1 Profitable Forex Trading Strategy - Candlestick Patterns

The Forex currency exchange is the largest financial market in the world and allows traders to capitalize upon currency trends to generate profits. There are many Forex trading strategies a currency trader could use to profit in this business. This article explains what specific candlestick patterns we look for to make some very profitable forex trades.

Candlesticks in Forex Trading - There are a few things you need to know when trading candlesticks. In my experience, the 30 minute charts are the best ones to use when trading candlestick patterns. You must always wait for the candles to complete to make sure the candlestick pattern is complete. Do not guess where the candle will close and try to get into a trade early.

There are many other candlestick patterns, however some are more dependable than others. The ones I use are called engulfing patterns. Specifically "Bullish Engulfing" and Bearish Engulfing". Both of these are reversal patterns and are considered to be some of the most profitable candlestick patterns to trade. When the candle body engulfs the previous candles body, this is called an "engulfing" pattern. Bullish engulfing patterns are found at price bottoms and bearish engulfing patterns are found at price tops.

How to Trade Engulfing Candles - To trade engulfing candle stick patterns, we're looking for an end of an uptrend or downtrend. This doesn't have to be a strong trend but it does need to have some momentum that looks like it's coming to an end. A good indication of a trend coming to an end is when the bodies of the candles are getting smaller in size. That means the momentum may be running out and this is when you should be looking for a reversal in price action. This could also be the beginning of a consolidation period, so we need to be aware of that.

In an uptrend, we look for an "up" candle immediately followed by a "down" candle, where the body of the "down" candle engulfs the previous "up"' candle. This is the setup we want to see so we take the short trade immediately following the close of this candlestick. Next, we count how many pips away the top of the highest last 2 candles are, including the wick, and add 5 pips. This is our Stop Loss. Our Take Profit target should be set to twice this value. For example, if our stop loss is 40 pips away, then our take profit should be at least 80 pips. Money management/risk to reward ratio, are key in this business. A long trade would be similar to a short trade except we're looking for a downtrend reversal to get into a trade.

You can search around the web for forex candlestick patterns and learn all you need to know about them, but remember there are so many of them, you need to just focus on a few. As I mentioned, the engulfing candlestick patterns are some of the best patterns to trade so if you stick with those, you'll do very well.
Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and partners with Forex Confidential for live trading sessions and their very profitable forex trading signals service.

Article Source: http://EzineArticles.com/?expert=Andrew_Daigle


0 Learning to Be a Profitable Forex Trader

So you've decided to start trading the foreign exchange market but you're not sure how to start? One of the most important things you should do is learn as much as possible about the forex business. Learning forex trading will give you the advantage you need and help you get more confident about the trading process. You should also consider joining profitable trading services such as Forex Confidential and others to make substantial profits as you learn this business.

What is Forex? Forex is another term used for foreign currency exchange. So when you hear a phrase like "forex trading system", that basically means "foreign exchange trading system." Let's take a look at some of the tools you'll need before you start to employ your own forex trading systems and strategies.

One of the most important things to remember when you're getting started in this business is that you're not actually trading goods and services. You are trading money and these currencies are from all over the world. Foreign currency exchange trading means the buying of one currency with another. For example, you would buy the Euro and sell the US Dollar if you thought the Euro was going to gain strength against the Dollar. Or you would sell the British Pound against the Japanese Yen if you thought the Pound would weaken against the Yen.

It's not advisable for the novice forex trader to jump right into trading without first getting some basic forex education. You should learn from some of the most respected online experts to help you get the best forex trading education. You should also contemplate purchase books on forex currency trading and forex trading strategies. As with any other business, knowledge is key. And to become a profitable, successful forex trader, you must supply yourself with a very good educational foundation if you expect to do excel in this business.

The forex currency exchange market is open for business 24 hours a day. Meaning, the market is continuously traded 24 hours a day from Sunday night through Friday night, EST. The foreign exchange market is made up of a network of banks, brokerages and other financial institutions and each of these entities function during their own operation hours. The hours of operations essentially vary based upon time zone. Simply put, you would see the New York exchange hours more active from approximately 8:30am until 5pm EST and the European session would start to pick up more activity during their normal business hours, and so on.

If the concept of trading the forex market is new to you, just remember that the first place to start, and the best way to help you succeed in this business, is with a broad educational background. Once you've gained knowledge of the currency exchange market, you can start building your trading strategies into a highly profitable business. Take the time to read books, online material and other references on forex terminology. You'll quickly find that much of the confusion around foreign currency exchange is simplified once you understand the basics.
Andrew Daigle owns and operates many successful websites including ForexBoost, a free Forex educational site for learning Forex trading strategies and partners with Forex Confidential for live trading sessions and their very profitable forex trading signals service.

Article Source: http://EzineArticles.com/?expert=Andrew_Daigle


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