Connect with us

Strategies

How to Trade Channels In Forex?

Channels In Forex Trading

So, what is a channel?

As the name suggests, channels aka tunnels or sleeves are parallel trend lines that surround a rising or falling trend at the angle and width that not only captures the overall slope of the trend like a single trend line but also encompasses most of all the price range.

Tunnels or sleeves in FT

And the price range is most of the higher highs and higher lows that defined an uptrend and lower highs and lower lows that define a downtrend.

Up trend down trend in FT

Again, the goal is to best describe the overall slope and price range. So don’t worry if your parallel lines don’t touch all of the highs and lows or don’t encompass the entire trading range.

parallel lines don't touch highs and lows

Here are some examples of channels, on the first one you can see a rising channel.

Example of a rising channel FT

On the second a flat channel or trading range.

Example of a flat channel or trading range FT
And on the third one a descending channel.

Example of descending channel

There are two big advantages of channels over single trend lines. We prefer using channels over simple trend lines, whenever the price range of a rising or falling trend can be captured by two parallel lines because channels provide more useful information.

two parallel lines in FT

1.Better Guidance for Entry/Exit Points

While single trend lines only tell us about the slope of the trend, the upper and lower trend lines of channels also tell us about THE PRESENT AND POSSIBLE FUTURE TRADING RANGE.

Channel in FT

In other words, those upper and lower lines may help us find the best entry and exit points for taking new long positions we might try to buy near the lower channel line. Which is a kind of support and sell near the upper channel line which serves as a kind of resistance.

Quantity and quality of the other irate criteria FT

Whether or not we enter at the lower line and exit at the upper line would, of course, depend on the quantity and of the other Irate criteria we find near these lines. For short positions, we do the opposite and consider entries near the upper line and exits near the lower line.

Again, the final decision would depend on the quality and quantity of the other array criteria we see near these lines. Of course, there’s a lot more to know about entering and exiting positions than that.

Beware of using channel lines to trade against the trend.

Trend lines and channels
When you use the upper and lower channel as entry and exit points it’s tempting to try to play both side of the trading range by going long near the lower line then exiting near the upper line and opening a new short position there with the goal of closing that position when the price returns to the lower line.

exiting and opening channels

However, trading both the up and down moves can be much harder If you’re trading against the trend. That is trying to short in rising channels or go long and descending channels.

Rising and descending channels

As a general rule, don’t do it unless you have both of the following conditions:

  • The slope of the trend and channels is very mild and
  • The channel is wide

If the slope is steep or the channel is narrow, you risk getting resistance and the need to exit too quickly to give price enough time to move in your favor.

narrow channel and steep slope
Here is an example of how a seemingly well-planned trade closes with a loss because when you trade against the trend of a steep and a narrow channel, resistance moves closer with each candle and the trade doesn’t have enough time to move in your favor.

Example of how a seemingly well planed trade closes with a loss

2. Channels Offer Stronger Trend Reversal Signals When the Price Breaks out of the Channels in the Opposite Direction

The other big advantage of channels over single trend lines is that channels offer stronger trend reversal signals when the price breaks out of the channels in the opposite direction.

In other words, when price breaks out above the upper line of a falling channel or makes a sustained move below the lower line of a rising channel. That’s a stronger signal of a trend is reversal than a breach of a simple trendline.

Falling channel

Falling channel

Rising channel

Rising channel 

That’s because it takes a stronger change in sentiment about an asset to reverse past and entire trading range that is, of course, wider than a single tread line.

For example, when price breaks down below a rising channel, it needed enough selling pressure to move all the way down from the upper channel line to the lower line.

Price breaks downSubjectivity is the big flaw of both simple trend lines and channels.

Even though trend lines are useful tools, their construction often requires a degree of subjective judgment. Different traders will draw them a bit differently and thus won’t see support and resistance in the exact same place.

That’s one reason why we view support and resistance from these trend lines as areas or bands of support and resistance, rather than is precise lines.

For more objectively drawn kind of trend line that will look the same for all traders, and this better tells you with the crowd views as support and resistance, we use a different type of trend line, called a moving average.

Moving Average

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Strategies

Automated Trading Software

How to Find a Trading Job

The complexity and amount of data in financial markets means
that we are inevitably turning to computers to do a better job. Automated
trading, isn’t new. It has been around for several decades.
What is new is the rapid evolution of these algorithms as well as their
widespread use. Recent studies estimate that over 80% of all trading in the forex
market is software driven.

What they do

First it helps to understand what automated trading is and
what it isn’t. Many of us already use some form of algorithms in trading. These
are the chart studies otherwise known as indicators that most of us use on
popular platforms like TradingView.

