RichardCox

Wolfe Waves are used in technical analysis to represent trading patterns that occur naturally in all markets, according to the rhythms of supply and demand. In these Waves, supply and demand unfolds in 5-wave structures as opposing forces in the market struggle (but never actually reach) an equilibrium in prices. Wolfe Wave patterns can unfold over both long and short term time frames and these patterns can be used as a basis for forecasting where (and when) prices are likely to travel in the future. When used to their potential, Wolfe Waves can help traders make accurate predictions with respect to equilibrium areas for prices associated with a specific asset. When conducting this analysis, certain elements must be in place when looking at the Wolfe Wave structure: Waves 1 and 2 must show symmetry (equality) with Waves 3 and 4 Waves 3 and 4 will remain contained in the channel formed by Waves 1 and 2 Wave 4 will fall inside the channel that is formed by Waves 1 and 2 Time intervals separating all Waves show periodic regularity The third and fifth waves are often equal Fibonacci extensions (i.e. 127%, 162%) of the prior channel price points Wave 5 surpasses the trend line generated by the first and third Wave (this action is used as the trigger for trades) Price targets will be generated (and altered) by the trendline that comes from the first and fourth Waves Understanding Advanced Channels Analysis Price channels tend to be one of the aspects of technical analysis that traders use early on in their trading careers. This is largely because of their simplicity and reliability in determining likely price direction, trade entries and exit levels. But while basic channels can provide a good (and quickly visible) indication of where prices will travel within that channel, there is not much information within these patterns to indicate when channel breaks are likely to be seen. Here, the strength of identification patterns (like the Wolfe Waves) become most useful, as they can help traders to forecast channel breaks - not just in terms of price distance but in terms of time as well. The extension of the breakout can be viewed in relation to the size of the original channel, and this information becomes useful when looking at potential profit targets for successful trades. Here, we will look at the main factors to consider when using Wolfe Waves as an advanced channel analysis technique and the ways these price patterns are typically used when generating profits. Wave Elements Practitioners of Wolfe Wave analysis will argue that these patterns were discovered (rather than invented), as they seek only to represent the natural equilibrium exchange that is constantly fought between buyers and sellers. Traders use this information primarily to find balances between market time and changes in price. These elements taken in combination help to improve on the accuracy of the analysis. But, in all cases, the most critical factor when looking at these structures is symmetrical behavior, as wave cycles that are marked by equal intervals in time tend to produce the patterns with the highest accuracy. To understand this, we will first look at the bullish and bearish structures when dealing with Wolfe Wave patterns. These can be seen in the first attached graphic. When looking for these formations, traders often watch for the following situations: Rising price channels that are found in uptrends Declining price channels that are found in downtrends Sideways price channels that are found in periods of market consolidation When looking at the basic wave structures, it is important to note that the fifth waves (in both the bullish and bearish formations) breaks through the channel containing Waves 1/2 and 3/4. These breaking moves tend to be viewed as a false breakout or an invalidation of the previous channel formation, and trade entries will usually be placed in these areas. This fifth wave “fakeout” is a common feature of the formation but is not a requirement for the validity of the formation. The extension move at point 6 is viewed as the take profit region, as this larger move is the most profitable price distance that is forecast by the Wolfe Wave structure. To determine the sixth price point, we connect Wolfe points 1 and 4 in the structure (using trendline EPA as shown in the following chart examples). Fibonacci extension levels are also helpful in determining these profit target areas. Trading Examples To see how trades play out using the Wolfe Wave structure, we will look at two chart examples. The key aspect to remember is that trade entries are taken at Wave point 5. Drawing a trendline through points 1 and 4 give us a potential exit point for the position. The following examples will both show bearish trading possibilities, with the next graphic showing how the entry levels and profit targets are constructed. As you can see, the move that follows point 5 gives us the largest price distance, which essentially means that this zone gives us the best chance for achieving a large gain in the trade. Now that we understand the basic trading structure, we can look at a live candlestick chart to get a sense of how a trade might play out in the active markets. In the third attached graphic, prices in the CAD/JPY rise to the fifth Wolfe point at 77.20. This channel pattern gives our entry signal. Note the Fibonacci relationships between all legs of the formation. Prices then see substantial follow-through and fall to the sixth point of the wave structure (the trend line drawn through points 1 and 4) below 74.20. The massive extension to the downside gives the signal that a corrective period might be seen next, which means that profits should be taken and the trade should be closed. Conclusion Proponents of the Wolfe Waves pattern analysis will argue that these formations workin price forecasting because of the ways they represent the natural equilibrium that is sought in the markets. These constant battles between buyers and sellers create the environment for what could be massive moves as these patterns reach completion. Of course, these structures involved some degree of subjectivity, perhaps even to a larger extent than what is normally seen in chart analysis. For these reasons, some traders are skeptical of the validity that can be attributed to these formations when forecasting future price moves. Proponents of these techniques will argue that profitability can be achieved as long as these formations are properly identified in real time. This is easier said than done, and it is clear that trading with Wolfe Waves does take a higher degree of practice (relative to many other techniques) in order to master and replicate on a consistent basis.

Candlestick patterns create one of the easiest ways to spot reversals or other market events and for this reason, these patterns are one of the most popular elements of technical analysis for forex traders. In the first section, some of the less commonly used patterns were explained (the Three Soldiers, the Three Black Crows, the Hikkake Pattern, the Island, the Piercing Pattern, and the Dark Cloud Cover). In the second part of this article, we will look at some of the other lesser known patterns which are less commonly noticed when markets are actively trading. The Abandoned Baby The first complex candlestick pattern we look at is the Abandoned Baby, which is a reversal formation that occurs near the completion of a downtrend or uptrend. In bearish cases, prices fall to an extended exhaustion gap and this is followed by the uptrend reversal which comes in the form an upward breakaway gap. The opposite would be true for bullish cases. Visually, we can see a single candlestick that is separated from the other candlesticks. This candlestick is the figurative “baby” that has been “abandoned” by the rest of the price activity. In many cases, the “abandoned” candle with be a Doji formation (or at least a candle with an extended upper/lower wick). The graphic of this formation shows this tendency. The Abandoned Baby is traded in ways similar to breakaway gaps, with entries above/below the gap and stop losses placed on the other side of the gap. These formations are created by the succession of the exhaustion and breakaway gaps, and this tend to be seen when prices encounter significant levels of support or resistance. This creates the exhaustion gap and and the ensuing reversal. The Island formation is a variation of this pattern, consisting of multiple candles that are separated from the rest of the price activity. The Hook Pattern The Hook candlestick pattern is another reversal formation that is characterized by higher lows and lower highs relative to the previous period. This is true for both bullish and bearish Hook patterns, as price activity is seen constricting in a tighter range. When identifying this pattern in an uptrend, it should be remembered that the open should be close to the previous high while the new closing low is also near the previous low. When dealing with downtrends, the opposite is true (in terms of open and closing values). Similar to the Island candlestick pattern, increases in trading volumes during the second time period lends to the validity of the formation. Looking at the commonly used rules for exiting trades, it should be understood that these patterns are often accompanied by sharp reversals in price. If the secondary candle does show a continuation of the previous trend, the pattern is considered invalid and any positions taken on the basis of this signal should be closed. The San Ku Candlestick Pattern (Three Gaps) The San Ku candlestick patterns are use to spot potential trend reversals that will be seen later. This differs from some of the other commonly used patterns, which are present at the exact area of price reversal. Instead, these patterns essentially signal that a trend is like to change at some point in the near future. Visually, these patterns are characterized by the placement of three price gaps that are seen in a trend that has already been well-established. When identifying this pattern, it should be remembered that prices are likely to retrace after major price moves as traders book profits and prices correct themselves. For this reason, some trading strategies suggest the use of other technical indicators that spot instances where trends are reaching an exhaustion point. So volume patterns and indicators that identify overbought/oversold conditions are often used in conjunction with these formations. With the San Ku pattern, prices will reverse after the third price gap but breakouts (confirmed by volumes surges) are seen, the pattern becomes invalid. In this case, any position based on this pattern should be closed. The Kicker Candlestick Pattern The Kicker candlestick pattern is regarded as one of the higher probability signals. Visually, these formations show sharp changes in price over only two candlestick periods. The formation of a Kicker pattern shows that a battle between bulls and bears has been fought (and then won decisively), and these situations will often occur during major news releases. This finalization of the bulls/bears battle ultimately results in a newly emerging trend. A key characteristic to watch is the gap between the initial and secondary candles and increases in trading volume will help to confirm the pattern. When dealing with the Kicker pattern, traders should look for immediate and strong trend reversals, which ultimately leads to a significant trend move in the opposing direction. Because of these required elements,these patterns should be regarded as invalid if prices experience a period of consolidation (sideways trading) or reverse again, back to the original trending direction. In these cases, any trades that are opened on the basis of the Kicker pattern should be closed. Trading with Price Gaps There are some cases (such as significant increases in trading volumes) where the price gaps associated with these candlestick patterns tend to produce more reliable results. Certain element to watch for include: the identification or breakouts, price movements that are large (in terms of candle length) and in conjunction with surges in trading volumes, and reversal formations that come after the early gap. These reversal candlestick formations (like the ones discussed above) should be within the first few price bars and when these come after periods of market indecision, a stronger pattern is being seen. Trading with reversal patterns does mean taking on risk prospects that are not visible in other aspects of technical analysis since, by definition, this means trading against the dominant momentum that was seen previously. Because of this, reversal trades are often associated with tighter stop losses and these positions should only be considered when strict criteria are met. Candlesticks as an Early Sign of Trend Reversal Looking at the characteristics of these candlestick reversal patterns, it becomes clear that changes in trend become apparent when looking at the various ways price behavior presents itself visually. There is a large number of candlestick patterns that can be outlined but, in many cases, traders tend to focus on the simplest patterns and disregard the rest. The simpler patterns tend to be more common (and visible) but because of their higher frequency, the signals they produce tend to be less reliable. It is very rare for traders to use candlestick formations on their own as the basis of trades, as there are many complementary tools in technical analysis that can help to confirm or deny a pattern as it presents itself. The patterns outlined here deal with gapping formations (in addition to the visual representation of the candle) and the reliability of these signals will rely heavily on the accompanying trading volumes that are seen as these patterns are developing.

