MACD Divergence

By Ahmad Hassam

Understanding and interpreting a MACD divergence can be very helpful in your trading. You may ask what does a MACD Divergence means. Just that the current price trend is running out of steam and soon may reverse direction. Price reversal may not happen right away. But a MACD Divergence is a powerful hint that the market is changing direction. It is easy to spot MACD crossovers and dramatic rises but not so a MACD divergence. Spotting a MACD divergence correctly will only come after practice.

What you are looking for is when the price action and MACD do not agree. For example, if the price is making a series of higher highs and MACD is making a series of lower lows, something is wrong between the two.

Most probably the traders are getting nervous. They are slowly fading out of their trades. No one is trading against the trend and yet fewer and fewer traders are in the trend. MACD divergence is seen as a sign that fewer and fewer traders are in the trend.

When the only traders in the trend are nervous, they are likely to exit their trade at the first sign of trouble. So if MACD is diverging from the bullish trend as soon as the bears muster up enough guts to short, the bulls will exit and the bears will take over.

This is exactly why MACD is so powerful. It takes time to setup but when it works, it often works well. There are two powerful keys in locating times when MACD divergence is likely to represent a reversal in price.

Suppose the price action is at the double tops or double bottoms. MACD divergence can be powerful. You spot MACD divergence at this point. This is known as Exhaustion Pullback. You are making your trading plan based on the bounce/reversal or breakout of the support and resistance (S&R).

You should trade now based on rejection reversal. This is a sign that the price action is running out of steam. This indicates that there are not enough committed traders to break the support and resistance (S&R).

MACD is also used as an overbought/ oversold indicator or oscillator. Suppose you see that it has reached its overbought/ oversold range. The price action is turning normal. This is a signal that you should avoid trading at this time.

Dont think that it is overbought and everyone is buying. Dont confuse the overbought/ oversold MACD zones as trade opportunities. However, when the price reaches its extreme, you will see price exhaust and the MACD line drop back into normal zone.

It is also important to note that divergence can not only be found on the MACD line and the signal line, it can also be found on the histogram. These two situations along with your other technical indicators can provide excellent trading opportunities. - 23221

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.

Tax Deferral -The Best Investment Strategy

By Don Burnham

Deferring taxes on your income is an investment strategy in which income taxes are paid at a later date for money invested now. The benefit of tax deferral is that it provides more money for you to invest now.

For example, say you manage deducting $1000 from your taxable income in the current year and then you invest that amount into an account that gives you interest. As a result of this, you get to pay around $200 less in income tax for the current year. Therefore you are gaining $200 more as compared to if you hadn't invested the $1000. So if you add the deferred $200 to the already invested $1000, your investment adds up to $1200. The other kind of tax deferral that investors often opt for is deferring the amount of tax to be paid for interest earned. The invested amount is taxed, but the interest earned becomes free of tax.

Another type of tax deferral used by investors is the deferment of taxes paid on interest earned. The dollars invested have already been taxed, but any interest earned is tax free.

Investment Vehicles Tax deferred accounts shelter your money from taxes until you begin making withdrawals in the later part of your life, when you're likely to be in a lower tax bracket. The type of investment vehicles best for you depends on your situation.

You could opt for the plan 401(k). This vehicle is open for you only if your employer offers it. This will allow you to make contributions that are deductible by tax but grow as deferred tax until you start withdrawing the money. Depending on your employer, your 401(k) might come with a bonus, when your employers add to your contributions, doubling it. You could make anywhere between 25%-100% on your contributions, if your employer adds to it.

By using the 401(k) planning, you could add more to your retirement plan, than most other plans. You can add around $9,500 to your retirement plan, and your employer can add another $30,000 every year. You can also add the yearly bonuses that you receive to this plan to help your retirement money grow even faster. If you leave your job or wish for more freedom with your money, you can always roll your assets over into an IRA account.

A 401 (K) may work for a beginner at investing, someone who does not know how to invest in stocks or which are the best stocks to invest in.

