 03-31-2006, 8:54 PM
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asimon
Joined on 03-07-2006
Posts 140
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Rapid Forex e-Course Day 5
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===================================
"The Rapid Forex e-Course"
--> a 20-part mini-course series
Published by:
Abundant Freedom, LLC
http://www.rapidforex.com
===================================
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
LESSON #5:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Charting Your Way to Success: FOREX Price
Charts, What They Mean and How to Use Them
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"What's the difference between the speculative winner and
the ignorant loser in FOREX?" my silver-tongue friend asked.
When I thought about it, numerous things came to mind - such
as discipline, trading rules, not being greedy etc., but
what came out of my mouth was really no big surprise:
"Understanding the charts... they represent so, so much. You
gotta know they represent the lifeblood of the market. Know
them well and you'll be head-and-shoulders above the rest."
We at RapidForex.com will be the first to admit that reading
charts, and interpreting patterns, are more an art form than
a skill; however, knowing you'll have to be personally in-
tune and subjectively-creative with the charts (basing your
entry and exit decisions on YOUR OWN combined methods of
technical analysis) doesn't mean you should run-for-the-
hills.
Nope, don't be scared...
The beauty of FOREX charts, as opposed to charts used for,
say, daytrading stocks, is that they are pretty easy to
interpret and use. They're a reflection of a slower-moving,
stable economy (the one of a country) compared to the future
and daily drama of company reports, Wall street analysts and
shareholder demands.
And, don't forget...unlike stocks, currency charts rarely
spend much time in tight trading ranges and have the
tendency to develop strong trends (even though the FX market
may be volatile, it's more predictable). And, rather than
tens of thousands of stocks to analyze, you only have a few
major currencies to trade.
===================
The complimentary charting software provided by any one of
our recommended brokers will be absolutely sufficient for
you to put your finger (eye) on the pulse of the market for
any one currency pair.
Understanding just a few basic points, below, of the
technical analysis of currency chart reading can lead to
increased profit potential that far exceed the hazards of
other markets.
===============
Pricing - Price reflects the perceptions and action taken by
the market participants. It is the urgency between buyers
and sellers in the Over-The-Counter (OTC) or 'interbank'
market that creates price movement. Thus, all fundamental
factors are quickly discounted in price. Therefore, by
studying the price charts, you are indirectly seeing the
fundamental and market psychology all at once - after all
the market is fed by two emotions - Greed and Fear - and
once you understand that, then you begin to understand the
psychology of the market and how it relates to the chart
patterns.
Data Window - When you click on a price bar or candlestick,
most FX online charting stations will display a small box of
data usually called a display window which will contain the
following items:
H = Highest_Price
L = Lowest_Price
O = Opening_Price
C = Close_Price (or Last_Price)
The most common types of price bars, used in FOREX trading,
are the Bar Chart and the Candlestick chart:
Bar Charts - Price bars are a linear representation (a line)
of a period of time. This enables the viewer to see a graphic
representation summarizing the activity of a specific time
frame. As an example, we use one minute and five-minute time
intervals for our system. Each bar has similar
characteristics and tells the viewer several important
pieces of information. First, the highest point of the bar
represents the highest price that was achieved during that
time period. The lowest point of the bar represents the
lowest price during the same period. Regular bars display a
small dot on the left side of the bar which represents the
opening price of the period and the small dot on the right
side represents the closing price of the period.
Candlesticks - Japanese Candlesticks, or simply Candlesticks
as they are now known, are used to represent the same
information as Price bars. The only difference is that the
difference between the open and close form the body of a box
which is displayed with a color inside. A red color means
that the close was lower than the open, and the blue color
represents that the close was higher than the open. If the
box has a line going up from the box it represents the high
and is called the wick. If the box has a line going down
from the box, it represents the low and is called the tail.
Many interpretations can be made from these "candlesticks"
and many books have been written on the art of interpreting
these bars (you'll find a few links in our Resources
Section).
So, the main thing to keep in mind between the two types of
price charts is this:
Candlestick charts are similar to bar charts in that the top
tip of a vertical line represents the high and bottom tip
represents the low. However, market activity between the
OPEN and the CLOSE is represented differently by the use of
candlestick bodies.
Because of their colored bodies, candles provide greater
visual detail in their chart patterns than bar charts. Which
is why we recommend you become intimately familiar with
Candlestick charts or, as we like to call them, "bar charts
on steroids."
===============================
Chart Intervals & Time Frames:
===============================
A chart Time Scale & Period, or timeframe, basically refers
to the duration of time that passes between the OPEN and the
CLOSE of a bar or candlestick.
While most of our trading methods, outlined in our course
packages, will have you viewing the 5-min and 1-min candle
charts, it is often useful to look at larger time frames
(like the 1-hour or Daily charting methods used in Forex Sailing).
For instance, with your broker software, you will be able to
view a currency pair, in a 1-hour timeframe over a 2-day
period, 5-day period, 10-day period, 20-day period and 30-
day period.
Most of the short-term time intervals (5-min and 1-min charts)
are used for entry and exit points (we teach this extensively
in our course titled "Forex Surfing" & "Forex Scalping") and the
longer-term time intervals (1-hour and daily charts) are used to
gauge where the CORRECT trend is (see our course Forex Sailing
for longer term trend trades).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Stay Tuned for tomorrow's email from us. It will have
the following Subject line:
asc, Lesson 6 - The Rapid Forex e-Course
In tomorrow's lesson, you'll learn about what
influences prices in the FOREX market: economic
fundamentals.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Health, Happiness & Prosperity,
Robert Borowski & Brian Campbell
Abundant Freedom, LLC
http://www.RapidForex.com
--------------------------
To DOWNLOAD the "Insight Trader Package":
follow the instructions on the page below:
http://rapidforex.com/dlInsightV100.shtml
Inside the "Insight Trader Package" you'll receive:
*Forex Freedom
*10% to 30% Monthly R.O.I.
To See the e-Course Table of Contents:
http://rapidforex.com/ecourse.shtml
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"The Rapid Forex e-Course" is published by:
Abundant Freedom LLC
Visit us at http://RapidForex.com
This publication may be fre_ely redistributed if
copied in its entirety, as long as you do not claim
ownership, or alter the content in any way.
Copyright (c) 2004-5 Abundant Freedom LLC.
The information in this e-Course is provided for
educational purposes only. This information is
offerred as-is, with no warranty of any kind. While
Abundant Freedom LLC, and the author of this e-Course
have taken reasonable measure to assure the accuracy
of this information, the information is not guaranteed
to be accurate, and is subject to change at any time,
without notice.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Abundant Freedom LLC
758 Kapahulu Ave #335
Honolulu
Hawaii 96816
United States
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