The trading theories developed by Bill Williams combine various aspects of Chaos Theory with the general tendencies seen in trading psychology to determine the ways these factors influence the trading markets. Broadly speaking, Williams’ central suggestion is that the ability to accurately forecast the trading markets comes as a result of the behaviors that are typically expressed by human psychology, and that it is possible for any trader to post consistently successful results the hidden determinism of market events (which, on the surface, might appear to be random) are ultimately uncovered. Where Williams’ techniques differ from the wider majority seen in the market is in the idea that technical analysis (and even fundamental analysis) is unable to guarantee consistently accurate price forecasting and profitable trading results because these approaches fail to the broader workings at work in the “real” market. Williams’ work suggests that most traders ultimately lose because there is a general tendency to rely on different (and potentially conflicting) forms of analysis. Williams’ conclusions suggest that all of these approaches are useless when dealing with models that are nonlinear and dynamic (ie. the financial markets). Trades with Market Dimensions At this stage, it should be clear that the ideas of Bill Williams work heavily off of the concept that trading in the financial markets is largely a game of psychology. But, in addition to this, it is also important to have a unique understanding of the way markets are structured. For Williams, this means breaking down a market to its core sections, which he called Dimensions. These include the Phase Space (Fractals), Phase Energy (Price Momentum), Phase Force (price acceleration and deceleration), Zones (Phase Force and Energy in conjunction), and the Balance Line. Using the Williams method, all trading signals can be disregarded until the early Fractal dimension gives an indication of future price direction. These Fractal signals allow traders to open a small position and then to place additional positions in the same price direction when signals from the other structural dimensions are seen. Traders should limit position sizes accordingly, as it should be understood that new trading signals will develop after the early trade is placed. When looking to close a position, profit targets are often calculated in relation to the overall movements that are seen in the dominant trend. A good rule of thumb suggests that these targets should be equal to roughly 10% of the most recent impulsive wave. Waiting longer than this can create disruptions in the Williams method because the calculations that go into defining the Fractal areas are highly sensitive to changes in price. The Gator and Alligator Indicators Two of Bill Williams’ most famous indicators are the Gator and the Alligator, which, he explains, will act like a homing device which tells traders the most likely direction prices will travel. The Alligator is designed to show traders which trend is really present in the market and will keep traders away from range bound trading. The indicator itself is composed of three individual balance lines: The Alligator Jaw is a 13-interval MA that is based on the midpoint of the price interval [(High+Low)/2]. In the attached chart, this is the blue line and is offset 8 bars forward. The Alligator Teeth is an 8-interval MA that is based on the midpoint of the price interval [(High+Low)/2]. This is the red line and is offset 5 bars forward. The Alligator Lips are a 5-interval MA that is based on the midpoint of the price interval [(High+Low)/2]. This is shown in the green line and is offset 2 bars forward. When the three lines of the Alligator are intertwined, the Alligator is dormant, which is suggestive of range bound market activity. As is typical with consolidation periods, this can only last for so long, and the longer this is seen, the greater the potential price that prices will explode later. Looking at the actual indicator, this occurs when there is a divergence between the Balance Lines. After this is seen (and the following explosive price move unfolds), wait for the Alligator to show a dormant signal once again before exiting the position. Determining Trend Direction When the Alligator is sending its signals, there are trending forces at work in the market (either an uptrend or a downtrend). Here are the general rules for the trend indicator: Prices above the Alligator lines indicate an uptrend Prices below the Alligator lines indicate a downtrend Price activity outside the Alligator lines suggest the current wave is impulsive (in Elliott Wave Analysis) Price activity inside the Alligator lines suggest the current wave is corrective (in Elliott Wave Analysis) A Look at the Williams Gator Oscillator The Bill Williams Gator Oscillator is an expression of the degree to which the Balance lines are showing convergence or divergence. The visual display for the oscillator shows two histograms, which can be seen in the second attached chart. When the histogram is in positive territory, we can see the difference between the Alligator Jaws and Teeth (which is the Red and Blue lines). When the histogram is in negative territory, we can see the difference between the Alligator Teeth and Lips (which is the Green and Red lines). The next element to watch is the changing colors of the bars themselves. Red colors are seen in the histogram when the histogram bar is lower than the previous interval. Green colors are seen in the histogram when the histogram bar is above the previous interval. The Gator shows convergence (intertwining in the Balance Lines) when the Alligator is breaking from indications of range bound activity and this can help when looking to identify trends. Bill Williams’ Use of Fractals One of the central maxims in the Bill Williams approach holds that positions should not be established until the initial Fractal signal is generated. Until this happens, all other indicator readings can be ignored. When dealing with Fractals, buy signals are generated when five consecutive bars unfold in a set series. Bullish turn arounds are seen when patterns show the lowest low of the 5 bar series, along with two higher lows on the right and left side. When a buy fractal occurs above the Alligator Teeth (which is the Red line), stop losses can be set just above the high of the upward Fractal. Sell signals are generated when five consecutive bars unfold in a reverse set series. Bearish turn arounds are seen when patterns show the lowest low of the 5 bar series, along with two higher lows on the right and left side. When a buy fractal occurs above the Alligator Teeth (which is the Red line), buy stops can be set just above the high of the upward Fractal. When a sell fractal occurs below the Alligator Teeth, sell stops can be set just below the low of the sell Fractal. It should also be remembered that Fractal buy signals are not considered valid if they are seen below the Alligator Teeth. Similarly, Fractal sell signals are not considered valid if they are seen above the Alligator Teeth. Fractal signals will be considered valid until the pending trading orders are triggered or until a newer Fractal (showing the same price direction) become apparent. If this second scenario occurs, the initial signal is disregarded (and the order for that signal should be removed). In Williams’ analysis, Fractals are, in some sense, the “advance guard” as this is what makes up the first dimension in markets. We would need to see a breakout of the initial Fractal signal in order to consider valid the other signals that are generated by the system indicators. Later, signals might develop in later Fractal formations (in the same direction), and these can be used as a signal to add on to the position.

Candlestick patterns are one of the most popular technical analysis elements used by forex traders. This is largely because of their utility in gaining significant market insight at a glance. Most of us are familiar with some of the more basic candlestick patterns but, in many cases, these simpler patterns will generate false trading signals because they occur in a frequency that is too great. Here, we will look at some of the more advanced (and more rare) candlestick patterns. These patterns tend to offer a preferable rate of reliability, especially when they occur in conjunction with other price patterns (such as trading gaps). But these patterns also tend to be less well known as many traders stop their research once the more popular patterns have been covered. The Three White Soldiers Pattern The Three White Soldiers candlestick pattern takes price data from three time units and indicates that a bullish reversal is unfolding after a large bear wave. The pattern is made up of three long, positive candles in a sequential uptrend, which looks something like a staircase. Each candle opens above the high of the previous time unit (often in the middle of the range of the previous time unit). Each candle closes above the previous close, posting a new short term high. The Three Soldiers pattern signals an end to a bearish move and that the market is turning positive. The opposite of this pattern is the Three Black Crows candlestick pattern. The Three Black Crows Pattern The Three Black Crows candlestick pattern takes price data from three time units and indicates that a bearish reversal is unfolding after a large bull wave has come to an end. The pattern is made up of three long, negative candles in a sequential downtrend, which looks something like a downward staircase. Each candle opens below the low of the previous time unit (often in the middle of the range of the previous time unit). Each candle closes below the previous close, posting a new short term low in the trend. The Three Black Crows pattern signals an end to a bullish move and that the market is turning negative. The Hikkake Pattern The Hikkake Pattern is a more variable candlestick formation in that it can indicate either reversals or continuations, depending on the overriding trend seen in the market. The pattern is sometimes referred to by other names, such as an Inside False Breakout or a simple Fake Out but since these terms can also apply to other patterns, the term Hikkake is generally preferred. The pattern is made up of a period of stalling (a contraction in volatility), which is then followed by a short-lived price move that initially fools unsuspecting traders with respect to the next major price direction. However, like the other patterns, the Hikkake should not be viewed as a stand-alone signal capable of generating trades on its own. There is a bullish and bearish version of the pattern. In both cases, the first candle is an Inside Bar (higher low and lower high, relative to the previous unit). Then, we see a candle with a higher low/higher high (for the bearish pattern), or a candle with a lower low/lower high (for the bullish pattern). Confirmation that a true pattern signal has been generated comes when price falls below the low seen in the first candle (in the bearish pattern), or when prices rise above the high seen in the first candle (for the bullish pattern). This confirmation must be seen within three candles of the last bar, or the signal becomes invalid. The Island Candlestick Pattern The Island Candlestick pattern marks reversals in price activity, and is comprised of multiple candles that are separated from the majority of the currency’s price action (after a price gap). As a downtrend is reaching completion, there will be many instances where markets will make one more push and create an exhaustion gap. When prices consolidate in this area for a few periods (candle values change depending on the charting time frame), the previous trend officially comes to an end. Here, prices reverse and create another breakaway gap, and in this direction the next trend will begin. This creates a visual pattern that is one of the clearest of the advanced candlestick patterns, and resembles an island, separated from the “larger land mass,” which is the majority of price activity. Given the erratic nature of these moves, it is not surprising to see Doji patterns or at least candlesticks with long upper wicks (for bearish formations) or long lower wicks (for bullish formations). These patterns are traded in ways similar to breakaway gaps, where entries come as prices move through the gap, and stop losses are placed below the gap (in bullish scenarios) or above the gap (in bearish scenarios). These patterns ar5e relatively rare, and this helps to create a greater chance of seeing a successful signal once a clear formation actually becomes apparent. The Piercing Candlestick Pattern The Piercing Candlestick Pattern is a bullish formation that occurs as a downtrend is coming to an end. The pattern is made up of two candles. In a downtrend, the first candle is negative (in line with the dominant trend). In the next candle, prices open below the low of the first candle and rise dramatically but still fail to make a new high. This secondary candle will close inside the body of the first candle. When this formation is seen, it is clear that buyers are looking to take control of the asset. Chances of a true reversal improve when prices in the second candle close near the previous highs. The Dark Cloud Cover Candlestick Pattern The Dark Cloud Cover candlestick pattern (as the name suggests) is a bearish formation, which occurs at the height of a dominant uptrend. The formation is made up of two candles, with the first showing a positive performance (in line with the previous uptrend). In the following period, prices move above the previous candle high but, at this stage, markets see excessive supply which later deflates prices. Because of this, prices will close within the body of the first candle period. When the Dark Cloud Cover is seen, there is an increased likelihood that sellers will assume control of the market and send prices lower. There is a greater chance that this is the case when the second candle shows a close that comes near the old lows. In these cases, traders can work off of the assumption that a top is in place. The Dark Cloud Cover is the bearish version of the Piercing Candle formation. Expanding Knowledge of Candlestick Formations Candlestick formations are one of the most popular technical analysis approaches that are used by chart focused traders. But it should be remembered that there is a wide library of available formations that can be used in order to initiate trade ideas or to substantiate trade ideas that come from other sources. All of these formations are supported by an underlying logic and can give quick visual signals for how prices are likely to perform into the future. It is always important to have a wide understanding of these formations so that trading probabilities can be enhanced with a larger number of supportive elements.

FXCM is one of the most well known and widely used brokers in the forex industry and at some stage, most traders have come across some sort of news analysis or technical analysis strategy that has been published by one of its authors. But even with this large (possibly the largest) web presence, it was relatively surprising to see FXCM wait as long as it did to offer its clients a trading platform that did not need to be downloaded directly onto a PC. To be sure, when looking at the features of FXCM’s web based platform, it is clear that the company was going for a very bare bones approach that is designed essentially for placing trades and little else. More advanced technical and fundamental analysis will have to be conducted in other areas, and in the following sections we will look at why this is the case. Platform Order Types First, we will look at the various order types that are offered on the platform, as this is one its its strengths when compared to some of its industry competition. While the platform does allow for the execution of basic orders (market orders, stop orders, limit orders and entry orders) directly from the chart, there are more advanced orders as well and this is something that is not seen on all web based platforms. Specifically, these come with three choices: The first is the At Market and Market Range order, which are used when traders are looking for increased price certainty and execution validity. Second is the Simple OCO order, which allows traders to easily create two linked entry orders that straddle the current market price. Third is the Complex OCO order, which allows traders to manually link two or more orders (which cannot be done as quickly as the Simple OCO order). Platform Trading Modes Overall, the platform is definitely dedicated to increased order flexibility and this also becomes clear in the three platform trading modes that are available on the offering. In order to make accommodations for different types of trading styles, the web platform allows traders to choose between click and confirm orders, one click orders and double click orders, and each method has its own set of advantages. The one click order is best for very short term strategies (scalping), as is allows traders to enter and exit positions with a single mouse click. While it is much easier to get in and out of positions, a greater level of care must be used in order to avoid mistakes. For more conservative traders worried about these issues, the click and confirm option can be used. Here, traders verify their order levels before any order is submitted and for conservative traders this “mistake prevention” will be viewed favorable. A happy medium between these two modes is the double click mode, which can be done more quickly and will not create as many mistakes as the single click mode. Platform Charting Software Unsurprisingly, FXCM touts its charting package as “powerful” and says that “high-end” packages of this type are usually found in expensive, subscription based offerings. But when looking at the actual charting software, these descriptions don’t ring quite as true. While there is the ability for technical traders to overlay some of the most commonly used indicators, the overall list available isn’t exactly inspiring. This indicator list includes roughly 50 options, with many of the old favorites: SMAs/EMAs, Bollinger Bands, MACD, ADX, RSI, Stochastics, etc. At the same time, the chart elements that are offered include Fibonacci Retracements and Time Zones, Gann Fans, Trend Lines, the Andrews Pitchfork, as well as equidistant and regression channels. So while most of the basics are covered, traders with more advanced technical analysis strategies will likely need to use an alternative charting package in order to conduct their analysis. So while this is a general feature of most web based platforms, it does not change the fact that FXCM (even as one of the most well established companies in the business) has yet to offer a more advanced charting package. One later feature has been the ability to trade directly from the chart (and to manage trades from the chart once they are open), streamlining the process. But, overall, FXCM’s web offering offers little in the way of advanced technical analysis capabilities. Trade Execution and News Feeds A general concern with the use of web based platforms is the fact that order execution can suffer without the use of a downloaded platform. Fortunately, FXCM has one of the most respected reputations for trading executions in the business. This is largely a result of FXCM’s no dealing desk execution model, as this give traders a much deeper liquidity pool when trade are actually placed. Because of this, there is less lag time when trades are opened and in sending confirmation orders for those positions. But where the platform outshines some of its competition in execution, areas of weakness can be seen in the lack of a news feed that is part of the web based offering. This is truly a glaring omission, as there are other (and very well known) forex brokers that have offered quality news feeds for years. When looking at the platform, there is a “Research” button, which takes you to FXCM analysis website but in many cases, economic releases and other news headlines are not immediately updated. This does pose some potential problems when news related volatility picks up, so when using a strategy that is sensitive to this type of information, a trader would need to use an alternative source in order to know what is moving the market at that moment and to receive the result for macro economic data. Conclusion: An Efficient Platform Focused on Placing Trades, Not Analysis So when looking at the FXCM web platform as a whole, it does become clear that the intention is for trades to be placed in a fast and efficient manner, rather than on conducting the analysis that might be behind those trades. So, if your trades tend to be based on simple support and resistance levels, or on Fibonacci retracements, there is nothing wrong with the platform capabilities. On the other hand, if you tend to implement more advanced technical analysis strategies (such as the use of harmonic patterns) or if you tend to watch news events to manage your trades once positions are opened, it might be more wise to either use FXCM’s downloadable platform or to find a broker that allows for the extra platforms features.