The other type of plan that has to be offered by your employer is the 403(b). This is only for employees working in public schools or other non profit organizations. For them, money invested in this plan is tax deductible and tax deferred. Here too, you can contribute up to $9,500 on a yearly basis.

With 403 (b) plans, beware of a few cautions. Your contributions are generally invested in a tax-sheltered annuity, which may have heavy sales charges and low guaranteed rates.

Anyone with earned income, and the non-working spouse of anyone with earned income, can open up their own IRA and contribute up to $2000 a year. Your accrued earnings are not taxed until you begin withdrawing money from the account. However, withdrawals cannot be made without penalty before age 59 ..Even if your contributions do not qualify for a tax deduction, your earnings are still tax deferred.

The type of investments you can make with your IRA dollars depends on the custodian, but you generally have many more investment options with an IRA than you do with any of the employer sponsored investment plans.

The Keough Plan is open to people who are self employed or who work for unincorporated businesses. By this plan you can contribute up to 25% of your income every year with a maximum of $30,000. All the contributions become tax deductible and your earnings tax deferred. You can contribute more with this plan than with an IRA plan. There are three types of Keough plans, whereby you can contribute a fixed percent every year, or a variable percent or a fixed amount according to you every year. A lawyer can best assist you in setting this up.

The Simplified Employee Plan or the SEP is the other type of investment vehicle available. However, this scheme is open only to those business companies that employ les than twenty five people and at least half of them have to be a part of this plan. Under this plan, you can contribute up to $7,000 and the employee ca pay the rest with a maximum of $30,000.

All the above mentioned investment vehicles are divided under these two categories: Qualified and Non - qualified plans.

The 401 (k) and 403 (b) plans are qualified plans. Qualified plans are employer-sponsored plans that provide good benefits but that are restricted to the types of investment options offered by the employer. As we already mentioned, 403 (b) plans often require you to invest your money in tax sheltered annuities. 401 (k) plans generally offer a broader range of conventional investment options, but still seem very limited when compared to non-qualified plans. You usually get to select from a preset choice of investment options such as fixed interest annuities, money market funds, stock in your company, and other traditional investments.

The second category of retirement plans is nonqualified plans. Nonqualified plans generally allow more freedom as to when, or if, a contribution has to be made, and they also offer more latitude in the type of investments that can be made. All IRAs fall into this category. Generally, investors have more control over their investments in a nonqualified plan than with a qualified one. Usually they are easier to work with, have less regulation, and require less reporting. Often, contributions to these plans can be deducted as a business expense.

Most investments made with the vehicles we have been discussing fall into one of two asset categories: The first is debt and the second is equity. As an investor, you are either an owner or a creditor. Equity owners are entitled to all free cash flows that exceed the debt payment obligations of the underlying economic entity. Creditors receive priority in agreed-upon future interest and principal payments.

When choosing a retirement plan, you want to be certain of the types of investments permitted with your plan. Do not open an account that does not give you the freedom to choose your own investment options, whether they are debt or equity investments. - 23221

About the Author:

Do you want to defer taxes on your income with an investment strategy then, here is the website http://www.weknowthewayback.com of Don Burnham who is an entrepreneur, author, real estate investor, teacher and speaker.

Getting A Currency Trading Education

By John Templeton

On the subject of currency trading education, many newbie forex traders just don't know how to do this right. I say this because how else you could explain this statistic: 95% of currency traders will lose more money than make it, in their trading careers. Yet, they always seem to come back for more. This is strange because if there is something like this going on, how come there are so many new currency traders?

I can answer that question. It's really obvious. They just want to be part of the elite group of 5% of traders who are making a living doing something that they love. They are the traders the 95% look up to. The kind who don't have to answer to a boss and are able to make their own schedule. Even despite this, there are so many new traders who enter trading without taking it seriously. It's ludicrous because they are essentially risking the money that they work hard for, without getting a proper currency trading education.

This is proof as to why forex expert advisors are preyed upon by newbie traders.

If you are one of the few people who don't know what expert advisors are, they are essentially a software script which will trade the currency market for you. You put the script in a charting platform and it proceeds to trade the market automatically for you. This means something else is trading your money on autopilot.

