Traders Workshop : Advanced Technical Analysis - are you getting the most from your
There is a mindset that permeates my personal forex trading. It is
recognize, react, and repeat. These goals are only achievable
through chart study and flexible order execution. The common
fallacy is that there needs to be some new study or new order
execution capabilities to accomplish this specifically in the forex
market. Trading the forex market is not unlike trading stocks or
futures; however there are the challenges that can only be
presented by a market that trades 24 hours a day.
Almost any technical analysis tools can be an asset to trade set up
if it is used in the proper market environment. Failing to do this
is often why so many traders fail in their pursuit and continued
use of technical analysis. There are plenty of charting providers
that offer both entry-level and advanced charting and technical
The trend however seems to be to access these services from
execution platforms. This can be problematic as some brokerages,
certainly well equipped to execute orders, often are not capable of
offering much more than entry level or intermediate charting and
technical analysis tools at best. This is not to say they are anot
effective for traders. Simply put they are not necessarily
effective for all traders.
There are tools that can easily be applied to most charts to allow
traders to, for example, gauge the strength or weakness of a
particular pair or time frame. One tool commonly used are moving
averages. Moving averages are perhaps the best tool that any trader
can apply to a trending market. Every trader must understand that
the market moves in cycles. These cycles transition constantly and
in no set order from a quiet sideways channel, to an uptrend, to a
wider ranging, more volatile sideways range, to a downtrend.
All this means is that in order to best gauge momentum, whether
upside or downside, a trader must first identify the type of market
cycle prices are trading within. This can be as easy as recognizing
sideways market to trending markets. As simple as this may sound,
it unfortunately is the single largest stumbling block for traders.
By multiple moving averages a trader can recognize market cycles
and therefore employ the correct technical analysis. This analysis
can be applied to almost any charting platform
By applying multiple moving averages to any chart a trader can
gauge the strength, weakness, or lack of trend by simply measuring
the angle at which the moving averages are plotting. Another tool
that can help a trader identify the onset, strength, or weakness of
a trend is the MACD Histogram.
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