W.D. Gann is one of the most well-known contributors to the field of technical price analysis and this is due, in large part, to the unique approach he took when forecasting potential price direction. Gann’s decision to take some time away from trading and actually study the way market prices behave should be seen as a model of practice in itself but there are many traders that are highly skeptical of some of Gann’s underlying ideas. Here, we will look at Gann’s interpretation of the Square of 9 as it describes the distribution of prime numbers and then price forecasting. More widely known by mathematicians as Ulam’s Prime Number Spiral, the Square of 9 does receive criticism over the mystical nature of the analysis, and its seemingly disconnected relationship to the financial markets. First, we look at how the Square itself is constructed. Constructing the Square When looking at Gann's Square of 9, integers are arranged as a square, and can be constructed using graph paper by placing “1” in the centermost box, placing “2” on the box to the left, placing “3” in the box above. Then, we move clockwise and add consecutive numbers: “4” is placed to the right of “3,” “5” is next, and “6” placed below “5.” When we reach “9” the first square is completed, and “10” will start the next square. This can be seen in the first attached graphic. According to Gann, this collection of numbers is composed of a hidden rules that can be applied to the financial markets. For Gann, these numbers can be viewed as prices, and their progression as a circle can be viewed as the sequence of time. The completion of one spiral will lead the trader to the next spiral, and this will also represent the completion of one time period (for example, a day or a year). Of course, some numbers in these diagrams are more important than others, and those in lines that fall on the 8 directional lines found on a compass are considered to be more significant. When looking at the northern, eastern, western, and southern “compass lines” traders can see the areas where prices will align at certain periods within the unit of time you are watching. This can also be seen in the northeastern, northwestern, southeastern, and southwestern compass lines as well. Identifying Support and Resistance Levels So, in essence, these lines fall as a “cross” and an “X” in the number arrangement. Once these areas are identified, traders can watch for prices to hit a major high or low. So, for a frame of reference, if prices hit a high of 85, you would expect prices to find support at 52 because this is the next number in line as you move toward the center of the square. But how, exactly, are these numbers determined? The calculations for these numbers are relatively simple, as we take the larger number (85), and find its square root (9.2). We then subtract 2 (giving us 7.2) and then square this number, giving us the next sequential number toward the center. When moving in the opposite direction on the square (finding resistance), you will reverse the operation and then add 2 to the square root (rather than subtracting 2). Angular Relationships When trading with Gann theory, we look price relationships by marked by angles of 180 degrees, 90 degrees, etc. The relationship between 3 and 9, for example, would be 90 degrees, where the relationship between 3 and 7 would be 180 degrees. With this information, investors can forecast the magnitude of potential price oscillations and this can allow traders to time major reversals in price activity. To be sure, Ulam’s Prime Number Spiral has some very different applications in the world of mathematics. But Ulam noticed that when constructing this square, sets of prime numbers could be found in diagonal lines within the wider diagram. These prime numbers can be seen in grey in the larger diagram attached. As you can see, prime sequences (such as 81, 131, 181, and 239) start to become apparent. These patterns continue even when the square is stretched to much larger parameters. In the 45 degree angle from the center, 70% of these fields will show primary numbers (much higher than the 20% of the sequential integers which are actually prime). In terms of mathematics, this is viewed as significant because prime numbers can be thought of as the natural “elements” of all other numbers in that they are calculated by multiplying primary numbers together. Parabolic Shifts For this reason, the angular distribution of these numbers is a much-discussed mathematical mystery. According to Gann, these patterns mark evidence of underlying mathematical order that can be applied to other arenas and create trading opportunities for those in forecasting future price movements. The Square of 9 is, in essence, a parabola calculator and each angular ray from the center can be expressed as a quadratic equation, so when looking at a price and time chart, parabolic curves are formed. Gann’s argument is that prices falling along the same angles “vibrate” together along a parabola. In some sense, this should be relatively unsurprising, given that prices are vulnerable to large retracements when momentum goes parabolic. Parabolas can also be thought of as slowdowns and reversals in trends, so when looking at Gann’s structural elements in this light, applications to trading the financial markets start to become more visible. Price and Time Relationships At this stage, it should be clear that, for Gann, major tops and bottoms in prices have mathematical relationships. This cause-and-effect relationship that exists in price movements of various time periods then become the governing factor when determining how prices are likely to behave in the future. In the Square of 9 chart all forms and numbers are derived from the 9 integers that complete the first cycle. Finding the “zero point” becomes critical when determining the vibrational center that will theoretically affect prices in the future. But the main thing to keep in mind is that the dates of the highs and lows are related (in addition to the price levels themselves). So, when the harmonics of both price and time square with one another, Gann theory suggests that major reversals will likely be seen. When a larger cluster of price and time harmonics is seen, the reversal is thought to be more forceful. Another important factor to remember is that smaller time frames must be used in identifying significant highs and lows (so, for example, it would not be recommended to simply use the yearly highs and lows). This is viewed as lending credibility to the projections of the cycles of price and time. All trends are made up of sub-trends which move with and against one another, so all of these factors must be considered when making Gann projections.

Yes, I think you are right that there is some flexibility here in the possible definitions. It sounds like you are suggesting that the sessions correspond more with the open and close of the stock market but some would argue that the larger shifts in liquidity and transaction flows coming from North American sources start as early as two hours before that.

One of the most often discussed features of the of forex market is the fact that it is open 24 hours a day and does not experience some of the same abrupt closes that are seen in other asset classes. This, of course, allows for greater levels of participation from traders all over the world and provides greater flexibility for those looking to trade after work, during normal business hours, or in the early AM. But even with this flexibility, it should be remembered that not all of these trading periods should be considered equal, and this factor can have some significant effects when technical analysis strategies are implemented. While the foreign exchange market is clearly the most liquid and dynamic market in the world, there will be times when price activity is highly volatile and other periods where price activity will be more muted. In addition to this, specific currency pairs will show variations in momentum during certain trading periods, and this comes as a result of changing demographics of the active markets during those periods. Here, we will look at the characteristics of the main trading sessions so that traders can have a better idea of what to expect during different periods, as this can help traders of all strategy types to make more informed decisions when constructing a trading plan. Identifying Trading Sessions that are Manageable The added time periods in place for the forex markets can provide some key advantage for both retail and institutional traders (increased liquidity, reduced limitations in closing trades), but there are some drawbacks here as well. Some of these negatives can be seen in the fact that traders only have the ability to watch their open positions for so long, and for some trading styles, this can make things difficult when markets stall. Additionally, there will be many occasions where traders miss opportunities because they are simply not able to be watching market activity at that time. Times of increased market volatility can also cause close stop losses to be hit once positions are established, so in order to minimize these potential risks, it is important to know when markets are likely to become volatile as a means for deciding on optimal trading times. By most accounts, forex markets can be divided into 3 sessions: the European, North American, and Asian sessions, or by their city names, the London, New York, and Tokyo sessions. Since these three cities are all major financial centers, markets tend to have the most activity when banks and private companies in these areas are conducting business, and as a result, many speculators concentrate on these time periods. The Tokyo Session (Asian Trading) As traders enter the market after the weekend closing, Asian markets will be the first to see injections of liquidity, and the Tokyo session is typically defined as occurring from 12am to 6am GMT but some of the countries that fall into this trading period include Russia, China, Australia and New Zealand. To be sure, these markets are disparate and scattered, and the true parameters of the Tokyo session will fall outside these hours. The London Session (European Trading) Later, just prior to the close of Asian trading, the London session begins to being the next wave of market liquidity. In London, formal business hours are from 7:30 am to 3:30 pm GMT, but factoring in markets such as France and Germany, the hourly parameters are extended here as well. In this case, market volatility tends to remain consistent into the London fix following the close. Thus, the wider European trading period can be defined as the hours between 7 am and 4 pm GMT. The New York Session (North American Trading) As North American trading comes to trade, markets in Asia have been closed for hours, and the trading day is half-finished for those active in Europe. Most of the activity seen during this time is put through in the US, with smaller transaction amounts seen in Mexico, Canada, and various regions in South America. Given these factors, it should not be a surprise that the official open of the New York markets is what brings most of the period’s volatility and overall market participation. With early trades in the futures and commodities markets, and the fact that most economic news releases are scheduled in the early parts of the day, North American hours are generally considered to start at 12 pm GMT. Since there is a wide gap from the end of the New York session and the start of the Tokyo session, there is a drop in market liquidity during this period, and trading volatility tends to see substantial decreases in anticipation of this occurrence. How Time and Market Participation Influences Price Action Now that we understand the basic time framework for the 3 main sessions, it is important to look at the ways these participation levels will influence overall price action. One element to consider is the fact that a currency tends to be most active when its nation’s markets are open for business. This should not be surprising, given that more international transactions with that currency are likely to take place at these times. In these cases, domestic companies, banks, and investors from these regions will use their own currencies to make their international transactions. For these reasons, sessions with multiple active currencies (such as the USD/CAD in the North American session) could produce greater volatility because both regions are active at the same time. Additionally, it is more difficult to buy and sell currencies in a nation where the main banks are closed for the day. For example, if a Japanese company wanted to make a multi-billion Dollar purchase in the US, the Japanese company would likely wait until US banks are available and there is more liquidity in US Dollars. If this is not done, major orders in thin markets could result in unfavorable price quotes and extra costs that have nothing to do with a change in value of the product itself. Session Overlaps This is also why prices tend to see more activity when market sessions see overlaps. Looking at the attached price graph, we can see that there are 2 major peaks throughout the trading day - the end of the Asian session / beginning of the European session, and the confluence of the North American and European Sessions. The second example (four hours long) is much larger and there are volatility benefits that are created from this added liquidity. But this is not only the result of transactional flows, but also the result of market moving economic releases (usually from 12 pm to 2 pm GMT) that can guide the trading direction for the day and bring major increases to price volatility. Using this Information When Trading Market activity is clearly one of the most important factors to consider when placing trades. Otherwise sound strategies can be disrupted when they are implemented during the wrong trading session. Establishing long term positions during volatile hours can result in unfavorable exit and entry levels or missed trades. Conversely, shorter term positions that depend on volatility would tend to be unwise during market lulls (low price volatility) such as that which is seen in between sessions. So when placing real trades, it is important to consider these factors as market volatility is usually a predictable market element and can vastly influence the success or failure rate that is associated with certain types of strategies. In addition to this, you must consider the actual currencies that are being traded, as volatility in these specific pairs will also depend on the activity usually seen during the session. While these tendencies are not in place in the market 100% of the time, understanding regions and session periods will give trades vital information that can heavily influence the outcome for your personal strategy style.

