Guide to Pips and Spread in Online Forex Trading

The first thing you must understand in forex trading is the spread and the pips. Each currency is traded against another one.

This is called a currency pair. An example for a popular pair with high daily trading volume is EUR/USD.

The EUR/USD exchange rate is one of the most traded contracts in the world. In total the forex market trades around $2 trillion Dollars every day but there are only a few currency pairs that are traded with high volume.

When you want to trade this pair then you need to know the spread and the value of a pip. The spread is the difference of the buy and sell price. For example you want to buy the Euro against the Dollar. The current price that your trading platform displays is 1.5000 x 1.5003. That means there are 3 pips spread.

You can buy the Euro at 1.5003 but sell it only at 1.5000 right now. The price of the currency pair is constantly changing. The spread can also change. The spread will get bigger with more market activity for example. Your broker is the one who earns the spread. He widens the spread when he has more risk and reduces the spread when the risk for the broker becomes smaller.

You have no other choice than paying the spread. There are brokers that offer zero spread trading but that is often an illusion. The broker makes the pricing and he can give you any price he wants. The price you see may have no spread but you can be sure that you pay a price for it some way.

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6) Forex Technical Analysis Basics

Technical analysis uses information from the past in order to predict movements of the forex market. The latter represent any changes in the prices of currencies as well as volumes and open interests.
Technical analysis applies several instruments in its execution. Some of them are as follows:
• Forex Technical analysis charts
Different kinds of charts that are applied in technical analysis tend to picture changes in the prices of currencies that occur during a specific time period.
• Forex Technical analysis indicators
These indicators are generally extracted from various mathematical processing of averaging and other traits coming from movements in currency prices.

The tools that are applied when making a technical analysis can be applied to every sector of the forex market. Additionally, they are applicable to every currency as well as every time period.
By applying a technical analysis, forex traders can easily calculate the figures that matter to them, moreover it has been greatly facilitated by the development and progress in technical services, which have been accompanied by reasonable prices. Additionally, these technical services can be used by all forex market traders no matter what their trade plans are or the strategies they have chosen to apply for the completion of these plans.
To be successful at forex trading you need two main things - the knowledge and the right trading plaftorm.

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6. ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money

Forex Technical Analysis Indicators Based on Moving Averages

In this article we will examine some of the mathematical tools based on moving average applied in technical analysis.
Envelope
The envelope model includes plotting two bands around a short term closing price (typically a 5-day one) based moving average, by adding and subtracting a specific percentage rate. For foreign currencies it is usually recommended that this percentage is around 2%.
Forex Technical analysis interpret as a buying signal the intersection of the underlying chart price from above down by the envelope chart.
Bollinger Bands
Bollinger bands represent another mathematical tool in technical analysis. Bollinger bands consist of a middle simple moving average (typically a 20-day one) band and two bands plotted at two standard deviations above and below the middle band. Those standard deviations are mathematical formulas which measure volatility and show how the currency price can be extended around its "true value".

The bands resemble an envelope model that is expanding and contracting. The moments of considerable contractions are viewed as a signal that the volatility is low. On the other hand, when the bands are far apart, this is viewed as a signal of high volatility in price. Additionally, the sequence of two top formations, one being outside the band and the other inside it, is also considered a signal. Forex traders tend to sell a position when the signal appears above the band. On the other hand, forex traders buy a position when it appears below the band.
Median Price
An additional mathematical tool used in technical analysis is the median price indicator chart. The arithmetic averages of the high and low for the prices prevalent in the trade period are used in order to diagram the median price chart. In order to get an idea of the degree and direction of the close prices deviation from the average prices during the period under consideration, one should examine the superposition of the indicator chart and the underlying price chart.
Average True Range
In order to get information on the degree of the volatility Technical analysis forex traders should refer to the Average True Range indicator, which is also known just as ATR. A reversal can be expected if the values of the volatility are of a minimal or maximal value, meaning located in the extremes.
Moving Average Convergence Divergence (MACD)
Another application of the moving averages is viewed in the Convergence-Divergence of Moving Averages oscillator, also known as MACD. It is constructed on a moving average that has been exponentially smoothed.
The MACD combines two charts plotted against a zero line. The first chart is the difference of two EMA, where the first one should be short-term and the second one long-term. The second chart is the "shortest" EMA.
The zero line shows the number of times when the values of the moving averages are equal. A move above zero line would be interpreted by Technical analysis forex traders as a buy sign, while a cross below the zero line could be interpreted as a sell signal.
Additionally, when the short-term average line crosses the long-term average line, forex traders receive further trading signals. For example, they should buy a position when the intersection is of an upward direction. On the other hand, they should sell a position when the crossover is of a downward direction.
To be successful at Technical analysis forex trading you need two main things - the knowledge and the right trading platform.

