I came to believe that trading should not be a standalone money making venture, it should be supplemented with other income source to cover yourself. This is important for two reasons: You actually have money to trade a fair sized positions to make a difference with money that you can use (winning $10 a pop is nice, but it's nothing like profitting $ on your trade k members in the Forex community. Welcome to blogger.com's Reddit Forex Trading Community! Here you can converse about trading ideas, strategies IMO you can make decent part time income if you run medium risk on 20K. You could except to make between $ and $ per month if you're good. 50K is the absolute bare minimum It's not a get quick rich scheme. It takes time to learn how to read and analyse currency fluctuations. I started FX trading with a demo account as a side thing back in September Investing time in forex trading is totally worth the time. Forex trading is profitable only if you know how to trade. No doubt it has a great profit potential but at the same time it is very risky and ... read more
Perhaps the price is near the yearly high and traders begin taking profits. Or perhaps a large hedge fund decided to reduce its holdings. For whatever reason, the price bumps into resistance and starts declining. The decline is quickly met by increased demand as buyers view the lower price as a steal. The renewed buying pressure reverses the decline, and the price climbs back to the same level. At this higher price, however, more traders become willing to sell, forcing it down again.
This situation repeats itself for some time. You might notice that each fall stops at a higher low. Buyers gain more control as the price runs up to the resistance level and, eventually, a breakout occurs. This is expected to be followed by a significant increase in price. The descending triangle is just the bearish equivalent of the ascending triangle. It consists of a horizontal trend line drawn across the lows and an up-sloping trend line connecting the highs.
Prices much higher than that threshold are overvalued and prices much lower are undervalued. If the current price is higher than 1. The sudden demand at the 1. Nevertheless, if sellers are strong, the increase will quickly be suppressed and the price will fall back to the support. This is what happens in the case of the descending triangle. Once the price has fallen back to support, buyers push it higher again just to see it tumble shortly after.
By looking at the pattern, you can see that every attempt to lift the price is stopped at a lower high. This is a great indication of waning enthusiasm and growing selling pressure. The price is pushing into the support until it fails to hold, which marks the completion of the pattern.
Those who like tinkering with trading strategies might be interested in our attempt to build a triangle trading strategy from scratch. Spoiler alert! Rectangles are very versatile patterns that occur when the price is bouncing between two parallel support and resistance levels. You must pay close attention to these patterns because you never know if they will be bullish or bearish until the breakout. Bullish rectangles occur when the breakout is to the upside.
This signals continuation if the trend is up and reversal if the trend is down. When the price has been increasing for a while, the people who bought the currency pair at the beginning of the trend will eventually begin taking profits. This will create an increased supply at a particular level, as these people must sell their position to reap the returns. This selling creates the resistance level that you can see at the top of the bullish rectangle.
Once selling sends the market down, other traders will take it as an opportunity to buy at a cheaper price. This means a higher demand at a particular level. Consequently, a support level emerges, forming the bottom of the rectangle. Now the market is stuck between these two levels: support at the bottom and resistance at the top. Sellers who think the trend is over will stop the price from moving above the resistance.
When a breakout occurs to the upside, the market tells you that the profit-taking is done and short-sellers were unable to hold the resistance.
The odds now shift in favor of trend continuation. This is what the bullish rectangle signals in an uptrend. In this case, the rectangle is preceded by a falling market, which begins consolidating upon hitting support. The price starts bouncing between two levels: the support zone at the bottom and a newly established resistance at the top.
The bearish rectangle is identical to the bullish rectangle except that the breakout is to the downside. Like the bullish version, it can signal both continuation and reversal. If the trend is up, the bearish rectangle acts as a reversal pattern. If the trend is down, it acts as a continuation pattern. Around this area, the power of sellers and buyers becomes nearly equal. As a result, the price moves in a tight trading range, bounded by a resistance level at the top and a support level at the bottom.
Sellers take control after some time and the pattern completes with a downside breakout. This is the distinguishing feature of the bearish rectangle pattern. Consolidation in the uptrend followed by breakout to the downside signaling the reversal of the trend. The price falls in a strong downtrend and then starts to consolidate between support and resistance levels. This up-down struggle continues for a while and the pattern begins to exhibit the shape of a rectangle, from which it gets its name.
Eventually, buyers run out of ammunition. The selling overwhelms demand, and the price begins falling once again. When it breaks through the support level, the bearish rectangle is complete and signals continuation of the trend. Although they are fairly simple patterns, the close similarity between the bullish and bearish rectangles can confuse new traders.