Yes, you are right. Good eye, it should show PUT options. I realized this after I posted and I am not able to change these once they are submitted.

Many forex traders look to automated trading software in the hope of gaining an approach to the market that is thought out, unemotional, logic based, able to consistently repeat profitable trades, and will execute those trades immediately after opportunities present themselves. These qualities represent the best features of the automated software that is available for forex trading, and there is a wide variety of commercial programs that are designed scan the available markets for profitable trading opportunities and to function without the presence of an active trader. The scans conducted by these programs can be structured using parameters that are pre-set by the programmers or with trading rules set by the user. Range of Choices There is automated software that is designed for beginner, experienced, and advanced traders, coming in a large range of prices and levels of user sophistication. As with anything, it makes sense to read some of the online reviews that are available before committing to any decisions. Some of these programs offer trial periods and other incentives, so in many cases traders can test these programs before making any purchases. While automated trading programs can offer some clear advantages, they are still far from infallible, so it should always be remembered that this software does not guarantee that trade after trade will be profitable (despite what many of their advertisements will tell you). How Do these Programs Operate? Automated trading software is essentially a computer program that will analyze the price behavior (or other activity) that is seen in a currency chart. This might include factors like discrepancies in the spreads, deviations from moving averages, trend behavior or significant gaps in the market you are watching. The program will then use this information to locate trades that are potentially profitable and price levels for exits and entries in currency pair trades. So, once the trading criteria is set, the software will identify which currency pairs satisfy the initial price parameters. This creates either a buy or sell alert and then the trade is placed automatically. Traders will often refer to this method as Black Box trading, Algorithmic trading or “Robot” trading. Taking the Emotion Out of Trading One of the most significant advantages of trading with automated software is that the user is then able to eliminate influences that are created by psychological and emotional factors, and, instead, rely on mathematical approaches that are based on logic and consistency, using either the default trading parameters or ones that you design yourself. Since traders of all experience levels will inevitably be influenced by irrational psychological factors, those using automated software can help reduce lapses in judgment in order to avoid errors. For some strategies, such as those based on discrepancies in spreads, this approach can be highly effective and easy to execute. Other situations, such as crossovers in moving averages, chart patterns, breakouts, or other delineations of support and resistance can also be used. Managing Multiple Accounts In addition to these “ease of use” advantages, traders are also able to capitalize on the ability to manage multiple accounts at one time. Techniques like this can be difficult for manual traders using one computer, so for those looking to execute trades with more than one account, automated software can greatly simplify the process. But perhaps the primary advantage is the fact that traders are not tied to a PC at all times when trades are active. The fact is that many traders simply do not have the time to constantly watch trades one they are open, so in these cases, automated software can offer solutions, since these programs will constantly scan the market for opportunities and adjust trades as time unfolds. Avoiding the Wrong Automated Trading Software Since these are cases where real money is put at risk, traders should approach advertised claims of substantial profits with some level of skepticism, especially when these profits are said to occur quickly. Many trading programs are offered on the market - some are excellent, some are adequate but exhibit some design flaws, and some should be avoided entirely. Generally, there is an inverse correlation between the level of proposed profits and the true adequacy of the program. So, when ads claim a product will generate 95% in winning trades (or thereabouts), caution should be exercised. Reputable publishers will always provide verifiable trading histories in order to demonstrate the efficacy of their products. Assessing Your Trading Needs So, in order to choose the right trading software for you, first you will need to assess your trading needs. These programs will vary in terms of performance, speed, programmability, forecasting accuracy, trading frequency, and general ease of use. So what works well for one trader might be insufficient for another. For example, trading priorities might center on programs that generate detailed reports, implements stop losses, manages trades with trailing stops, or exercises other types of market orders. Other traders might want s much more automated process, more along the lines of “set it and forget it” programs that require less user effort. In other cases, remote access might be essential and the use of a VPS (Virtual Private Server hosting) might be worth consideration. A List of Factors to Remember Most automated software systems trade the most popular currency pairs (becomes of high volumes and better liquidity), so this would include the EUR/USD, USD/JPY, GBP/USD and USD/CHF Trading techniques vary from conservative to aggressive, with some programs looking to scalp a few pips and others profiting from longer term trends. Choosing a trading style is very important for defining levels of risk. Customer product reviews can provide a good source of reference for the accuracy of the trading results, read these before buying anything in order to identify scams. Always shop around. With so many products on the market, some very good programs are offered at relatively low costs. But also remember that cheaper is not always better in these cases. Use programs that offer technical and customer service support. This is important for new traders or those unfamiliar with programming software. Conclusion The use of automated trading software can provide many advantages for investors of all experience levels. And while some products offer performance results that are well beyond what is actually possible, there are many companies that provide reliable offerings that can generate significant returns over time. One way to avoid being scammed is to look at the consumer alert websites offered by the Commodity Futures Trading Commission and the National Futures Association, as this can help to prevent unfavorable surprises later. The forex market is fast-moving, highly dynamic and always open for trade. This can make it difficult sometimes to identify new trading opportunities on a constant basis. But when using automated software programs, traders are able to remove the irrational elements of psychology and emotion, and this can prove highly valuable when looking to sidestep some of the mistakes traders have made in the past.

Successful trading requires the ability to identify markets that are about to move in a direction that can be forecast and the ability to adapt to market conditions once trades are active and open. This becomes even more true when market conditions move against a trade, as this is when the real financial risks become apparent. Of course, there is a wide variety of trading strategies and techniques that are available for use when these conditions are seen and decisions must be made. When looking at the conventional wisdom espoused in forex tutorials, the typical methods of risk management usually recommend the use of stop losses as the best way to protect a trade from accumulating unnecessary losses. And while this is a perfectly acceptable approach, it should be understood by those active in the forex markets that this is not the only method available and that there are other techniques that will be better suited for different market environment and trading scenarios. In fact, some of the problems that traders might encounter with the use of stop losses can be rectified and overcome with the use of options, which is an aspect of trading that is often neglected by those more familiar with traditional spot trading. Disadvantages and Potential Limitations When Using Stop Losses Conventional trading wisdom shows that excessive losses can be avoided when stops are used as part of a pre-structured trade. If market prices reach a point that we initially found to be unlikely, a stop loss will trigger, the trade will be closed and additional losses can be prevented. But the fact is that a stop loss is really more like a tourniquet that is used to stop the bleeding. And while this tourniquet is able to prevent further damage and keep the body alive, there is not much flexibility in the ways this job is done or in how or when the bleeding is actually stopped. Essentially, once a placed stop becomes active as a market order, there are a few different outcomes that can actually unfold. The flaws that do exist when using stop losses become apparent when they are unable to protect traders from unexpected losses. Unfortunately, these situations tend to occur at times when traders need to most protection (such as in highly volatile and fast moving markets) but this can also occur during times of major shifts in supply and demand or in consolidating markets, as stop losses can pigeonhole traders, forcing them close trades under less than optimal conditions. In essence, the usage of stop losses is in reality a one size fits all trading solution,and it should always be remembered that this isn't the only choice that is available to traders. In fact,the use of options can allow traders to ease out of their trades in different ways, change time frames for your position, or to reverse trading exposure without opening up your account to additional risk (relative to what would be seen with the use of stop losses). Looking for Alternative Solutions When looking for alternate solutions, forex traders can compare the relative values of options and stop losses, there are some properties that characterize options which make them a favorable choice as traders look to protect their open positions. Here, we will look at some of the ways traders can use options during market conditions that are more volatile and quickly moving to see how this approach can stand up to the more traditional methods that are commonly used. The first problem that can be encountered when using a stop loss during volatile market periods comes when trading with brokers that do not guarantee stop loss prices. So, in essence, there is always the possibility that the market could gap right over your stop loss and create larger losses than you were expecting. To be sure, there is always the chance that this type of occurrence can be seen, especially given the fact that stop losses are generally set in price areas the market is unlikely to reach. It is not surprising to see enhanced volatility during periods like these and when there is greater volatility, there is a larger potential for price gaps in critical areas. This is also referred to as “slippage” and is seen when your stop order is filled at a price worse than your original order. In some cases (such as when leverage is maximized) this can create losses that are massive when looking at your account in percentage terms. But when options are used, there is a much greater level of certainty during volatile conditions, as your original orders must be executed at their originally agreed price. An example of this could be seen if a trader were to buy the EUR/USD at 1.3050, with a stop loss at 1.2975. When using options traders could simply enter into a PUT option, using a strike price of 1.2975 as a way of guaranteeing you will not be long the EUR/USD at any price below 1.2975. Trading Benefits When Using Options While it is true that you must pay for the option in the example above, there are two additional positives that can be gleaned from this approach. First, buying “out of the money” options generally cost less relative to “in the money” options. Cheaper options can also be found when using options that run counter to the prevailing market trend, as these have lower volatility levels. Second, the use of options is the easiest way to manage potential losses by controlling slippage. For this reason, this approach is also referred to as having a “hard stop.” Trading in Consolidating Markets Managing stops can also become difficult during consolidating markets, which might be surprising to some. Since markets cannot move straight up or down, there will always be pullbacks and traders must make an assessment of whether markets are consolidating or truly changing direction. But, in both cases, stops will react the same way in both scenarios (consolidation or reversal), and once triggered, will close a trade at a loss. There is, essentially, nothing you can do if the market hits your stop, stalls, and then whipsaws as it moves back in your initially favorable direction. For these reasons, stop losses are basically all or nothing mechanisms, which leave very little room for error when whipsaw conditions are seen. Here, there is always the possibility that you can have the market direction correct, and ultimately be forced to encounter losses. A Solution with Options in Stop Loss Areas Luckily, options can offer the opposite effect. When placing options in areas otherwise designated for stop losses, you will have the chance to hold on to a position that would have been stopped out in the spot markets. While the Delta of these options present some additional complications, these options can balance some or all of the trading losses as the values increase. This approach gives traders extra room when it is unclear if the market is consolidating or truly reversing, even while holding both a spot and options position. So when fundamental shifts in the market are approached with an additional options trade (in lieu of a stop loss), unfavorable outcomes can be diminished in two ways. Traders gain additional protection from extreme moves that create losses when spot trading alone, because the option will change in value at the same rate. Additionally, if the market change is not large enough to trigger limit moves, but is still moving in an unfavorable direction, you can “leg out” of the trade as a protective solution. Here, you exit the spot trade and keep the successful options trade open. In this way, the disruptions of negative can be mitigated.