These types of charting tools use software to process
underlying price information, sometimes aggregating it with other data like
volumes, to create a useful signal for the trader. That signal might be an
overbought flag which suggests a selling opportunity or an oversold flag that
could represent a buying opportunity.

Some of the most frequently used chart studies include the
moving average lines, stochastic oscillators, relative strength index (RSI), Fibonacci,
Ichimoku and MACD. There are also many variants of these.

These are the most basic types of trading algorithm. Not
surprisingly, computerized trading gets a lot more advanced than this.

A basic trading robot reads the outputs of indicators and
other data feeds and generates automatic buy or sell orders that are entered
into the market via a connection to the broker. This takes the evolution of the
indicator one step further.

A trading robot does not need a human to operate at all. It
can run as an automaton, just obeying the trading rules it’s programmed with.

More advanced trading bots take this a stage further. These
may use advanced pattern matching techniques and more specific rules that
can adapt better to changing markets. Some even aggregate information from different
sources like news feeds, indicator sets, and from multiple markets to improve
their accuracy.

forex trading software

Advantages and disadvantages of automation

Those who intend to use trading software should consider the
pros and cons of each approach. They also should understand that any kind
of trading involves the risk of financial loss.

Pros

  • Trading software is non-emotional
  • It will obey trading rules and money management accurately
  • It can be backtested on historical price charts
  • It is hands-off just requiring monitoring
  • It won’t get distracted or deviate from the strategy

There are drawbacks to software as well.

Cons

  • Trading software can be expensive to develop and maintain
  • It needs dedicated computer hardware
  • It can be unpredictable
  • The code can contain bugs

Solutions

So what are the solutions if you want to go ahead and use
trading software? There are a number of off-the shelf packages that are advertised
on websites like Metaquotes.

Their marketplace lists hundreds of trading expert advisors
and indicators. These tools can be created by anyone and sold or rented for a certain
fee.

The source code is locked so you will not know how the
system works besides the general description that the seller gives you on their
listing page. Because this is an open
market, with anyone being able to sell, the quality of these systems does vary somewhat.
The better-rated tools can be expensive.

For those who are already skilled in software development,
there is always the possibility to create your own system. Most trading
platforms have their own scripting language that allows you to programmatically
interact with price data and automate account functions like placing orders.

For non-programmers, there are platforms like Tradoso. This platform has a graphical tool
that lets you create an automated strategy, bypassing the coding stage altogether.
You can use indicators as building blocks and pull various inputs and feeds
together. It lets you backtest your system so that it can be refined and
improved upon.

Risks

All trading carries risk. Automated trading is no different. An automated agent is only as good as the rules it’s programmed with. That’s why it is important to know the rules
that your system is following, and the range of possible outcomes.

Trading with a black box piece of software will carry high risk because you can never be certain what rules that system is following. Creating your own system is the only way around this.

In this way, tools like Tradoso and others that automate the whole development process are likely to become more prevalent in the future.

While coding will always be important, the sophistication of algorithms out there makes it increasingly hard for the part-time-coder
to compete on the same level.

Continue Reading

Strategies

Forex Scams – How to Avoid Them

Forex trading

Scammers try to imitate the approach of legitimate investment firms and sales representatives. Thus, the fact that someone can contact you in a specific way – by phone, mail, email or even referral should not in themselves be seen as an indication that the investment is or is not shady. Many reputable companies use exactly the same methods to identify individuals who may be interested in their investment products and services in an effective and economical manner. Keeping in mind that “investigating before you invest” is good advice regardless of how to contact you, Forex Scams are here to help you in this regard… there are many ways that scammers use to scam but we will tell you how they do that, so you can be aware of 

Telephone boiler room telephones remains a favorite way for scammers and their sales squads to quickly communicate with large numbers of potential investors. Even if a scammer has to make 100 or 200 phone calls to find a mooch (one of the terms scammers use for their victims), they believe that the opportunity to save thousands of dollars from someone’s savings is still a good pay for the time and cost involved. 

Mail Some fraudulent investment deal sellers buy mailing lists in good faith – names and addresses of people who, for example, subscribe to a particular investment-related publication, who have responded to previous direct mail offers or who have other features scammers look for. In the hope of avoiding notification by postal authorities, mail order scammers cannot make a direct or immediate launch for their money. Rather, they often seek to entice you to write or phone for more information. Then comes a call from the seller or the person closing the deal. Some may call even if they did not reply to the email. 