Click here for a more in-depth explanation, additional examples, and interesting strategies. However, you must make sure that you are using forex chart patterns not only to generate trades but also to turn those trades into income. This guide helps you figure out how to leverage different forex chart patterns. Then, you must create your own rules regarding the risks you take, the currency pairs you trade, the timeframes you follow, and so on.
Once you know which chart patterns you like, you can perform backtesting to understand them even better and figure out the best way to trade them. Consider the suggestions you have read in this guide and download our free forex chart patterns cheat sheet.
The guide is structured as follows: First, we explain the notion of forex chart patterns: What is a forex chart pattern? Why do chart patterns occur? Are chart patterns reliable? How do you use chart patterns in forex? Typical suggestion. Short description. Double top. End of an uptrend. A pattern consisting of two peaks that are located at roughly similar levels. Double bottom. End of a downtrend. A pattern consisting of two bottoms that are located at roughly similar levels.
Head and shoulders. A pattern consisting of three peaks, with the middle peak being taller than the others. Inverse head and shoulders. A pattern consisting of three valleys, with the middle valley being lower than the others. Rising wedge. End of an uptrend or continuation of a downtrend. Falling wedge. End of a downtrend or continuation of an uptrend. Bullish flag. Continuation of an uptrend. Bearish flag. Continuation of a downtrend. Bullish pennant. A pattern consisting of two converging trend lines.
Bearish pennant. Ascending triangle. A pattern consisting of a horizontal top and an up-sloping bottom. Descending triangle. A pattern consisting of a horizontal bottom and a down-sloping top. Bullish rectangle. A pattern consisting of two horizontal trendlines between which the price oscillates. Bearish rectangle. Forex Indicators: The Definitive Guide Like any skill, trading also requires effort and dedication.
There are many traders who have traded over the years with dedication and perseverance. Here are some of the richest forex traders in the world. These are people who persevered after they failed, learned from their mistakes and are now role models:. By far, one of the most skilled forex traders around is Paul Tudor Jones. He took advantage of the market crash that occurred in October of He is considered to be one of the wealthiest living traders. As you may have expected, Jones did not start at the top.
He was born in and studied Economics at the University of Virginia. He graduated in and began his career in the financial world working the trading floor as a clerk. No review of the richest and most successful Forex traders would be complete without mentioning George Soros. He is one of the industry's most notorious figures. Soros earned a reputation as being one of the most skilled investors ever. This all happened in before Black Wednesday, September 16, If you want to know the full and incredibly interesting story, check it out here.
A name almost everyone knows. Waren Buffett is the third richest man in the world. He is an incredible investor. Buffett's fortune surmounted, in part, due to his investment decisions and his perspective on the long term which has reaped him enormous gains. I mentioned Warren Buffett in this list because he is one of the most well known and wealthy people in the world involved in investments, but he is more involved in long term investments and is not thought of very often in the world of Forex trading.
Interestingly enough, Bill Lipschutz earned his profits in the Forex sector of Salomon Brothers back in the s. He is a key example of someone who started out with no experience in currency markets and through perseverance and, no less important, dedication to developing a safe and intelligent strategy, became very successful. He earned the nickname the Sultan of Currencies. Libschutz sees the Forex market as psychological. While Lipshultz pays attention to fundamentals, like most traders do, he does not overlook market perception.
He believes it substantially influences price action. While trading can be an option to earn more money on the side, or replace a full time income, it's also important to be aware of the risks involved. All of the numbers above assume that a trader is being consistently profitable.
However, in reality, this is very difficult to achieve. Sometimes you might make the wrong trade, or the market might not react in the way you expect, or you might close a trade too early or too late. All of these can cut into your profits, which means that it's very unlikely for you to make the same return every month.
This is why having good risk management and money management is essential for long-term success in trading - while you can work on new trading strategies and invest in Expert Advisors and mentors to help make your traders more profitable, if you don't know how to manage risk, those good trades will be outbalanced by bad trades, leaving you in the red.
While it's difficult to get exact numbers of what different traders are earning, there is a lot of information we can use to draw some conclusions. For traders who are trading the market independently with their own money, their salary will come down to their average monthly profits, as well as their starting capital. The larger their starting capital and the larger their monthly profits, the more they will be earning.
