for new businesses. As time goes by and your business improves, however, you might need to get something a little more powerful than simple shared hosting. You have to pick between virtual private hosting or getting dedicated hosting of your own. It costs a lot of money to get dedicated hosting, and you typically can’t afford that unless you’re a large website. As a result, you’d do well to go for the middle ground and invest in VPS.

More Power: When you are utilizing virtual private server hosting, you are truly taking advantage of the services provided by a dedicates server which has been broken down into smaller servers. This allows you to enjoy increased bandwidth and more control than you can get from shared server hosting. Each VPS has its own operating system and a clear-cut share of hardware resources.

Efficiency of Cost: With virtual private server hosting, you’re taking advantage of the power of dedicated servers without paying for an entire server, making it ideal for saving money. You can even host as many domains as you want, given the right virtual private server hosting plan.

Total Access to Root: Virtual private servers are also like dedicated servers in that unlimited root access is granted. You can make all the changes you want to your webpages, and it won’t affect websites on the same server. By contrast, those other websites won’t be taking your resources if they choose to update their pages as well. This will reduce the amount of downtime your website experiences just because some other host make a mistake. You’ll enjoy autonomous use of the server’s resources and bandwidth, since there’s basically no connection between private servers.

Complete Security: There’s no shared space between clients on virtual servers, similar to dedicated servers. The security your website enjoys is exemplary.

Anyone who relies on shared hosting services will quickly see that switching to virtual private hosting is similar to switching from the run down, beat up, farm truck to a brand new Mercedes Benz. It is true, there is that much of a difference between the two.

With virtual private server hosting, you get all of the advantages and resources of a dedicated server, while still not paying much more than you did with shared hosting services.

Learn more about Ultima Hosts. Stop by Joe Jirade’s site where you can find out all about BostonTechVPS and what it can do for you.

As we have mentioned, hedge is a tool to reduce investment risk which is inherent to every investment. You can think in a way that hedge is sort of an insurance for your investment. When the risks you are facing are getting bigger and bigger, you are more in need of hedging. There are many different types of hedging that suits your different type of investments. You can find foreign currency swap, interest rate swap, futures hedging and hedging for stock price as the common ones.

You have to remember the golden rule that hedging is not a way to help you earn more money. It is a tool to help you reduce the risk. By that, you will invest in two different products that are negatively correlated. The risk is reduced by the offset between the gain and the loss from each of the investment. Or, when investment A is in a gain position, investment is on the contrary a loss position. The gain offsets the loss.

When the risk is higher, the earning or opportunity is likely to be higher, too. But, by hedging, the risk is reduced, therefore, the highest possible earning is also reduced. That means, when you are gaining on investment A, the gain is reduced by the loss in investment B. On the other hand, if you are making loss on investment A, the loss is reduced by gain in investment B.

Let me give you an example on interest rate swap. If you have a loan from the bank of $100,000 and the bank is charging you a floating interest rate (or market rate). You biggest concern must the increase in interest rate (“interest rate risk”), which than you have to pay more interest. To reduce the interest rate risk, you can enter into an interest rate swap with the bank.

As there is a tradeoff between risk and possible earnings, you can choose to what extend that you wish to reduce your risk. That means, you can enter into a $50,000 interest rate swap to minimize your risk or you can enter into a $25,000 interest rate swap to reduce part of your risk. For simplicity, we now assume you have entered into a $50,000 interest rate swap that you receive interest on floating rate.

When the interest rate increases, you have to pay more interest for your loan, but you receive more interest income on the other hand. If interest rate decreases, you can pay less interest for your loan, but your interest income also decreases. For explanation, hedging can be simple. But in real case, you may not find the hedging is such a perfect hedge that all your risks can be completely eliminated.

Leonardo Fibonacci was the inventor of a sequence of numbers that are used in the Fibonacci retracement tool. Retracements are created when the trader picks a high and low price point on the charts that are divided by a few ratios. These ratios are 23.6%, 38.2%, 50%, 61.8% and 100%..

When a retracement is plotted on the charts, the ratio lines are readily noticeable. These ratios are then looked to as areas of support and resistance. No one can clarify why this is so. As such, fibonacci retracements are always referred to by technical traders before entering a trade.

Stock traders, forex traders, futures and commodities traders usually make utilize of this tool often. A few individuals have made something fibonacci confluence in an effort to improve the performance of fibonacci retracements in general. To apply fibonacci confluence, two or more fibonnaci retracements are used on a single instrument. These retracements start from the same point but is stretched to different levels of support and resistance.

The trader then looks for areas where many lines are present, these areas will have stronger support or resistance. As such, traders take these areas into consideration before making a decision on the trade to be undertaken.

Fibonacci retracements are not frequently utilized as a stand alone tool. They are used with other forex indicators to perfect decision making. Utilized in tandem with other indicators in a strategy, fibonacci retracements are a reliable tool that are not often ignored when opening a trade.

I use it to share my indicators and other Forex related files amongst my computers, and with others.

If you’re using MT4 then contact me after you’ve signed up and I”ll share my favorite indicators with you.