This is the epitome of a useless trading tool.

Would you trust somebody else in a different profession if they let a piece of software or an inanimate machine do all the work for them. Would you like to go to a doctor or lawyer who did that?

Think about it like this. If it was really that simple to trade the currency markets, don't you think more people would be having success? After all don't you think most people would just pick the "best" forex expert advisor and soon they will become millionaires the next night, right? I hope you can tell I am being sarcastic.

Let's face facts. To make money in the currency trading markets, you are going to have to get you hands dirty and take the time to truly learn the nuances of the market, and for goodness sakes, stop wasting your time and money on useless tools. - 23221

About the Author:

If you want to learn more about learn to trade currency, make sure to check out Trading In The Buff.

Forex Trading System Plans

By Lucas Connor

Many markets are traded on unique exchanges or on an electronic platform or over the counter market that is made up of trading groups or individuals. The Forex is such a market. The cash market enables these transactions to take place with instant currency worth available in another currency. But the other part of this is the big players (about 5000 institutions) only account for 5% of the volume of trades on any given day, traders and speculators account for the other 95%.

There are many trading strategies that will prove to be successful if you follow them properly, and don't let your emotions get in the way. Use trading charts and set them up with candlesticks and use both the 5 minute and 30 minute time periods. The actual shoulders of the candle, not just the wicks, must touch, and preferably violate the lines. We want to see the candle or spanning the 2 lines.

Using such a program will allow its user to look at trends and statistical analysis so that users can make better decisions. Forex trading software will make the process much easier and streamlined. Your personal information and that of the market will be presented in a well formatted and easy to read manner. This will allow you to know exactly where your investment portfolio stands, when and if there are any profits and how the market is performing.

Most novice Forex trading amateurs are often perplexed about which trading broker to leverage. Reviews and general opinions about a broker site are crucial. Does the broker follow regulations stipulated as per Forex trading laws? Are they desk-oriented, no-dealing brokers, ECNs or market makers? How fast can they execute an order?

You can work with a broker or you can take the reins yourself, purchase and use a Forex trading software. Perhaps the best place to find one is online. To avoid them, be sure to choose forex trading software that has a good reputation in the industry, offers proof of results and a money back guarantee. After all, this is a sure sign of whether the system is truly a proven winner. - 23221

About the Author:

Forex trading software will be able to automate many of your foreign currency exchange tasks. If you want to take the guesswork out of forex trading, visit ForexVerse.com to learn about the most popular and profitable automated forex trading systems that are making successful trades on autopilot.

Forex Trading Courses: Which Do I Choose?

By Michael Pepper

So, you have decided to jump into the forex trading market? You saw that other people were having success with trading, so you figured, why not? Well, if you do get involved, then it is important you pick the right kind of forex trading course.

You want to make sure you pick a forex course that can really help you get started on the right foot. Your top priority should be understanding the basics of trading, not just how to make money. Remember, youve got to walk first before you can run.

I know that there are a ton of forex courses to choose from, but my top recommendations dont involve educating you on a general idea. What they do is instead teach you on a specific method which you can specialize in.

The instructor of the course is recognized as one of the foremost experts in their specific trading method. It should be evident that they have really taken the time to perfect the strategy so that it could be taught to others.

So its really up to you to do the work, and find out the best possible way that you can quit your job and have the best chance of making a career out of this.

This is the same kind of strategy that all the forex professionals use to make their income with. They comprehend all the workings of currency exchange and know what needs to be done to take advantage of it. Its actually not as hard as you may think it is. All it takes is a little bit of practice.

The key is to use these kind of techniques so that your reward can be a lot greater than the risks you are taking on each trade. That is the essence of every successful trader.

The best recommendation that I can possibly give you when it comes to forex courses, is learn more about price action. This is exactly what the full time traders rely on. This is their bread and butter. It goes to show you that it doesnt really matter the kind of charting platform that you are using. The important thing is that you have a strong grasp of price movement. - 23221

About the Author:

If you want to learn more about a forex courses, then you should definitely check out day trading strategies.