Forex Trading Education For The London Open
Part of your Forex trading education should include a study of the effect market timings can have on trading and volume.
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
Are the MACD indicators on the 4 hour and 1 hour charts in agreement? If they are not going in the same direction be very careful!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
On the 4 hour chart what is the overall trend?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Are any fundamental announcements due?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
trade
wait for clearer signals or a better entry point
Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
There is no magic formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 23167
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
Are the MACD indicators on the 4 hour and 1 hour charts in agreement? If they are not going in the same direction be very careful!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
On the 4 hour chart what is the overall trend?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Are any fundamental announcements due?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
trade
wait for clearer signals or a better entry point
Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
There is no magic formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 23167
About the Author:
For a free candle & chart pattern recognition reference tool click here: Candlestick Charts See how to use trendlines to get an optimum trade entry point: Trendline Trader
posted by X - Men @ 2:06 AM
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