Analysis
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The application of the RAIX layer oscillator - the possibility of the full description of the dynamics of the band components of the signal of the traded instrument quotations. The technical indicator developed by the author of the article - the RAIX layer oscillator - is offered for practical use by traders. The indicator is recommended to be used together with the previously published indicator of RASL layer, it is also possible to use the RAIX oscillator together with other technical indicators. Figure 1 shows the RASL layer indicator (upper picture 1) and the RAIX layer oscillator (lower picture 1) for the signal fluctuations layer of the traded instrument quotations, concluded within the limits from 20 to 60 periods. A full description of the RASL layer technical indicator is given in the previously published article "New RASL layer trend indicator and trading strategy...
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Every trader sooner or later begins to experiment with technical indicators, trying to find "the one" which will allow opening deals with at least 100% profitability. Often, the result of such investigations becomes a diagram with all sorts of "superprofitable" indicators' signals that reminds one of abstractionists' pictures. The best is the enemy of the good, and, unfortunately, many classical indicators are becoming forgotten, although their effectiveness is not inferior, and sometimes even superior to all grails. Today we are going to talk about one of such indicators, namely MACD. MACD is an indicator for beginners MACD is an abbreviation of Moving Average Convergence Divergence. Its name is pronounced correctly...
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The application of the technical indicator of RASL layer is an opportunity to present the complex dynamics of quotes signal in the form of a set of simpler (band) components. RASL Indicator - idea and application The technical indicator of RASL layer developed by the author of the article is offered for practical use in trading. The example of RASL indicator for the layer of quotes fluctuations concluded in the interval from 4 to 20 periods is shown in picture 1. The construction stages of RASL layer indicator are shown further in figures 2 and 3. Figure 2 shows nine moving averages RAMA with smoothing periods from 4 to 20 with step change of 2 (4, 6, 8, 10, 12, 14, 16, 18, 20). Algorithm...
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Spectral analysis in modern trading Any trading signal is organized rather complicated. It can be concluded that it consists of many rhythms with different periods, at that rhythms are not constant - they appear and disappear during their evolution in time. The structure of quotes signal rhythms can be estimated by means of digital spectral analysis, which is used in digital signal processing. Spectral analysis is widely used in trading nowadays. Figure 1 shows a typical spectrum of some quotes signal. The peaks with different heights on the spectrum graph reflect the value (amplitude difference) of the rhythms with the corresponding periods. The graph of the spectrum is displayed in the range of periods up to 100 (extreme right value). From.
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Fundamental analysis on the Forex market is an approach that helps to understand the underlying processes that determine the dynamics of a particular currency. As a rule, we are talking about long-term trends. Basically, everything is very simple: the currency of the country, which has a higher economic growth and a higher interest rate of the Central Bank, strengthens in the currency pair. However, there are situations when these principles do not work: economic and political crises or natural disasters. Many traders, especially beginners, give up on fundamental analysis (FA), because the way they see it, it is too haphazard - there is too much economic information and there is no convenient functional to formalize it. Today we'll try to change your mind, because in fact...
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Many traders chase the modifications of indicators, thinking that the more "contrivances" in it, the more accurate and profitable trading signals will be. Standard indicators turn out to be completely undeservedly forgotten and abandoned. Today we will discuss one such indicator that, when used properly, gives a trader a huge advantage. The case in point is the Heiken Ashi indicator. What are the advantages of the Heiken Ashi indicator? Very often, the heightened volatility throws traders, especially beginners, off their trading plans. The Heiken Ashi indicator dampens the volatility as if by transforming the abrupt volatility into smooth and easy-to-read price movements. HA is a kind of filter for low-frequency market fluctuations, at the same time it does it equally on...
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The higher quality of averaging (smoothing) of the indicator is connected with its higher noise immunity, i.e. with a significant decrease of the fast pulsations of the coherent line of the indicator. RAMA vs. SMA The technical indicator RAMA (weighted moving average) with the averaging period equal to N and with the weight function of averaging W (solid line), which is shown in figure 1 (calculation is made with the averaging period N=20 bars) is offered for practical use in trading. For comparison, Figure 1 also shows the uniform smoothing weight function (dashed line) of the classic indicator SMA, also with an averaging period of 20 bars. You can see that the weighting function W has a significantly non-uniform character, the large weights...
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We continue to analyze candlestick patterns indicating a reversal of price movement. In the previous article we discussed "Hammer" and "Hangman", now we will talk about a fairly common reversal candlestick pattern "Absorption" (Jap. Tsutsumi). Rules for the formation of a candlestick pattern "Absorption" For the formation of a candlestick pattern, both bullish and bearish, a number of conditions must be met: The presence of a pronounced trend; The body of the second day must completely absorb the body of the previous day. However, it doesn't mean the tops and bottoms of the two candlesticks can't coincide, it only means the tops and bottoms of the two bodies can't be both equal; The color of the first day reflects the trend: black color in case of a downward trend...
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If we are trading a particular currency pair, I think it is logical to try to understand what other factors can influence its rate. In addition to strong correlations of certain currencies and equity markets, you should also remember about correlations of commodity markets with currencies of commodity nature because they move in strong interrelations - fluctuations in one market will certainly lead to changes in the other. It is necessary to see the whole picture. This will allow you to protect yourself from sharp, unpleasant fluctuations and also to make profit by taking advantage of trend trading. Oil - interest rates - commodity currencies Let us consider the interrelation of changes of quotes of certain currencies with the dynamics of interest rates...