However, even if they don't start with a large deposit or capital, if they trade persistently and make consistent profits over time, those profits will accumulate exponentially over time. In any case, it's important to be aware of the risks involved with trading, as those earning the highest salaries are often taking the largest risks, which means they could potentially lose those earnings just as quickly as they made them. Whether you're trading independently or trading for a company, performance is everything when it comes to earnings.
Fortunately, anyone can improve their trading performance by learning from the pros. With Admirals FREE weekly trading webinars. Every week, we run FREE webinars on the world's most popular markets and trading strategies, to help you be more successful as a trader.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
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Forex chart patterns are patterns in past prices that are supposed to hint at future trends. There are many different patterns, with various suggestions depending on the situation. Before we get started, download a copy of our forex chart patterns cheat sheet.
These patterns are highlighted below for a quick overview. Each pattern is discussed in detail later in the guide. A pattern consisting of two up-sloping trend lines that consciously narrow as the market moves higher. A pattern consisting of two down-sloping trend lines that consciously narrow as the market moves lower.
A pattern consisting of a large price increase and a subsequent consolidation bounded by two parallel trend lines that point down. A pattern consisting of a large price drop and a subsequent consolidation bounded by two parallel trend lines that point up. Forex chart patterns are patterns in historical price data that can indicate when there is a greater probability of one thing happening over another. Many people believe that prices evolve randomly and that there is no way to predict the future.
Those who subscribe to this hypothesis avoid trading and invest in index funds. Others believe that prices are at least somewhat predictable. Those who belong to this group want to beat the market through fundamental analysis, technical analysis, or the combination of the two.
Fundamental analysis uses financial data such as GDP reports or expectations of future interest rates to determine proper exchange rates. Thus, while fundamental analysts rely on economic data, technical analysts examine patterns of past price behavior. Some forex patterns relate to only one or a few price bars. These are called candlestick patterns and not chart patterns.
The distinguishing feature of chart patterns is that they take a long time to form and consist of several price bars. In their book, Technical Analysis of Stock Trends , Robert D. Edwards and John Magee were the first to provide a systematic overview of the most commonly recognized chart patterns.
The idea is that if you can develop an understanding of various forex chart patterns, you can become a better trader. The traditional academic view has always centered on the notion that investors are rational and market prices properly reflect whatever information is available to them.
This suggests that regardless of how high or low the price is, it must be the correct price based on currently available information. Now, here we run into a problem—at least as far as chart patterns are concerned. If currently available information is already priced in, only new information can cause price changes.
How could past price data help you predict the future if the market reacts only to new information, which is obviously unpredictable? These people are the proponents of the economic theory referred to as the efficient market hypothesis EMH , introduced by Fama. Behavioral finance argues that people are not always rational , and their decisions are subject to various biases. You can probably recall situations when you threw your analysis through the window and acted based on your feelings.
Perhaps you were afraid of missing out on an opportunity or you held on to your losing position for too long. Now, if people are consistently influenced by their emotions, it is logical to expect that some patterns are observable on price charts and repeat themselves around important psychological areas. This last point is important. You can find chart patterns on any chart, but chart patterns at important psychological levels are more meaningful.
It is safe to assume that your ultimate trading system will influence your success with chart patterns. Chart patterns alone will get you into more trouble than they are worth.
How difficult was it to find this article about chart patterns? Chances are, it took only a simple Google search. This is because chart patterns are publicly available information. They are easy and costless to obtain. If forex chart patterns were very reliable, every market participant would closely monitor them.
Once a signal was present, the market would be flooded with orders and the price would immediately rise or fall to the foreshadowed rate. On the one hand, this is clearly not the case. You might have an outstanding internet connection, but good luck beating the speed of Wall Street firms that spend millions of dollars on things like smart routers, algorithms, and high-speed connections to exchanges.
You can find just as many failed patterns as successful ones. On top of that, chart patterns are subjective. The psychological forces that are supposed to form these patterns also require time to play out.
Patterns on higher charts such as the daily might be more meaningful than intraday patterns. You can be sure that most market participants closely monitor the 1. The point is that a lot of market interest is clustering around a particular level. You know this because the market is hovering around that level for a long time.
Besides, spotting a pattern is just the beginning. What you do next will have a profound impact on your results as well as your perception of the reliability of chart patterns. Chart patterns can serve as a basis for a wide variety of trading systems. They can help you carve out an edge over the market and make money in forex.
While they are no silver bullet, they provide some information, which is better than having no information. Chart patterns are often simple formations such as two failed attempts to achieve a new high price.