One of the most often discussed practices amongst technical traders is the activity of backtesting. But there are still many traders that are relatively unfamiliar with the process, so here we will discuss some of the details to get a better idea of what the term actually means. To start, it should be understood that backtesting is the process is using the price performance from prior time periods to test a specific trading strategy. Here, traders will simulate trades with specific parameters (using relevant price feeds) and the effectiveness of a trading strategy can be gauged using real data. But when trading theories are backtested, it is important to remember that the results you receive depend heavily on the market conditions and the price movements that were present during the testing period. Essentially, when the theory in question is backtested, the assumption is that markets will repeat themselves and that what has happened in the past will happen again in the future. So, if this does not happen (and market conditions change) there can be potential risks once the strategy is implemented using real money. For example, if we back test a strategy for a currency like the Euro and include the time periods when the financial crisis of 2008 occurred, your results might be very different than if the time periods had only included times of more regular market volatility. So, when traders debate the validity of backtesting strategies, the main question can be seen when we ask whether or not past performance is indicative of what will happen again in the future. Backtesting When Developing a System Many proponents of technical analysis in forex will argue that backtesting is a critical component when developing an effective trading system. Since virtual trades are reconstructed with historical data, rules that are defined by an overall strategy will generate statistics that can be used to understand when a trading method is likely to work and when it is likely to fail. The ability to do this allows traders to optimize their approaches, find flaws in the original theory, and to accumulate confidence in a system before any real risk exposure is undertaken. In the following sections, we will look at the application types that are used to conduct backtests, the types of information that is gleaned from these tests, and how to put this information to use when trading. Application Tools and Data Types Accumulated Proponents of Backtesting methods will argue that this approach can can provide traders with plenty of important statistical feedback when looking at the efficacy of a system approach. When looking at these statistics, some of the basics include: Net Gains and Losses - Typically expressed as a percentage, showing net profit or loss. Time Period - Describing the time frame when the testing was enacted. Asset Types - Showing the currencies that were included in the test. Volatility - Showing maximum upside and downside percentages Average Gain and Loss - Enabling traders to get a relative sense of their successful and unsuccessful trades. Risk Exposure - Showing the percentage of monetary capital that was exposed to market fluctuations Win Loss Ratios - Giving traders a sense of the number of gaining trades versus losing trades Returns (Annualized) - Shows total returns as a percentage for the year. Returns (Risk-Adjusted) - Shows returns as a percentage adjusted for risk levels. When looking at most of the commonly available backtesting software programs, two screens will be viewed as most important. The first screen lets traders customize the settings for that will be used for each backtesting analysis. For example, these customizations will allow you to set items like time frames and spread costs. The first attached picture is example of one of these customization screens. The second of these important screens will show actual backtesting results that will be contained in a report. Each of the vital statistics presented in the bullet list above will be shown in these fields. The second attached picture is an example of one of these screen within the backtesting program. For the most part, these software programs are relatively similar and will include most or all of these statistical elements. There are examples of higher-end programs that will allow traders to add some increased functionality, allowing you to enact automated position sizing, trade optimization or other advanced features. Key Things to Remember When Performing Backtesting Tests Clearly, running a backtest can give traders some complicated statistics that might seem difficult to interpret at first glance. While some of these stats will be more important for traders than others, here we will look at some key things to remember when running backtests on your own: Always remember to consider the broader market trends that are seen during the tested time period. If, for example, a certain strategy works well during the period in which the 2008 financial crisis occurred, the same strategy might not fare as well when markets are showing less bearish (or less volatile) price behavior. This is the main reason why backtesting over longer term time frames (getting a variety of different market conditions) tends to be viewed as more of a valid exercise. Consider the behavior of the asset in question. Different currencies will also behave very differently in different market environments. So, a backtest performed for a high yielding currency might produce different results when a safe haven currency is used. This can be another factor that might distort your results if a wide variety of assets are not tested. Consider Market Volatility. Volatility is another extremely important factor to consider when testing your trading system. This is also important for accounts using leverage, as there can be margin calls that will change your stats if volatility is extreme. Always watch the average gains and losses figures. These numbers should also be taken with the win to loss ratio, as this can prove to be extremely helpful when determining your appropriate position sizes and aid in money management. Combining All of the Relevant Factors When looking at all of these factors, traders can then look to the annualized return figures, giving the trader an idea of how the system performs in the market when compared to other comparable approaches. To be sure, most traders will center most of their attention on annualized returns but traders should also consider the changes in risk level, as this will be another quantifiable factor. To make an assessment of these elements, traders should watch the risk-adjusted return, as this will establish parameters for different types of risk factors. One all of these areas have been assessed, traders will be able to compare the relative strength of a trading strategy, as these results must outperform other investment approaches (and at less risk) in order to be considered a worthy venture. For many technical traders, backtesting is a vital part of the trading process but application customization must be given a great deal of attention as well. Failure to tailor your tests to the conditions established by the broker you will be using can lead to testing flaws and distortions in the data results. Even amongst the practitioners of these methods, most would agree that Backtesting is not always the best way for accurately gauging the potential success or failure of a trading system (in all cases). This is because there will be many instances where strategies that were highly successful when tested in the past will not fare as well in the future. But even with these possibilities, Backtesting is widely considered to be one of the most important parts of the process when traders are developing a workable trading system. When the process is conducted properly and interpreted accurately, traders will be aided when looking to optimize their approaches and to improve on their prospective strategies. This is one of the easiest methods for finding flaws in the process before making a real application of the strategy in the forex markets.

It can be argued that the most difficult aspect of trading for those new to the game comes not when a trade itself loses money but when another trading opportunity presents itself and the next trading decision actually needs to be made. It can be a large task to forget the previous trade, collect your thoughts and make the next decision in an informed, rational manner. But the ability to do this is one of the main characteristics that separates professional traders from amateurs. Structuring sound trades after experiencing a loss (or multiple losses) comes mostly as a result of managing reactions and looking at the bigger picture. All traders experience unfavorable trades - anyone suggesting otherwise is either lying or has never actually made a trade with real money. While it is possible for both a professional and amateur trader to have a similar outlook on the market, there is nothing to suggest that both of these traders will end with similar results. Here, we will look at some of the reasons why this is the case. Evaluating System Efficacy Rather than Focusing on Individual Trades One of the key differences between the successful trade reaction management of professionals and those of amateurs can be seen when the successful trader focuses on the rationale behind the trading system rather than on the outcome of one specific trade. Of course, a single trade cannot make a trading career. Successful trading careers require a large number of individual trades in combination, so the outcome of any one instance is not going to be of large importance. So, when we place a larger number of trades, an individual losing trade will start to look much more insignificant. When new traders approach the forex markets in this way, singular losing trades will be much easier to manage and much less distracting when you are going to place your next trade. This will also make it easier to exit trades once your accepted levels of risk are reached. In lieu of this, new traders tend to become married to losing trades (based on emotional and irrational reactions) and are unwilling to accept losses. Trades are left open too long as the trader attempts to convince himself that the market will turn later, even in the face of constant rejection. These problems come directly from the idea that each individual trade is much more important than it actually is. Now, this is not to say that each trade has zero importance, but in all cases we much have some context in mind and take into account the broader picture: The next trade is simply part of a much larger whole, and even if the original idea is not successful, there will be many more opportunities to make up (and overcome) the loss. Approaching the Market with a Professional Mindset When looking to approach the forex market with a professional mindset both front end practices ( those taken before the trade is placed) and back end practices ( those taken after the trade is placed) must be calm, mechanical and rational in nature. Of course, as human beings, it is impossible to completely remove emotions from the equation but attention must be centered in this area and it pays to realize that accepting risk is a standard part of trading and you must be ready to exit a trade when the market if telling you the original idea was incorrect. A professional trader is able to accept losses in a much calmer way because they are fully aware of the strengths of their strategies and how these strengths fit into their overall money management scheme. When we don’t allow our trading egos to get in the way, it is much easier to prevent a 2% loss that turns into a 5% or 10% loss if the market continues to move in the wrong direction. Larger losses like these are unacceptable for professional traders, so it pays to watch the signals and to pay attention to what the market is telling you. Maintaining the Sustainability of Your Trading Career When following these rules and in paying attention to this frame of mind, it becomes much easier to sustain the longevity of your trading career. If “being right” is what is most important to you (and you try to force a losing trade into profitability), it is highly unlikely that you will be able to remain active in the forex markets for very long. Instead you must do the research to develop a trading system, and to actively obey the rules of that system. This allows traders to maintain an edge in the longer term by avoiding the old adage of “putting all of your eggs into one basket.” This is what occurs when we allow one trade to ruin a trading day (or week, or month) because we are failing to take the much larger picture into account. This is a key difference between professional traders and amateur traders. A newer trader is only focused in the things that are directly in front of him (the open trade seen currently). Alternatively, the professional trader gives most of his attention to the trading system at work. Luckily, these trading systems do not need to be overly complicated in order to be profitable. Indeed, there are many trading systems that are very simple and are still able to profit consistently over time. Conclusion So, when we avoid trying to “force” our trades to work in our favor (which, it should be clear, is impossible), and maintain a strict usage of favorable risk to reward ratios, it becomes much easier to relax when individual trades start to move in the wrong direction. To be sure, the level of calm that is experienced by professional traders might seem overly mysterious. It might seem as though these traders do not actually worry about losing money. But this is far from the reality. Instead, these traders understand that losses are a regular part of trading and that sound money management and a consistent strategy will erase (and overcome) these temporary difficulties once the bigger picture is taken into account.

It has become clear in recent years that technology (and trading technology in particular) is going increasingly mobile and doing so at ever-faster rates of speed. Many traders with large position sizes, however, are skeptical (or at least reluctant) to base their positions on some of the information sent by some of these mobile devices (and through their associated apps). But as mobile technology is improving in a continuous fashion, forex traders are starting to rely more heavily on their phones and mobile tablets so that trades (and general market info) can be monitored when when we are not in front of our main trading consoles. To meet this increased demand, app developers are stepping up their productions of these software choices and most forex brokerages have now made app offerings for their trading clients to use. But what other choices are available for those not looking to rely simply on the information sent by their brokers? Luckily, there are now many great apps available on the market (some available at no charge) and here we will look at some of the more reliable information sources traders could be adding to their daily research routine. Bloomberg’s Mobile App One of the clearest choices for a reputable mobile trading application can be seen with the Bloomberg mobile app. Bloomberg’s free market app gives traders access to all of the most important information guiding traders in all asset classes (not just forex). Bloomberg’s up to the minute data feeds provide traders not just with factual economic information (such as price quotes or the results of economic data releases) but also with editorial pieces that give traders recommendations (usually long term) for potential forex positions. While these recommendations are not explicit calls to place trades, there is a wealth of knowledge and discussion that traders can hear (on Bloomberg radio) or read (through news articles) and this can give traders an immense help when looking to conduct an overall trading bias. Of course, market trends can change on a dime and there are not many info sources that are viewed as being as current or as reliable as the information that is seen in the Bloomberg app. For these reasons, active forex need to be informed with all the current events as this will help to monitor open positions or to enter into new ones. Bloomberg has a solid reputation amongst professional traders and its mobile app offers much of that information and data for traders that cannot be in front of their computers. Price charts can also be found (in addition to the financial news offering) but other than giving traders a sense of where prices have been over a given time horizon, technical analysis is one feature that has not yet been added. But stay tuned, as this type of offering can’t be far off. CNBC Mobile App Not to be outdone, one of Bloomberg’s main competitors, CNBC also has a mobile app offering. Unfortunately, the app is only available for users of Apple products (the iPhone, iPad, and iPod touch). Some of the features of the CNBC app include: Streaming Live Price Quotes and Price Charts for all major currencies Breaking news alerts that are exclusive to CNBC (making it easier to get a step up on the rest of the market) Video on Demand (VOD) which offers more than 150 breaking video clips explaining market moves produced throughout each trading session Interactive charts, which includes a customizable watchlist so that only your main trading currencies can be included on your device feed. The StockTwits Mobile App While this might be surprising to some, the StockTwits mobile app (similar to a “Twitter” for active traders), there is a great deal of information that can be used with this app in order to get an edge on your forex trading positions. Specifically, the app allows you to monitor and communicate with other active traders so that you can see (in real time) how the professionals are reacting to certain market conditions. This app can prove valuable for forex traders for many reasons. First, the ability to communicate with more experienced traders can be one of the surest ways to learn what to expect from the markets, even when volatile and dynamic moves are seen. With the Twitter style news feed, traders can post charts or even videos that provide free technical analysis that can be used as the basis for new trades. And while it might seem unnecessary to use Stock Twits when your trading market is primarily forex, but this is not at all the case. Many forex traders actively used the software and using Stock Twits can help you get a better footing in this community. But don’t disregard the stock market information that is available, either. Some currencies are heavily correlated with the stock market,so being aware of the developments in these areas can be invaluable when monitoring your own forex positions. Whether you are a short term trader or use long term horizons, Stock Twits is a highly valuable app to watch and use throughout the trading day. An added bonus, all these tools are available for no charge. The Forex News Mobile App But for traders who are looking to place all of their focus on the forex markets, and do not want their data feeds “cluttered” with information that might be more useful for stock traders, luckily there is the Forex News app, which takes the separate news feeds from prominent websites like Action Forex, Daily FX, Forex News Now Bloomberg, and Dow Jones Newswires. This information is then grouped together in terms of which currency is most directly affected by the news in that specific release. So,for example, if there is a many interest rate decision from the European Central Bank, you can find the information under the Euro category, which will have it as soon as the event is made public. This can prove to be greatly valuable for traders that focus on a few specific currencies and even when forex traders use mostly technical strategies, the information can be helpful in knowing when market volatility is likely to pick up for a certain currency. This can potentially help you to perhaps avoid getting into a position when conditions are uncertain and this can help to improve your overall accuracy when conducting your regular technical analysis methods. This app is available on the Android Market, all you need to do is search “Forex News” and this will be one of the first items listed. Conclusion New forex trading apps are entering into the marketplace every day and with the continued improvements seen in mobile technology, traders are more and more likely to turn to these devices in order to monitor when it is not possible to be in front of a trading console. These apps will allow traders to conduct their regular market research, monitor positions and spot new trading opportunities as they unfold. Perhaps the best advantage of these apps is that alerts can be sent, which will give you an indication of when the market is likely to become increasingly volatile. These news and data feeds are essential when looking to up your game and stay ahead of fast moving markets.