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Some time ago we published some lessons on trading with Ishimoku indicator by Andrew Lukin, the links to which you can find below. Today we will return to this topic, refresh our memory and try to answer some questions related to practical application of the rules of these lessons. This article is written in the form of a question-answer, but to fully understand the essence of the subject we recommend to take a look at the literacy on the Ishimoku indicator. Lessons on Yishimoku: the indicator, its components and basic signals Trading with the Yishimoku: the cloud, its purpose and trading signals Lessons on Yishimoku: market entry and stop orders Trading with the Yishimoku indicator: the Chinkou Span...
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Despite the fact that carry trade operations are available mostly to large market participants, their actions can become a pleasant surprise for us as well as a surprise, in case our trading instrument is a currency pair, which includes a funded currency. What is the profitability of carry trade operations? When the interest rates on bonds or deposits in some country begin to rise because of the actions of the Central Bank, hedge funds, currency dealers of corporations, asset managers and other participants of financial markets try not to miss the moment to take advantage of this fact. The most common are carry trade transactions. Carry trade transactions with currencies are loans of one...
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Hello, dear traders. We continue our series of articles on "Price Action Trading Methods". This article, which is the second in a row, is dedicated to trend lines as an integral part of the Price Action system. What are trend lines and how to draw them correctly? The concept of a "trend line" is often treated ambiguously and inconsistently. However, it should be remembered that out of the many trend lines, only one is true. Fig. 1. Examples of trend lines of a beginning trader. Let's see what we see on the chart of the beginner trader. Figure 1 shows such "desktop" where we see a lot of lines that often cannot be called a trend line. Naturally, the principle "some or other line" works in such drawings.
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"Quantitative easing", aka QE, aka quantitative easing (easing) - articles of economic publications, traders' forums and communities are full of this term. At its mentioning, it immediately comes to mind the Fed chief Ben Bernanke, a bearded man with sad eyes and a smart-eyed man. But if you ask anyone what "quantitative easing" is and what it does, only one in ten people will give an intelligent answer. This is not surprising, since even economists and financial experts disagree on its meaning, application and effectiveness. So what and with what is quantitative mitigation? Other articles of the master class "Be a Trader: Fundamental Analysis" Credit rating: do you have any...
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There is an opinion that the fundamental analysis of the currency market is a work with news flow and trading on the news itself, but this opinion is wrong! In fact, trading on the news is catching volatility; you do not even need to analyze the values of this or that macroeconomic indicator. The Essence of Fundamental Analysis Most of what we see in the economic calendar is not necessary for intraday trading. To be fair, it should be noted that it is difficult to apply the findings of the fundamental analysis to intraday trading, rather this information will be useful for position traders, ie, those who trade on a medium- and long-term basis. In my opinion, the whole essence of the fundamental analysis comes to...
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Articles in the economic media are full of the word "default," and the average reader with no economic education gets the impression that default is at least the local end of the world. And there is a widespread desire to urgently exchange the dollars (euros, Mexican pesos or Mongolian tugriks) stashed away for something that this "terrible default" will not touch. Let's find out what "default" really means. There are no shortage of defaults in the world First of all, we should note that the term "default" (Default) means any refusal to fulfill a debt obligation. In fact, default is the worst kind of bankruptcy. However...
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Candlestick analysis of the currency market has been popular for over 200 years. Invented by the Japanese, it confirms its effectiveness today and therefore is in demand by traders. Candlestick patterns are a combination of market bars from 1 to 5, which predict further market movement. How to trade using candlestick analysis? When trading using candlestick patterns, known as candlestick analysis, you don't need anything but a streaming chart. The market indicators are the bars and their formations. This is especially useful for long term trading on higher timeframes when it is necessary to look into the terminal only once a day. Using the candlestick analysis in trading is quite simple - you just need to know...
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Everyone has heard about the "shale revolution" and the "shale boom" in the United States, but few people have any idea what shale oil is, how it is produced, or whether it is such a threat to "classic" oil. Types of shale oil Shale oil is a mineral and, like "classic" oil, is formed from organic residues that have fallen under the influence of certain geological factors. The modern energy industry distinguishes between two types of shale oil depending on how it is produced: Tight Oil This type of oil consists of light fractions and is found in reservoirs with low permeability, which is the reason for its name. Tight oil is produced by hydraulic fracturing and drilling...
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In order to predict the future dynamics of a currency pair a huge number of techniques have been developed. Nevertheless, quantity has not turned into quality and getting a fairly effective forecast is not the easiest task. Let's take a look at the four most common methods of forecasting currency pair rates. Purchasing power parity theory (PPP) Purchasing power parity (PPP) is probably the most popular method. It is the most often cited in economics textbooks. PPP theory is based on the principle of the "law of one price," which states that the cost of identical goods in different countries must be the same. For example, the price of a cabinet in Canada must be the same as the price of the same cabinet in the United States, taking in...
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The legacy of the great Italian mathematician Leonardo of Pisa, better known as Fibonacci, is still actively used in all spheres. Trading on financial markets is not an exception. Tools based on numerical sequences of Fibonacci are very popular among traders. However, not everyone knows how to use correctly the built-in MT4 terminal Fibonacci indicators. And if almost everybody can "stretch" the grid of Fibonacci expansions, only few of them use the Fibonacci Fan having a different specifics of its creation. Let us join this effective tool. Fibonacci Fan is a trading instrument based on Fibonacci numbers. The lines, which are supports and resistances,...
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Fractals were used in the analysis of trading operations long before Bill Williams. His merit is that, as a result of extensive scientific work, he established that market movements are related to chaotic systems. Bill Williams claims that the market is a chaotic system, not a linear one. Accordingly, the use of linear methods and indicators will give a very weak effect when forecasting price movements. The market is characterized by chaos and the market stability is only temporary. Fractal analysis: Fractal Components Fractal analysis was a continuation of computer modeling. The result of the scientific work was the discovery of the feedbacks describing the market structure. The formation recurring at any timeframe of the price chart is...
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