Successful trading systems that incorporate chart patterns also account for a variety of factors. We recommend that you bookmark our guides on how to create a trading strategy and how to create a trading plan. With each chart pattern, you can use the formation height and add it to the breakout price to get the profit target. Stock traders usually consider volume to be an important factor in identifying chart patterns. They look at how volume changes during the formation of the pattern, and might reject or favor set-ups based on that.
While this is fine, the forex market is decentralized. This means that whatever volume data you have, it relates to only a small portion of the market such as volume at your broker and might not represent the entire market.
Chart patterns are subjective, meaning that different traders might do and interpret things differently. For example, someone might draw trendlines using wicks, while someone else might use closing prices. Instead of worrying about every little detail, focus on what certain formations reveal about the balance between buyers and sellers. Sometimes you have to be more flexible and throw in some extra reps or rest a bit more.
The same goes for chart patterns. Every situation will be slightly different, which is fine. The double top is one of the simplest patterns on charts. When the price reaches a new high, it shows conviction behind the uptrend. Each trend alternates between impulse and consolidation moves, so the correction following the high is to be expected.
The situation turns interesting when the price resumes its trend and reaches the high again. Instead of breaking through and putting in another higher high, the buying pressure evaporates and the price is unable to surpass its previous high. When the price fails to break above the prior high, it breaks the pattern of an uptrend and signals possible weakness.
Perhaps it will take a bit more time for buyers to attain a new high or perhaps sellers are about to take control. You can assume that sellers are strong enough to reverse the trend or at least drive the market into an extended consolidation. The double top pattern is completed when the neckline breaks.
Traders often set a profit target by measuring the distance between the neckline and the high of the pattern and projecting it to the neckline break. This guide belongs to ForexSpringboard. Do not copy without permission. The double bottom is the mirror image of the double top. When the price reaches a new low, it shows conviction behind the downtrend.
As we have pointed out, trends consist of impulse and consolidation moves. The situation turns interesting when the price resumes its trend and reaches the low again. This is problematic because the downtrend should follow the pattern of lower highs and lower lows. When the price fails to break below the prior low, it signals a possible issue with the trend. That said, this is not yet a buy signal. Now you can assume that buyers are strong enough to reverse the trend or at least drive the market into an extended consolidation.
The double bottom pattern is completed when the neckline breaks. Traders often set a profit target by measuring the distance between the neckline and the low of the pattern and projecting it to the neckline break. Do you want to learn more about trading reversals with double top and double bottom forex patterns? Take a look at this guide. The head and shoulders pattern is a fairly complex formation consisting of three peaks, with the center peak being the highest of the three.
The neckline can slope in any direction and is a good predictor of the severity of the price decline. You can project the height of the pattern to the neckline break and set your profit target accordingly. For a beginner trader, the head and shoulders pattern might be more difficult to recognize. You can always zoom out a bit from the price action or switch to a line chart.
k members in the Forex community. Welcome to blogger.com's Reddit Forex Trading Community! Here you can converse about trading ideas, strategies IMO you can make decent part time income if you run medium risk on 20K. You could except to make between $ and $ per month if you're good. 50K is the absolute bare minimum WebNone of the information provided by Forex salary connect constitutes a solicitation to engage in any trading/investment blogger.com using the Forex salary connect website Web · Managing this variable when trading, according to most institutional, retail and reddit traders - is key to protecting your investment. This includes using stop loss to set the maximum risk you Web · According to Glassdoor, the average Forex trader salary of a London trader is £65, For the basis of comparison, that's about USD86, at the current exchange rate, so a $10, drop from the average figure in the US. Source: Glassdoor, London Trader Salary Meanwhile, CW Jobs calculated the average Forex trader salary as only £42, It's not a get quick rich scheme. It takes time to learn how to read and analyse currency fluctuations. I started FX trading with a demo account as a side thing back in September ... read more
I remember when starting, i calculated to be a millionaire within 2 to 3 years… Hehe, well i still have a bit to go after X years of trading. Here is a look at the average Forex salary in for experts, both employed and independent. Watch, watch,watch then launch. ok get a journal and track record and approach a proprietary trading firm. Moving on… Do you withdraw or compound your returns? If you are from the UK I highly recommend you read this article on how to get started trading in the UK.Hi Peter. Take a look at this guide. This guide helps you figure out how to leverage different forex chart patterns. November 22, Can you see how powerful this is?