Stocks & Commodities V. 24:3 (16-20): Forex Focus by Matt Blackman
Access to foreign exchange trading has opened up exciting trading options for the retail trader. You can now trade alongside corporations and institutions in a highly liquid market that is global, traded around the clock, and highly leveraged. Before jumping into this market, however, we must understand the factors that affect the forex market. With that in mind, STOCKS & COMMODITIES has introduced Forex Focus to better prepare the retail trader to participate in the currency market.
THE CURRENCY COMBO
Integrating strategies can increase forex trade confidence. Before entering a trade, traders must do
whatever they can to put the odds in their favor. Candlesticks have been helping traders in this for hundreds of years. From analyzing an individual candlestick right up to complex patterns involving a group of them, traders may gain a substantial advantage by learning to use them. Because they do an excellent job in giving visual cues to what is happening in the market, a candlestick chart can quickly show whether there is a trade coming, one setting up, or if nothing much is happening. Since there are excellent books already written on the topic, this article will
instead focus on how to combine candlesticks with a crossover strategy on the US Dollar Index to provide more reliable buy and sell signals.
No matter what time frame you are using from one minute to monthly there are advantages to performing a candle-by-candle analysis. Why? The shape of the candle where it opens or closes, its relation to the previous candle or candles, its position in the overall trend, and if its at or near levels of support or resistance can provide insight about where price is going. By knowing what the highest-probability outcome is for the next candle, a trader can make a more rapid decision as to whether he or she should stay in, stay out, take a profit, or take a loss.