One of the oldest maxims in financial markets trading is the idea that traders should be looking to “buy low and sell high.” Now even if this rationale does not inform your strategy (for example, if you look to trade breakouts where you will buy higher and sell lower), it is difficult to argue with the fact that in an ideal scenario, the most potential profit can be gained when having a clear understanding of when a market is topping or bottoming out. Each time a currency changes its trajectory, the fate of traders invested in that currency changes as well, so whether markets are rallying or in decline, it is important to spot the signals before these major turns occur so that traders can capture gains when the corrections unfold. Here are some critical factors that should be considered when we are looking to assess the future trajectory of a currency Avoiding Panic Reactions Of course, it is not essential to pick an exact bottom and top in each trending move in order to capture gains in the forex markets. But the goal of any trader is place trades that capitalizes on the bulk of a large impulse move, as this is the surest way to attain substantial rewards without looking for a large number of separate trade entries. Traders can come into problems when attempting to locate the exact top or bottom of any of these moves, as attempts like these can put traders into a position where trades are held for too long and profits that had accumulated previously are quickly given back. Traders often find themselves in positions where they panic and close a position once they see their previous gains are being lost and these emotional types of reactions can lead traders to close positions at times (or at levels) that are not optimal. Finding Changes in Correlated Currencies One of the earliest indications in identifying a trending move can be seen when the highs for the year have started to roll over and post declines, even if this is not seen in highly correlated currencies. Examples of these situations can indicate that fewer of the correlated currencies are working to sustain the general momentum and this can serve as a hint that investors are changing their minds and have become less optimistic (or pessimistic) in these traded markets and a large correction could be forming in the process. Signals like these can alert traders to buying or selling even before your chosen currency has even made its new top or bottom. Using the Advance Decline Line (ADL) Since it is essentially impossible to pinpoint exact tops and bottoms (either in terms of price or in time), traders can look for other evidence of strength or weakness when looking to place new trades. This is helpful because even when the previous trend continues (either higher or lower), traders can take some solace in the fact that even though additional gains were missed, the initial signs of a correction were enough to close the trade as the move prudent approach. One of these signs can be seen in the behavior of the Advance Decline Line (ADL) which compares the indicator activity with that of the price to determine the strength of weakness of the prior trend. For example, if the ADL is rising at times when the forex price is advancing, the established uptrend is healthy. The reverse would be true for downtrends and when there is a divergence between the forex values and the ADL reading, traders can expect changes or pauses in the trend that was established previously. The ADL can provide traders with a signal that price momentum is reversing using calculations that make a comparison between the amount of advancing and declining moments that are seen in your chosen market over a given period of time. Watching the Most Liquid (Commonly Traded) Currency Pairs Those with experience trading these markets know that all large price movements are equal in all highly correlated currency pairs. One of the most substantial (and potentially valid) signals that a market in general in changing directions can be seen when the most commonly traded pairs post new and significant highs or lows. This can be true(and possibly easier to visualize) for stock markets as well, as the most commonly watched and traded assets are generally the ones that provide confirmation that a widespread uptrend or downtrend has reached completion. So, then commonly traded forex pairs (like the EUR/USD, GBP/USD, or EUR/JPY), fail to make higher highs and higher lows (in an uptrend) or lower highs and lower lows (in a downtrend), it presents the trader with a good signal that a much wider price move is emerging. Since these tend to be larger price moves, longer term chart time frames (dailies or weeklies) are generally referred to, but this aspect of trading can be adjusted to match your more typically used time horizon. There are some differences with this approach and the first two methods, however, as the signal tends to become clear later in the process. Conclusion The market euphoria that grips markets in an uptrend (or the pessimism seen when markets are in a downtrend) can become attractive, and it can become tempting to enter into new positions rather than taking a step back and look for the critical signals that show whether or not the previously established trend is going to continue or reverse. But this level of discipline is an important element to remember and this is one of the contributing factors when investors look to separate themselves from the actions of simple gamblers. For these reasons, it is important to dismiss any emotions or panic that arises, as this can make it difficult to remain focused on what the market is actually telling you at the moment. Both rising and falling markets will eventually see some form of correction there are generally early warning signals that can be seen before the major change occurs. When traders are aware of these signals early on, more substantial profits can be captured and a larger portion of the following move can be forecast. These signals can prove to be helpful when making the decision to either execute a position or to stand on the sidelines until a clearer picture presents itself.

Here is the third and final part of the Andrews Pitchfork tutorial: Breaking Down Trades Using the Indicator The two trading methods methods discussed previously (placing trades from within the pitchfork lines and placing trades outside those lines) might seem complicated but when these strategies are broken down into their component steps, the picture is simplified. One factor that should be considered is that the Andrews Pitchfork tends to work better in stable trends, and this tends to be a characteristics that is seen in the more commonly traded (less volatile) currency pairs. Since some of the crosses exhibit price behavior that is more choppy (and less dependent on trends), there can be more inconsistencies when looking at long term results. So, here we will deconstruct the process, looking for examples of trades from both "within the lines" as well as opportunities "outside the lines" allowing traders to capitalize on the strengths of the indicator. Initially, we will look at the in-line method: Identify movements in price that have broken from the median line and are now seen moving toward the upper pitchfork prong (marking resistance). As prices test the higher resistance line, look for evening star (or other bearish) candlestick formations. The candlestick formations will act as an initial trading reversal signal. Find additional confirmation. Using common oscillators, traders can confirm the initial signals. For example, a downward cross in stochastics can help to confirm the trading bias and signal that the downside is likely to follow. Trading entries can be placed just below the closing value of the third part (candle) of the evening star candlestick pattern. Trading entries can be close in these cases, less than 10 pips away. Stop losses can be placed using a 3:1 reward ratio, so with profit targets of 150 pips, stop losses can generally be placed at 50 points away from entry. The Pitchfork tends to give high pinpoint accuracy for entries, so trades should be exited quickly if prices move in an unfavorable direction. Next, we look at strategies where price activity moves toward the median line. Here we will outline some parameters for how trades can be placed when alternative scenarios are seen in price movement. First, find a major line of support or resistance. In the ideal scenario, we will see a break of a major level of support, as this will generated renewed momentum and give better trade entries (improving probabilities as well). Look for prices to fall back toward the median line (potentially 35 pips below the previous support level) Risk to reward ratios should be at least 2:1 (preferably 3:1), and this will help to determine appropriate stop loss entries and profit targets. Use oscillator readings to help confirm price activity. When traders are able to identify downside oscillator crosses (in a stochastics reading, for example). The confluence of all of these factors can help to increase trading probabilities and ensure that a more objective reading of price activity is being seen. Conclusion When looking at the common applications of the Andrews Pitchfork in technical price analysis, traders are able to isolate opportunities that might not be found with the more traditional “envelope” indicators such as Bollinger Bands or other types. The main goal of the Andrews Pitchfork is to capitalize on larger price swings that are seen in the market. When the Andrews Pitchfork is applied properly and pricing levels are accurately defined, traders can factor these tools along with the readings seen in other forms of technical analysis in order to improve on overall trading probabilities. Additionally, choppier trading conditions can be avoided with the likely effect of improved risk to reward ratios and an enhanced potential for gains.

he JForex platform was designed for traders or developers with some experience in software programming. Most of the platform features are directed at executing automated trades or for testing and developing new, JAVA based trading strategies. Because of this, the interface of the platform and its central functionality have many similarities with what is typically seen in JAVA platforms. A cross-platform interface is part of the package and this enables traders to further customize their strategies and programming codes. The platform does offer integrated technical analysis tool so that positions can be tracked from the charts themselves. One-Click Average One of the more handy features of the platform (specially for longer term trading) is the One Click Average feature, which allows traders to adjust their average position size when scaling into losing trades. While this will not be viewed as much of an advantage to scalpers, short term traders or those who do not scale into losing positions, it can really automate the process for those of us that to not place their full position sizes in one shot. Specifically, when traders tick the One click average box, you will automatically add to a losing position to give you the average price you want. So,if you are down 40 pips, for example, and you set your trading parameters to -20 pips, the platform will automatically double the position to reach this figure. While this might sound dangerous (as it could lead to overly large position sizes) it should be remembered that there is an added feature, found in the MAX POS Lots field, which will enable you to limit the total trading size for any one position. This can help you to avoid over extending the margin used in your account. Overall,this is a very handy feature for those generally using this type of strategy. Position Merge The next aspect that we will look at is the position merge feature, which has some connection in terms of the overall usefulness relative to the one click average feature. Assuming you use a strategy that will scale into a position if market conditions move in the wrong direction, many platforms will show that you are moving into move that one trade (even you are dealing with the same currency pair). This can make things cumbersome and more difficult to track (it is much harder to monitor 5 position than it is to monitor one condensed position). So this platform aims to simplify the process by combining the separate trade into one field on the account field. Of course, however, there will be trades with different parameters (such as a different stop loss or profit target). So to rectify this the platform will only combine (or merge) the trades that show the same parameters (such as the same stop loss level). In these cases, if you would want to merge the entire position you would need to either delete all of the trade parameters or at least set them all so that they are equal. The use of these features makes it much easier to track your total trade exposure and avoid things like margin calls or just simple trade over extension. Broader Overview of the Platform While the JForex Trader platform is one of the lesser known product offerings in the forex trading space, the platform can still be run on all of the major PC operating systems (Windows, Mac, Linux, etc), so the automated strategies features can be run by traders will any of these systems. One of the strengths of the platform is the ability to display results for a wide variety of strategies, using either real time trading conditions or with historical backtesting tools. These strategies are not limited to single currency pairs, so traders are able to use these features no matter which market is being traded. Trading strategies can be tested with multiple currency pairs over any market, and this will enable traders to tailor their strategies in more specific ways and to focus on whichever pairs are best suited for a given strategy type. Backtesting Tools All of the historical backtesting tools will base results on real historical tick data, and this has become a point of contention in some cases because there have been some cited examples of disagreements in backtesting accuracy. These disagreements have stemmed from the use (or misuse) of data interpolation and JForex makes it a point to suggest that the platform is free of these potential problems and that there will be no discrepancies in the tick data that is used for historical back tests. Trading Indicators While not exactly showing as the strength of the platform, there are roughly 180 technical indicators that can be used for trading (and applied to automated forex strategies). The platform offering in this area, however, is in line, for the most part, with that is seen from the competition and it is unlikely you will find another trader using the platform simply for this aspect of the application. Traders using the platform will have access to support for JAVA IDEs (Integrated Development Environment) and this can be helpful when determining the various ways new strategies can be implemented. Market Depth The market depth that can be viewed in the JForex platform uses prices and liquidity that is drawn from a variety of market liquidity providers. This can be a helpful area to watch, as traders that are developing new strategies. Specifically, traders are able to watch the complexities of the market depth offering and this can be interpreted as an additional resource (source of market information) when determining the features and behaviors of a changing market environment. Placing Bids and Offers A final aspect of the JForex platform to consider is the ability to place both bids and offers to the market, in effect allowing traders to act as liquidity providers themselves. This is done by placing individual bid and offer orders and sending them directly through the market. As these orders are placed, they can be matched by opposing liquidity consumers and this can help to be a bigger factor when considering spread costs. Conclusion While the JForex trading platform is a relatively little known offering within the forex markets, and while there are some clear deficiencies when compared to its more major and well known counterparts, there are some trading styles that can be served by some of the features of the platform. Specifically, these tend to relate to longer term strategies where trades are enlarged as prices move in the unfavorable direction. So while chartist traders and those with very short term strategies will likely find little of use in the platform, there are situations where the entire automation process can be viewed as preferable when some of the other available platforms are taken into consideration.