The Rising Popularity of Binary Options in Nigeria

Forex Scams on The Internet 

Internet access has increased dramatically in recent years, and consumers have become more comfortable doing business. (Shopping, banking, or investing) online, but crooks are aware of the potential of cyberspace. The same scams that are conducted by mail or phone can be found on the internet and new technology creates new ways to commit crimes against consumers. 

Advertisement Advertisements in newspapers or magazines may offer profitable opportunities. (Or at least with implications) that are more interesting than general investments Once you have taken the victim, the scammers will try to “hang up”. Although investors know that the regulatory agencies regularly check advertisements in major publications, there are some who use famous publications. Said in the hope that it could be hit and run before the other detectives appeared. Advertisements in the narrowly spreading print media, they think regulators may be less likely to see. 

Referrals 

One of the oldest plans involves paying fast, big profits to initial investors. (Indeed, from their own investments or those of other people) knowing that they tend to recommend investments to their friends and these friends will tell their friends soon. Scammers do not want to find victims. New ones anymore They will meet him. 

The “Reputable” Business 

Some scammers go to the first floor. Take profit from scams. Previously, they rented a luxurious office, hired an interior decorator and professional receptionist, sounding and opening things that were similar. (But not the truth) of a reputable investment company, You may have to call to make an appointment and when you don’t have to wait. (Which is intended to make you more enthusiastic). The success of this type of scam depends on how long he can prevent his victims from knowing that they have been cheated. Investors are confident that their big profits will be reinvested to receive even greater profits. Such swindlers may join local civic groups, participate in charities, and generally play stable citizenship. There are some best forex brokers in the market, which forex scams will let you know about that, stay tuned with us to check it before investing your hard money into them. 

forex quotes

Techniques for Using Forex Trading Scammers 

Their techniques vary according to how they communicate. However, what they have in common is their ability to persuade. The skills that make them successful are the same skills that help salespeople succeed. But con artists have an advantage in their decisions: they don’t have to fulfill their promises. In the absence of this responsibility, they do not hesitate to make any promises that will persuade you to divide your money. Here are some techniques to figure out the forex scam in the market, please see below: 

Expectation of Large Profits 

The money flying through the air, the profits that con artists speak of, are big enough to make you interested and eager to invest. But not too big to make you believe it Or he might mention the profit numbers he thinks you will consider credible, and then in further temptations suggest that the actual profit is even greater. Of course, the latter numbers are something that he hopes you will focus on. In general, if an investment proposal sounds too good to be true, it is possible. 

Low risk Some people are clear that it suggests that there is no risk – investment is a sure-fire source. Clearly, the last thing a scam wants you to think of is the possibility of wasting money. (If you ask how you can be sure that your money is safe, you can trust that the answer is trustworthy. He also believes that you believe what you want to believe) to make him confident. Con artists may admit that there may be a risk – then reassure you that you will definitely get the least profit. Con men may become impatient or aggressive if they have questions about the risk – perhaps suggesting they have. Better things to do waste time with people who lack courage and farsightedness in making money! With this, he hopes that you will not bring this story back. 

Urgency 

There are generally interesting reasons why it’s necessary for you to invest now. It may be because the investment opportunity can be “offered only to a limited number of people” or because the delay in investment can mean missing a big profit (after all, when the information they have told you becomes generally known, the price will Higher, right? Urgent is important for con artists. He wants your money as quickly as possible, with the least effort on his part, and he doesn’t want you to have time to think about it, talk to someone who may suggest you to wonder or check out his or her proposal. With regulatory agencies. In addition, he may not plan to stay in the city for very long. 

Confidence 

The scam is confident in the money you make, so you are confident enough to release your savings. Their message is that they are doing your favorite things by offering investment opportunities. Con artists may intimidate (Happily or something else) to end the conversation by suggesting that if you don’t really care, there are many others that will When you protest that you are interested, he will keep your savings in his pocket. Even if you can’t see a man the way he speaks But most people are determined, clear, and determined people who will control the conversation. The more you talk, the less likely you are to ask questions.

Continue Reading

Strategies

Know all about PIPs in Forex Trading

A Lot Size Which Is Too Big or Too Small

What is a PIP?

PIP is one of the basic terminologies in forex trading. You can’t start your trading journey without knowing about pips.

In this guide, we are going to tell you what a PIP is in Forex and how they are calculated.

All about Pips

A pip or “percentage in point” is the smallest possible movement of the price of a currency pair. 

Suppose, the EUR/USD pair has changed from 1.2334 to 1.2335, this means that the pair’s quotes have changed by one pip. 