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Forex Indicators and drawing tools

This is a subject we are quite passionate about at PFX. Charting is the core of the analysis done by a technician. Reading and analyzing charts is something that you get better at with time and experience. But if it's not harnessed correctly, it can also become almost hypnotizing and lead to “ticker-itus,” a dangerous condition that borders on obsession as a trader spends more and more time staring at charts and indicators and less time making trading decisions and controlling risk.
I think the reason why it is so easy to abuse chart analysis is because it is highly subjective. Show the same chart to two technicians (which is fun to try), and they are likely to come to similar conclusions but possibly through very different means and details. And in some cases, they may not come to the same conclusion at all.
We have assumed for this section that you understand that a chart plots a currency pair’s price movements over time. On most charts, time is plotted from left to right on the X, or horizontal, axis and price is plotted from bottom to top on the Y, or vertical, axis. While most charts are built on this basic setup, each type of chart—from line charts to candlestick charts—illustrates price movement differently. Each chart type has specific advantages and disadvantages, and you will need to find the chart type that works best for you as a trader. Here a few things you need to know.

Time is important
Each data point on the chart, whether it is shown as a line, candle, bar or box (all discussed later in this lesson) represents price at or within a specific point or interval in time. Very short-term traders may have their charting intervals set for 30-minute increments or shorter, while longer-term traders will often use daily, or 24-hour, increments. You can see in the image below of two charts both spanning the same length of time. The shorter-term (4-hour) chart on the right shows a lot more detail than the daily chart on the left.

What's your type?
There are different ways to illustrate each interval of time on a chart. It really depends on what kind of trader you are and personal preference.
Here are the most common types of charts and samples below:
Candlestick charts: Most forex traders use candlestick charts in their trading and analysis. Candlesticks show the open, high, low and close prices for each trading period. The body, or rectangular portion, of the candlestick shows the open and close prices, and the wick, or shadows, of the candlestick shows the high and low prices. We use candlestick charts for our own analysis and on the PFX site.
Line charts: Some traders use line charts—which only shows one price, usually the close price, for each period. Line charts are certainly easy to read, but they leave out a lot of detail.
Bar charts: Bar charsts are similar to candlestick charts, but many traders feel they are more difficult to read. A bar chart shows the open and closing prices as horizontal tick marks on a vertical bar that shows the period’s total trading range.
Exotic styles: Some traders have come up with other, more unusual, ways to chart price movement—typically to accommodate a specific style of analysis as well as to show price movement. For example, the chart below is a Renko chart, which shows price movement but does not progress linearly through time

Many traders will layer drawn trend lines, technical studies and moving averages on top of their price charts. Most dealer charting applications include many of these studies, indicators, and line tools. At PFX, we use trend lines and Fibonacci analysis frequently—which you will learn more about later in the course.

Technical studies can be useful, but they can also be abused by traders. The biggest danger traders face when using charting tools is “analysis paralysis.” At some point, you have to make a decision about your trade, and simply adding more analytical tools that may just end up muddying the water does not necessarily increase your probability of success. “Indicator piling,” or adding several indicators to a single chart, will probably only obscure your real trading opportunities.
If your charts start to look like the one on the left rather than the one at the right, it may be time for you to reevaluate how much time you are spending adding indicators.

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Beginners Guide to Bigger Profits

This article gives you a complete guide to currency technical analysis. We explain why it works, and show you how you can use technical analysis in the currency markets
, to make huge profits.
Many traders don’t fully understand the advantages of technical analysis - and scoff at it, saying that it can’t work.

