Forex Trading Education For The London Open
A thorough Forex trading education must include an understanding of the effect market timings can have on trading and liquidity.
Good trading opportunities often arise at the time the London market opens as this can be one of the busiest trading times of the day.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
About 15 to 30 minutes before London open check the answers to these questions:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, 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.
Looking at the four hour chart, ask yourself, 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.
Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)
Is the market approaching a key fundamental announcement?
Looking at the candle that closes the first 15 minute period after London opens, do you see any distinctive patterns, or is the candle itself a doji or a hammer or any other shape indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:
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 be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
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. - 23221
Good trading opportunities often arise at the time the London market opens as this can be one of the busiest trading times of the day.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
About 15 to 30 minutes before London open check the answers to these questions:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, 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.
Looking at the four hour chart, ask yourself, 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.
Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)
Is the market approaching a key fundamental announcement?
Looking at the candle that closes the first 15 minute period after London opens, do you see any distinctive patterns, or is the candle itself a doji or a hammer or any other shape indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:
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 be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
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. - 23221
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 Break
posted by X - Men @ 8:44 AM
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