In the next section of this article, we will look at the ways trades are placed inside and outside of the channel lines when using the Andrews Pitchfork. Trading Inside the Andrews Pitchfork Lines In the next sections,we will look at the various ways traders can profit from trading from within the lines that are drawn by the Andrews Pitchfork. The first attached picture shows prices in the EUR/USD moving off of the median area to hit the resistance prong in the Andrews Pitchfork at the second red arrow. Looking closer at the price activity, evening star or doji formations will often become visible, giving traders another indication that the buying momentum is starting to weaken and suggesting a reversal is imminent. When this appears near the resistance that has been established by the upper end of the Andrews Pitchfork, downside moves can be expected. Additional confirmation can be had when using oscillators (such as Stochastics) which can help to verify this momentum is valid. In these cases, trades could be initiated on the following candle with proper money management rules and an appropriate stop loss in place. In the chart example shown, large gains could have been recovered if trades had been placed based on this information. Trading Outside the Andrews Pitchfork Lines When looking at the Andrews Pitchfork, trading outside the support and resistance lines occurs much less often than trades that take place when prices are caught inside these areas. The positives of these types of trades is the fact that price moves can see major extensions once these activities is seen but at the same time there are negatives, as there are some aspects of these trades that are more tricky to anticipate. Again, the primary assumption is that price action will move back toward the median line at some stage, just as this would occur when values are trading from inside the pitchfork lines. But at the same time, there is always the possibility that instead the market has shifted in terms of its general direction. In these cases, a break outside the Pitchfork lines would suggest that a new trend is on the way. So, in order to avoid major losses, trading parameters must be constructed so that any retracements back into the channel can be captured (and capitalized on). At the same time, however, traders must look to filter (and remove) any adverse price movements that can result in a trade being closed too early (missing the profitable move). In many cases, traders will be given several opportunities to place trades before prices actually move back into the overall trend slope. These typically are seen when prices are consolidating or caught within a shorter term range. The best opportunities, however, can be seen when the broader moves are seen, as these extensions allow for the most profitable trades. Some traders will use oscillators to spot divergences in price activity, as this additional confirmation will help to reduce false moves. As always, entry levels are key and the combination of these factors can help to pinpoint areas for greater accuracy. Placing Trades So, when placing trades, we must first wait for a prong area to be tested. Prior to this point, trades should not even be considered. Without these tests, there is always the possibility that an oppositional trend is actually present and this can help to avoid being stopped out of a position. If prices break outside the prongs, we can consider trades based on the expectation that prices will continue in the direction of the break, as fresh momentum is entering into these markets. Trades can be placed 25 pips above the initial line break with stop losses 10 points above or below the previous high or low of the session. These trades are based on the assumption is that the new momentum will lead prices away from the previous high or low and that those levels will not be seen again in the near term.

Ninja Trader is one of the companies at the forefront of online forex trading technology, developing software solutions since 2004 and is currently based in Denver, Colorado. The company’s principal application, the Ninja Trader trading platform offers a wide variety of functionalities – with examples including advanced charting, trade simulation functions, in-depth market analysis in addition to its live trading functions. The platform is supported by hundreds of online forex brokers worldwide and offers most of the standard features that are seen in its competitor’s product offerings. The Ninja Trader platform can be used to trade the stocks and futures markets in addition to the retail forex markets so no matter which markets you trade, Ninja Trader can make the accommodation, providing traders with the tools to analyze the markets and enact your trading ideas with an interface that is customizable, flexible, and user-friendly. Ninja Trader’s Charting Software Ninja Trader advertises its charting package as “leading edge charting” technology and while the platform does offer multi series charting applications, a wide array of tools for drawing on charts to conduct analysis, a wide indicator library, and the ability to trade directly from the chart itself, there is not much that distinguishes Ninja Trader from most of its industry competition. The features in Ninja Trader’s charting package are fully customizable and offered in a user friendly format but overall the charting package lacks design sophistication and forex traders that are focused mostly on the technical side of things might want to look elsewhere in order to conduct advanced charting analysis that is in-depth and tailored to more complicated analysis strategies. Ninja Trader’s Strategy Analyzer One of Ninja Trader’s more interesting features is the Strategy Analyzer, which allows traders to run historical tests in order to assess the performance of automated trading strategies. Ninja Trader’s backtesting features are high powered and while these features are made available at some the major competitors in this field, it is still an attractive feature that keeps the platform near the upper end of the available forex trading resources. In addition to the Strategy Analyzer, Ninja Trader’s features include Basket testing, along with walk forward and genetic optimization. All of these features allow traders to view price data in more objective ways and to test out new strategies in ways that might not be possible when dealing with other trading systems. Ninja Trader’s Market Analyzer Ninja Trader’s Market Analyzer offers traders an enhanced quote sheet that will allow traders to sort, monitor and hundreds of trading instruments – all in real time. Ninja offers a large number of indicator columns (more than 150), rules-based color coded cells and price alerts, dynamic ranking and filtering and the ability to customize your trading experience with Ninja Script. Enhanced Ability to Assess Trade Performance Ninja Trader’s aim is to make trade analysis easier to conduct. More than 80 performance metrics are made available so that traders can analyze the performance of back tested strategies or with trades enacted in real time. Traders can also selection from various performance graph options. Additional analytic tools can be found in the time & sales window, the Alerts window, the Level II market data window, and the News & RSS window. Advanced Trade Management Feature Since trade management and order submissions are subject to potential error factors (especially when implanting very short term strategies), Ninja Trader looked to streamline the process with the Advanced Trade Management (ATM) feature. While there are the more standard features seen with the automated stop loss, trailing stop and profit targets that can be placed in order submissions, Ninja Trader also makes the breakeven stop loss an automated feature. With the Auto-break even button, traders can meet the demands of quickly moving markets with limited potential for error when altering positions that are already open. Developing Trading Strategies with Enhanced Automation To ensure the best performance when constructing trading strategies that are automated, the C# based Ninja Script can be used (even by non-programmers). More than 100 predefined indicators are also included with the platform. Trading signals from external applications can be processed, for example routed from Trade Station or eSignal (with no additional programming required). File, DLL and .NET interface options are available, as simulated trading is viewed as being an integral component of the process. Ninja Trader’s Market Replay Feature Other testing tools can be found with the Market Replay feature, which is an educational testing tool that can Record activity seen today in order to play it back in the future. Tick by tick replays can be defined at user chosen speeds at user, which allow multiple markets to be replayed at the same time. The market data simulation feature allows for controlled strategy testing and can be defined with the platform’s Trend Control feature as a means for developing new strategies. Ninja Trader’s Analysis Capabilities Looking more broadly at the analysis capabilities of the Ninja Trader platform, it becomes clear that the three most essential features in the analysis module can be seen with the market analyzer, the strategy analyzer, along with the trade performance analyzer. The strategy analyzer evaluates automated trading strategies and at the same time offers recommendations for strategic improvements that can be made. The market analyzer, on the other hand, will allow traders to monitor and analyze separate markets while using multiple filters in order to create a more substantive overview of the trading environment and (ideally) leading to better trade performance. Last, the trade performance analyzer evaluates previous trading behaviors exhibited in your account and uses specially tailored performance metrics in order to make an analysis of the results seen previously. Conclusion Ninja Trader has attained a position as one of the most well known and widely used trading platforms that is currently made available to forex traders. The platform can be used in a variety of markets (stocks and futures are other examples), so forex traders will want to focus on the FX Pro section of the offering when traders are practicing placing trades with a demo account. Actual placement in the forex hierarchy, however, is debatable as the platform will be viewed as advanced and well designed when compared to some trading stations, while it will be viewed as deficient in some of the major categories when compared to others. Ninja Trader does offer some top notch market analysis tools that can be paired with manual trading or automated trading styles. More than 300 3rd party add-ons can be fixed to the Ninja Trader platform and over 100 stocks, forex, and futures brokers currently have the product on offer. More advanced traders that are focused on technical analysis when trading the forex markets will find all of Ninja Trader’s simulation and back testing features to be of great use and of high quality. Since these types of tools can be invaluable when designing a trading strategy for the long term, Ninja Trader is definitely a platform that should be considered, as there are options available that cannot be found in other product offerings.

The Andrews Pitchfork technical indicator was invented by Alan Andrews and is used to isolate profitable trading opportunities that are based on swing strategies. Longer term,the indicator can be used to gauge cycle activity that can determine price direction in the forex markets. Here, we will take a look at some key factors measured by the indicator and the various ways it can be used to establish new trade ideas in two critical ways - trading inside the lines and trading outside the lines. The Andrews Pitchfork Defined The Andrew’s Pitchfork (which is sometimes called a “median line” study) is made available to traders on a wide variety of trading platforms and charting packages. Similar to standard “support and resistance” lines the Andrews Pitchfork creates two strong areas of support and resistance, along with a middle line (something of a regression line) that can serve as either support or resistance, depending on the conditions. Andrews worked off of the assumption that price activity would move toward the regression line 80% of the time. In the remaining 20% price activity would likely be experiencing major changes in sentiment of rapid fluctuations. Because of this, longer term trends tend to remain intact even when smaller fluctuations are seen. Once sentiment has changed, the forces of supply and demand will shift and this, according to Andrews, will create a new trend. With the Andrews Pitchfork, these changes provide the primary trading opportunities in the forex markets. Applications of the Andrews Pitchfork In applying the Andrews Pitchfork, traders will first define a significant high or low seen previously. This peak or trough area will be used as a pivot and thought of as point A. Once this point is isolated, identify a peak and a trough that can be found on the right side of the original pivot. This is generally a corrective move that comes in reverse of the previous wave (whether it was higher or lower). These corrective moves will serve to act as points B and C. The first chart graphic shows an example of this at work. Once these three areas have been found, the Andrews Pitchfrork can be plotted. The Pitchfork handle starts with the pivot seen at point A, and this will act as the median line in the application. The two Fork prongs are formed using the preceding peak and trough seen at the B and C points. These areas will act as support and resistance for the trend. This support and resistance is based on angles, however, and this can be seen in the second chart example. As the Andrews Pitchfork is applied traders will be looking to trade within the channels themselves or to wait for breakouts (to the upside or downside) relative to the channel lines. Because of this, traders will either base trade entries either when prices bounce off of the support line or drop from the resistance line - based on the assumption that prices will always be attracted to the median line. To give these trades a higher level of probability, an additional oscillator can be used as a means for providing confirmation. Basing Trades on Breaks In addition to this, traders can base trades on breaks of the support or resistance lines. In these cases, the Pitchfork is giving the indication that market sentiment is changing, with prices deviating from the median lines and then breaking through one of the channel lines. In these cases, the median will remain the central focus as major windfalls tend to be seen once the price activity loses its original momentum. But given the alterations seen in market behavior in these cases, money management becomes more of a critical issue and additional oscillator confirmation will also provide increased trading probabilities. In the next section of this article, we will look at the ways trades are placed inside and outside of the channel lines when using the Andrews Pitchfork.

