The FX Winner

A moving average is a common technical indicator used in forex trading. Moving averages have many options, but their basic function is to track the trend. Moving averages are lines that follow the price direction divided by the number you set. If you have an hourly chart open and you want to see the average price over 100 hours, you would set up a 100 period moving average. As each new hour passes, the moving average moves to show the average price movement over the past 100 hours.

Commodity Channel Index (CCI) Basic Definition The Commodity Channel Index (also known as CCI) is a momentum indicator that was first introduced by Donald Lambert in 1980. It can be used to show overbought and oversold levels, or as a trend indicator showing the beginning and end of trends. The CCI is calculated using the price, a simple moving average of the price, and a standard deviation around the price. The CCI displays the difference between the price and the simple moving average as a momentum line oscillating around a 0 (zero) line. A scaling factor is also used (0.015 by default), so that most of the values are between 100 and -100. The CCI is displayed on its own chart, separate from the price bars, and is in the lower section of the chart. Formula •    Description: The CCI is the difference between the typical price and the simple moving average of the typical price, divided by the standard deviation of the typical price multiplied by the scaling factor. •    Calculation:
    TP = ((H + L + C) / 3)
    TPSMA = ((TP1 + TP2 + TP3 + TP4 + ... + TPn) / n)
    SD = ((ABS(TP1 - TPSMA) + ... + ABS(TPn - TPSMA)) / n)

    CCI = (TPn - TPSMAn) / (SD * 0.015)

Why It Is Used It can be used as an oscillator, to identify an overbought level when the CCI is above 100, and an oversold level when the CCI is below the -100 line. The CCI can also be used to identify the beginning of a trend when the CCI crosses above the 100 line or below the -100 line, and the end of a trend when it crosses back over the line. The CCI is also used as a pattern indicator, where trades are entered and exited based upon the patterns created by the momentum line, and trend lines are drawn on the CCI instead of the prices.

Moving Average Convergence Divergence

MACD, developed by Gerald Appel, is a more detailed method of using moving averages to find trading signals from price charts. The MACD plots the difference between a 26-day exponential moving average and a 12-day exponential moving average. A 9-day moving average is generally used as a trigger line, meaning when the MACD crosses below this trigger it is a bearish signal ( sell signal ) and when it crosses above it, it's a bullish signal ( buy signal ). MACD studies provide early signals or divergences between market prices and a technical indicator.

If the MACD turns positive and makes higher lows while prices are still tanking, this could be a strong buy signal. If the MACD makes lower highs while prices are making new highs, this could be a strong bearish divergence and a sell signal.

RSI: Relative Strength Index

The RSI measures the markets activity as to whether it is over bought or over sold. It provides an indication as to which way the Market is moving. This is a leading indicator and therfore allows you to see what the market is about to do and then act accordingly. The higher the RSI number, the more over bought it is and conversely the lower the RSI number, the more over sold it is. It is a highly used leading indicator for samll reversals in the forex market. By using an RSI on shorter time frames to confirm longer time frame entries you can play the bounces with confidence.

A lot of traders continue trade short time frames and keep getting burned because they have this need to trade.

Why do we trade? I hope your answer is to earn a living.

Why is it so hard to follow instructions using proven historical methods. This is not the world series of poker here. This is a science.

Longer time frames have always been more reliable. Isn't that obvious to everyone. If not please go to babypips.com and spend a day reading. It will save you all your money.

No wonder most professional traders use only daily charts. They usually trade with H-4 and daily charts, support and resistance levels and a few more indicators. Nothing fancy, basic simple stuff.

The 5/8/10/ 35/72 emas work very well when the market trends. The market trends 30 percent of the time, so if you take 5 trading days and do not even consider news days, holidays and weird events, that would mean you would average 1.5 trading days per week. Most traders freak out if they can't trade every day and so do investors. They see a good return on a trade and get their calculators out and want traders to force their trades. Professional institutional traders no better and everyone needs to learn that not trading on the "ranging unpredictable" minor moves up and down day is a winning day. The problem with trading, no matter what (stocks, options, fut forex etc.) is when the market is choppy- You can't "ride the waves". That's when most profit obtained while it was trending are burned by inexperienced traders and even the experienced traders.

You must realize to trade only the best time frames during trending markets and stay out of choppy waves your surfing will be much more enjoyable.

Hopefully everybody will understand this and stop searching for the holy grail.

Even trading news has its "ranging" moments: so knowing this you can trade against the influence this information has on traders as they will trade on "what is expected" by certain written online junk rather than research what the majority of economist predict which in many cases is exactly opposite of each other. I go with the smart guys not the article writers. How many time has that happened, and trades freak out and say "well, it is going down because you see, the news was good, but not as good as it was expected and plus yesterday Mr. Guru article writer (why is he writing articles and not trading full time like us?) said that this and that so I think the markets are going to do this or that......blah blah blah

It is all worthless noise, all noise. Systems come and go (look at Vegas) and people still look for the next best thing. When will they learn ?

Keep it simple, stay to the rules, DO NOT DEVIATE FROM THEM, and you will make a living at it, but you will never, EVER become  rich if you don't settle down, stay with a program and realize there will be losses as that is part of trading, and when they come don't "double down" or pull out right before the trading gets good again. Leave your risk capital in and let the professionals teach you how to grow it.

After finally letting this sink in, you will then enjoy the ride and have fun ! Only when you eliminate all that financial pressure you can really have fun at it and see charts in a different way.

Moving Average Crosses Work. Learn them.

Happy Trading and Much Success To All Of You!

Until Next Time

Kevin Edwards