As a rule, in the forex market, the name “point” is more common, although point and pip have the same meaning. But on the stock market, these concepts are different; their pip is one cent, and a point is one dollar.

Usually, 1 forex pip is equal to 0.0001 parts of one unit of the base currency but since each currency has its own value, then the price of a pip is not a fixed value but a variable, depending on the chosen currency pair.

Suppose, if we take the same currency pair EUR/USD, then we will see that the first currency in this pair is the Euro. This means that the Euro is the base currency, which we buy for US Dollars so that 1 pip will be measured in dollars.

Currency quotes change by a certain number of points, therefore, the forex trader’s profit changes first in pips, and then it is converted into a monetary equivalent. 

Giving up in FT

What determines the cost of pip?

As you know, each currency pair has its own monetary value of pips. It depends on:

  • a currency pair that is being traded;
  • lot (volume) by which it is open;
  • the exchange rate that applies to the currency transaction.

How to calculate your profits using pips? 

Suppose you decide to make a purchase of one lot for a pair of EUR/USD. One lot (the standard unit of forex trading) is equal to 100,000 units of the base currency. In this case, the volume of your transaction will be 100,000 euros. 

Since the cost of a point = 0.0001 parts of the lot, then 1 pip will be equal to: “100 thousand euros multiplied by 0.0001”, that is, $10. If the currency quotation changes by 1 pip in the direction you traded, you will earn $10, if, by 100 pips, your profit will make $1,000. 

Tools for calculating pips

To avoid calculating the value of potential profit or loss in your mind (or on a piece of paper) every time you open a transaction, we recommend that newcomers use the pip calculator.

Almost every broker has a pip calculator now. So, it shouldn’t be a problem. 

The concept of pipsing

The concept of “pipsing” in Forex Trading is a trading strategy that enables a market participant to make a profit on short positions, usually from 1 to 5 points. 

Many professionals use pipsing several times daily, which makes it possible to get good profits with the least risk.

Conclusion

It is very important to gather information on basic Forex trading terms like “pips”, because a small change in pips can make you win or lose. You must need to educate yourself with all the basics of Forex Trading before you start your Trading. A regular Forex trader needs to spend at least 1 hour daily to read all the technical aspects of Forex Trading, and to practically apply them in the real trading step by step. The more good knowledge you have, the more cautiously you can trade. We wish you best of luck in your Trading!


Sources and references of the Content: Some of the facts and hints have been taken from Wikipedia Percentage in point and FXCC’s article What is a Pip in Forex

Continue Reading
fx 300x250

Latest

How to Find a Trading Job How to Find a Trading Job
Strategies2 months ago

Automated Trading Software

The complexity and amount of data in financial markets means that we are inevitably turning to computers to do a...

Forex trading Forex trading
Strategies3 months ago

Forex Scams – How to Avoid Them

Scammers try to imitate the approach of legitimate investment firms and sales representatives. Thus, the fact that someone can contact...

A Lot Size Which Is Too Big or Too Small A Lot Size Which Is Too Big or Too Small
Strategies3 months ago

Know all about PIPs in Forex Trading

What is a PIP? PIP is one of the basic terminologies in forex trading. You can’t start your trading journey...

Forex Trading10 Forex Trading10
Lessons7 months ago

Can Trading Signals Really Help You?

Predicting how a forex pair is going to behave is sometimes quite a challenge. There are so many factors influencing...

forex business newspaper forex business newspaper
News9 months ago

Selecting the Best Forex Team for You

Finding the right forex trader for you can be a test of patience and frustration. The rapidly changing forex market...

The Rising Popularity of Binary Options in Nigeria The Rising Popularity of Binary Options in Nigeria
News9 months ago

The Rising Popularity of Binary Options in Nigeria

For years now Nigeria has been one of the most developed economies on the African continent. Its divisiveness can be...

How to Find a Trading Job How to Find a Trading Job
News11 months ago

Automated Forex Trading – How It Works

Automated Forex trading is proof that the future is here. About 75% of daily transactions in a foreign exchange market...

Focus on the risk Focus on the risk
Lessons11 months ago

No Deposit Bonus Forex – The Ultimate Guide

If you’re thinking of getting into Forex trading, then you’ve likely already heard of the concept of the Forex no deposit...

Trading too big Trading too big
News11 months ago

Choosing a Forex and CFD Broker

Playing the Forex or investing in CFDs requires the intermediation of a broker to take care of and execute your...

how to short bitcoin how to short bitcoin
Lessons12 months ago

How To Short Bitcoin Today

Buying into Bitcoin is a common occurrence in the market today. That is because it makes sense to invest in...

Trending