We will however, show you how to use currency technical analysis the right way, to make big profits – so let’s get started.
What is Currency Technical Analysis?
It is simply defined as the study of price action through the use of charts - for the purpose of identifying price trends. It’s not a science, as many chartists claim - it’s an art, and it works! Why? Because technical analysis reflects human psychology. What about the supply and demand fundamentals, you may ask - well it takes them into account too.

Currency technical analysis uses the following equation:
Market Perception (trader psychology) + Fundamentals = Price Action
All currency technical analysis does, is postulate that all fundamentals are quickly reflected in price action (and in the 21st century with our advanced communications this is truer than ever) - so it simply concentrates on price action. It really is that simple!
Price action reflects all the fundamentals, and more importantly, how the participants perceive them.

Traders who study fundamentals claim that you can’t use technical analysis - because you need to know and study the fundamentals, to know where prices are going - this is simply not true! Some of the largest price moves in history, have occurred with little or no change in the fundamentals.

It’s a fact that markets are generally most bullish at market tops and most bearish at market bottoms - and these markets occurred with little or no change in the fundamentals. Human psychology was at work here - and currency technical analysis studies this, as well as fundamentals.
Learn to use technical analysis, and you will see the reality as it is - rather than listening to the opinions of others. Keep in mind that 90% of traders lose money - because they’re influenced by greed and fear created by the news services.
Charts allow you to see the reality - and that’s a huge advantage
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Explaining The Technical Analysis

The study of a security's price action for the purpose of forecasting profitable price trends and movement is known as Technical Analysis. The price action is defined as movement in a security's price, volume, and open interest.

Technical analysisis primarily, maybe not exclusively, conducted by studying charts of the recent past price action. Many different methods and tools are new in Technical Analysis, but they all rely on the superlative assumption that price patterns and trends exist in markets, and thus, that they can be identified and exploited too.
Technical Analysis does not try to analyze the financial data of a company, can say the cash flow, dividends and projection of future dividends, an area of analysis which is also known as the fundamental analysis. However, some speculators try to combine Technical Analysis as the elements from both technical and fundamental analysis.

Like any predictive method, Technical Analysis is not 100% accurate, but it surely attempts to give the presumable outcome. Some forms of Technical Analysis, like charting, are viewed by many of its practitioners as more art than science.

Some scholastic studies conclude that Technical Analysis has little predictive power while other studies show that the practice can produce excess returns too. For an instance, measurable forms of Technical Analysis non-linear prediction using neural networks have been shown to occasionally produce statistically significant prediction results.

Lets take an example to understand the debate regarding the efficacy of Technical Analysis, a very well-known and successful fundamental analyst, once commented that, "Charts are wonderful for predicting the past."
A Federal Reserve working paper has shown that the statistical properties of intraday foreign exchange prices change near the "support and resistance" lines, without showing that this result would be new in a profitable trading approach

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Trade and scalp the market ForexGen has the pleasure to announce the availability of both Dealing Desk and No Dealing Desk Platforms.

No Dealing option provide traders with direct access to the best bid/ask prices through multiple bank access. No re-quotes & No dealer confirmation is the main characteristic of the no dealing option made specifically for “scalpers” and active FX professionals. Absolute freedom to trade during news and economic events.

Fundamentals Of Technical Analysis

Technical analysis was truly an arcane art before the internet boom. Chartists perform technical analysis in their secret rooms with data that was carefully collected from professional sources. Those were the times when stock prices and data did not have a medium through which to be readily available to the public and be ran through publicly available software to produce the charts that are available today.

Today, with internet in almost every household, technical analysis became an art anyone could practice. Complex charts, technical indicators and analysis that was once the sole domain of a few highly paid wallstreet analysts are now available to anyone who wants it, often for free.

Technical analysis also became linked to short term aggressive trading instruments such as stock options and futures because of its excellent short term predictive nature.

With technical analysis this popular, I feel obligated to teach you once and for all everything you need to know about how to conduct proper technical analysis before you start looking at your first chart. A lot of amateurs fail at technical analysis simply because they didn't have the necessary basic knowledge to understand how to interpret technical indications properly in the first place. With the knowledge in this article, you will definite experience more success at technical analysis.

[Why ForexGen?]

1. Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
2. Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
3. ForexGen offers Forex trading in the major currency pairs and crosses.
4. Low capital start, with $250 as a minimum account size.
5. Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
6. ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

Why you Should Know Technical Analysis:

No matter which style of investment
you are engaged, you have to meet and know the basic of technical analysis. As you know, fundamental analysis and technical analysis are two main ways to forecast the price trend. Fundamental analysis involves researching and evaluating the characteristics of the object. Technical analysis, on the other hand, pays
more attention to price movements.

To understand technical analysis, you have to believe three assumes: all market fundamentals are depicted in the actual market data; history repeats itself and therefore markets move in fairly predictable, or at least quantifiable, patterns; prices move in trends.

Technical analysis is a method of predicting price movements by looking at purely market-generated data. Price data from a particular market is most commonly the type of information analyzed by a technician, though most will also keep a close watch on volume and open interest in futures contracts. Based on these information, there are many technical analysis methods which can be used as a tool to forecast the price trend, such method as chart research and technical indicators.
Chart research is the basic method of technical analysis. You can know a variety of charts patterns that show price action or specific trend. Trend is a term used to describe the persistence of price movement in one direction over time. Trends move in three directions: up, down and sideways.

Technical indicators can be expressed by the value of the indicator. The value will be up, down or same and you can get the signals which are coincident or leading the market. Technical indicators are objective, and you can be objective too.
Almost every trader uses one method or more of technical analysis. Even the most reverent follower of market fundamentals is likely to glance at price charts before executing a trade. At their most basic level, these charts help traders determine ideal entry and exit points for a trade. They provide a visual representation of the historical price action of whatever is being studied.

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Smart Investments are Made With the Technical Analysis Software

Have you always had a taste for great investments?
Do you find trading to be an exciting and extremely rewarding experience? If the answer to either of these questions is affirmative, then perhaps you might be interested in the most recent technical analysis software developed for enthusiasts like you. It’s all presented online but we are going to make a brief summary of what you can expect. There are many great features to be explained, so let’s proceed!

You’ve heard without doubt of technical analysis before we mentioned it to you. It represents that method, approach or study of historical price movements, trying to predict future ones. It is based on the use of various parameters and indicators. Well, the stock analysis software is just what you need. And if we are going to talk about the latest advances in the field, we would have to mention the neural network forecasting.
Have you heard about technical analysis and neural networks? If not, it’s high time that you did. First of all, keep in mind that the stock analysis software studies various patterns of price movements. Then, try and picture a complex network formed of virtual neurons, a sort of an artificial brain. This amazing mechanism is highly intelligent, helping the software locate and gain knowledge of diverse patterns. There is no better way to predict price movements than by analyzing previous changes and the technical analysis software is very useful in such situations. Thanks to the neural network technology, the software can produce exactly the trading signals which are needed.

Specialists have studied carefully the advantages brought to the technical analysis software by the neural networks. Thus, they discovered that once the network is stimulated by various parameters, such as historical price information and several indicators, the results are diverse trading signals (future price levels). As opposed to the regular technical analysis we are all acquainted with, the stock analysis software with neural network forecasting manages to find a connection between original parameters (with stimulating effect) and future price levels. Neural networks locate patterns with extreme ease, working with numerous indicators. Thus, you can rely all of your trading decisions on the technical analysis software.

And how about the portfolio scan? This is another impressive tool offered within the stock analysis software. Depending on the criteria you have chosen and also on the neural network estimating, winning stocks can be selected. Thus, you can rely on the technical analysis software to identify exactly the stocks that match the originally chosen criteria. This feature is highly useful for anyone looking to make smart investments and make a nice profit from them as well. Yes, there are other products available for technical analysis. But why settle for the first you see when you can have the best there is?

While performing the portfolio scan, you will certainly notice how the technical analysis software combines various criteria and adds weight to each and every one of them, according to how relevant that reference truly is. The scan includes price return measures, neural network forecasting and risk management. The smallest change in the stocks can be easily determined thanks to the advanced technical analysis technology.
There are many other features of the technical analysis software you can discover while reading about the product online. For example, there is adaptive noise suppression for price movements and an automatic selection of the best technical analysis models. Model parameters are optimized on a regular basis and the stock analysis software offers only stable trading signals, as a direct result of combining several of the existing models (optimal combination).

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