Tradestation’s newest platform offering for the forex markets builds on some of the key features available in previous versions of the software and provides some new additions that enable trades to be set in slightly different ways. The Tradestation product offering has been one of the most popular choices with forex for some years at this stage, as it allows for an alternative to Metatrader and enables plugins and analysis studies that cannot be found in many of its industry counterparts. The company’s newest offering (seen in version 9.1) aims to deliver enhanced efficiency in terms of both speed and power that can be controlled in a more intuitive fashion. While the platform does offer some very interesting features enables trade in other markets (the OptionStation Pro is a clear example) but on the whole the platform does feature some supercharged options that will allow traders to spread out their methods of regular analysis while having an interface that is interactive enough that it can be used by traders at all experience levels. Charting Features in Tradestation Technical forex traders tend to focus most on the charting features that are made available in any trading station and it can be said that the Tradestation offering does allow for analysis capabilities that are either not available or are far superior to what is seen in other platforms. Intuitive and highly customizable, the charts are attractively designed (when compared to some of their more basic counterparts). Here is a list of the available charting features: Beginner to Advanced Analysis Tools - Classical to Exotic Indicators Customizable Multi-time Frame Charts - Allowing for extensions of smaller time frames that are not typically seen Years worth of historical intra-day forex market data Show Me and Paint Bar features - allowing for improved visualization of possible breakouts and other market moves Intelligent Drawing Tools - creating the potential to view market activity in a more personalized manner. Improving Chart Processing Efficiency In terms of the company’s attempts to improve processing efficiency for more advanced technical charting analysis, traders will find the Multi-Core chart analysis feature to be a positive addition. Here, Tradestation is looking to make software that takes full advantage of the processing power that is seen in individual computers. When more complicated real-time charts are used for analysis, Tradestation will distribute power requirements across separate CPU cores. This helps to reduce the possibility of trading delays when a bigger number of charts are opened (and possibly processing more complicated information). This also aids platform stability when markets experience enhanced volatility (during news releases, for example). It is nice to see a trading company look to make improvements in areas like this because to many of us it seems as though trading delays occur more often than they should and approaches like these will help to rectify some of these issues. Optimized Strategy Backtesting One of Tradestation’s aims with its newest platform is to allow traders to implement and focus on backtested strategies. Tradestation has made it so that backtesting procedures are easier to carry out for people that are not computer programmers and this will allow a greater number of traders to use Tradestation’s pre-built strategy components to test out a variety of different trading methods before committing to any one strategy. Backtesting accuracy has also been improved, with the Look Inside the Bar feature, tick level testing, and limit order fill assumptions, which take outlying factors (such as commissions and the possibility of slippage) into account in order to get a more accurate assessment of how a strategy would perform under real market conditions. Multiple markets can be tested (using tick data or intraday data) using the comprehensive database of historical market information. Once backtesting has been completed, traders are able to assess the strengths or weaknesses of individual strategies using the performance strategy reports that are presented with graphs and statistics that will allow traders to analyze their attempted approach from different perspectives and under different market conditions. These strategies are given pass or fail grades with the Walk Forward optimizer, which is an easy to read assessment of whether or not a given strategy is strong enough to survive under real market conditions over the long term. Backtesting at the Portfolio Level But since most traders to not simply trade on forex pair in isolation, Tradestation’s Portfolio Level Backtesting allows for assessments to be given to strategies that implement the use of positions in multiple markets at once. The latest version of Tradestation’s platform is also built for compatibility with Portfolio Maestro (a newer addition to analysis in the forex markets), with gives performance reports at the portfolio level, aids in risk assessment, and aims to optimize strategies focused on more than one trading symbol. Fast Cache Data Retrieval Traders using very short term strategies are often finding themselves in situations where any delays in computer performance can lead to losses or missed trades, and the latest version of Tradestation aims to load custom workspaces (which might contain thousands of symbols) in a shorter span of time. Here, Tradestation’s offering can be seen in the Fast Cache Data Retrieval feature which improves on previous levels of processing performance. Data retrieval can be accomplished in a fraction of the time that was needed previously and this will be viewed as especially beneficial to traders that are working on the shorter term time frames, when seconds can be critical when placing trades. The Walk Forward Optimizer As hinted at previously, the Walk Forward Optimizer allows traders to test potential strategy systems based on seen and unseen data. One of the biggest complaints that technical traders have when certain strategies are backtested can be seen in the fact that many of these tests fail when they are actually put to work in the markets. The reason for this comes with the fact that most backtesting is done using data that is built around one set of historical data that is used by the majority of platform testers. Tradestation’s Walk Forward Optimizer attempts to build on this aspect of analysis by implementing a series of Walk Forward strategy performance tests that puts the strategy against market data that has not yet been seen. This is meant to add an element of unpredictability to these tests and to, hopefully, show how the strategy would react in scenarios that have not been seen by the market. Some will argue that this data has nothing to do with the actual market and should not be considered as valid when backtesting a strategy. Others, on the other hand, will view these tests as a way of getting a leg up on other traders who are only drawing from commonly used price data. Either way, it is clear that Tradestation is looking to take things a step forward in this area and the Walk Forward Optimizer is an easy to use tool that will allow traders to gain a pass or fail analysis of a certain trading methods critical performance criteria. Conclusion Tradestation still has a way to go in drawing traders away from its primary industry competitor (Metatrader) but the latest version of the company’s platform does offer some interesting additions to the typical market analysis that has come before this software was released. While some of the features might not be for everyone, the latest version of Tradestation is definitely worth taking a look at so that traders can test drive the applications under real time conditions.

The Aroon Indicator, developed in 1995 by Tushar Chande, is a charting tool focused on aiding traders in determining direction and strength of a trend, even in cases where a trend is not readily apparent. The indicator can help traders to identify situations where long term trend is reaching completion or just showing consolidation features in preparation for its next extension. Here, we look at the Aroon indicator calculations and trading applications. Aroon Indicator Calculations To find the Aroon indicator measurements, the following formula can be calculated: Bull Reading - [ (number of time periods) - (number of time periods after most significant high)] / (number of periods)] x 100 Bear Reading - [ (number of time periods) - (number of time periods after most significant low)] / (number of periods)] x 100 Looking at these formulas, we can see the main focus lies in pinpointing the time elapsed since the most significant highs and lows. Higher values in the Aroon indicator show that these highs and lows were more recent, while lower values suggest they are farther away. These values oscillate between 0 and 100, with higher numbers suggesting stronger trends. The bullish and bearish lines on the Aroon indicator can be turned into one oscillator when the bullish line is calculated at 0 to 100 and the bearish line is calculated at 0 to -100. In these cases, a reading of 0 shows no trend is in place. Applying the Indicator To use the Aroon Indicator, the bullish and bearish lines are plotted on the subchart (either together or in the singular variation). Next, traders should watch for how the indicator behaves at key levels. Movements above 70 show that a strong trend is in place while drops below 30 suggest that weak trends. Reading between this level are indicative of indecision. As an example, if you can see the bullish line holding above 70 as the bearish indicator falls below 30, trades can be based on uptrend scenarios. Additionally, seeing bullish and bearish lines cross over one another sends another trading signal. Crossovers seen between the 70 and 30 levels provide additional confirmation. As an example, bearish lines crossing over the bullish confirms that a bearish trend is in place. Chart Example The Aroon Indicator qualifies as an “oscillator” because its values fluctuate between its upper and lower boundaries. The bullish and bearish lines measure directional momentum and when polar opposites are seen in these lines, peaks and valleys become more likely, and can be expressed in oversold and overbought conditions. In the chart attached, we can see instances where trends began to reverse after reaching their significant levels and that crossovers helped to provide confirmation of these reversals. In the first set of white circles, the bullish line began falling as the red bearish line started to cross above, forecasting the decline that was to follow. Similar instances can be seen in the bearish line example that follows (the next set of white circles) which show an opposing scenario. The third set of white circles give us another reading suggestive of a completed bullish wave while the fourth set of circles is indicative of an environment that is more consolidative or neutral in character. Conclusion The applications of the Aroon indicator are best suited for traders that are looking to determine whether or not a prior trend remains intact. This can be useful when looking to scale out of profitable positions or to close a trade altogether as there might be decreased evidence that the trend can extend further. Additionally, sideways markets can be avoided in favor of other currency pairs that are ready to make moves that are larger.

MB Trading recently released the next version of its desktop application, MBT Desktop Pro, which builds on the features seen in the previous platform and adds some new enhancements that are relatively significant for forex traders. MB Trading’s attempt was to retain all of the account management systems and order types that were available previously and to make improvements on its charting software and alert systems but whether or not it succeeded in this task is up for debate and there are some significant pros and cons that can be seen in the offerings which should be considered by forex traders looking to start using the platform. Some of the more well-known features in the application can be seen in MB’s access to daily research (its Morning Note), its Options Strategist feature and the low commissions that can be found relative to most of its competition. A list of the additional features available in the Desktop Pro include: Charting Software with more than 100 built-in indicators, technical studies, and trading tools A revised scripting language that applies to all asset classes and allows for the design of custom executable scripts An enhanced back-testing system Increased options for order placement An automated scanner which can be used for finding patterns which meet customizable criteria (available for all asset classes, not just forex) Overview of MB Trade Offerings MB Trading is a US-based broker (regulated in the US) and is an ECN so its task is to match buyers with sellers. This is beneficial as this means the company does not have a direct active interest in whether clients win or lose in their trades. On the MB Trading website, the draws attention to its 4.5 star rating from Baron’s (which is a widely respected source) and specific award from Baron’s have come in the Best for Frequent Traders and Best for International Traders categories. These ranking do help to secure MB’s position as one of the more popular ECN traders in the US. Clients using the MBT Desktop Pro are able to trade in all asset classes (stocks, commodities, etc) but it should be noted that forex trades are segregated and must be traded using an alternate account. Company highlights include excellent capitalization and highly competitive trading costs. Since the company is an ECN, forex trades are commission-based as a means for offering lower spreads. Per 100,000 base units traded, commissions costs are 2.95. This essentially comes out to roughly 0.2 pips for every full lot traded, so these are some of the lowest trading costs that can be found in the forex markets. The company offers some attractive promotions as well, so the company is clearly set on providing incentives for its clients. Platform Specifics MB Trading allows client to place trades using several different platforms, with most of the common options available (a trading platform for mobile devices, a the previously released MBT Desktop, the newer MBT Desktop Pro, as well as MetaTrader4). But while the MBT Desktop has been one of the company’s centerpieces for year, there is a reason these other platform options are available. Central weaknesses in the company offering can be seen in the lack of educational materials and in their platform itself, which lacks many of the advanced design offerings that can be found in MBT’s competitors. Perhaps the most useful feature is the Market Depth field, which can be seen in the attached screenshot. This allows traders to see the price and size of transactions that are taking place (useful for seeing which orders are being filled and which aren’t). Switching between currencies is a bit cumbersome, however, as this must be typed in manually. Kind of surprising to see that they have not streamlined this but this is another example of how platform design does not appear to be at the top of MB’s list of priorities. Charting Software It can be said that what MB offers in transparency and low trading costs, it lacks in charting software, which will likely be a major problem for technical analysis traders. The Charting Tools available from MBT is clearly the weakest part of the company’s offering, as they use IntelliChart through a web browser. This is the reason MBT also offers MetaTrader and third party add-ons (like Ninja Trader), which are compatible with the platform. On the positive side, it can be said that MB does offer its clients work-arounds in order to get better platform efficiency and ease of use, but if a trader is looking for a new platform to conduct advanced technical analysis in constructing a position strategy, the MBT Desktop Pro is unlikely to be high on anyone’s list. As can be seen in the attached picture, the charting software that is made available on the platform should only be used to get a sense of basic trends or support and resistance levels, as there is little in the way of allowing traders to make complicated object analysis when compared to other, more commonly used platforms like MetaTrader. While this will be viewed as unfavorable to traders of many styles, at least it can be said that MB does not limit trades to their own platforms and that there is some added flexibility in that other options can be used to augment the ECN offerings. Upgrades from Previous Platform But while there are some clear deficiencies in the power of MBT Desktop Pro as a tool for conducting technical analysis, it should be noted there are some improvements from the previous offering. Here is a list of some of the changes: Platform bug causing no longer crashes when loading some workspace files has been removed. Platform now remembers last workspace viewed from the account Charting Improvements include the addition of the CCI (replacing the plugin) New Trade Increment Snapshot Field added (communicating the minimum price increments) New ways to control the Auto Cycle speed for the Symbol-Interval Bar. Improved tick charts now have no limits on the number of ticks that can be shown Addition of the Heikin-Ashi chart type Addition of the middle line indicator in all band studies Conclusion When looking for a trading firm that is a true ECN and maintains high levels of transparency and fairness, MB Trading has a long established (in fact, award winning) reputation in these areas. When dealing with the platform itself, however, there is much to be desired as there is little in the way of technical analysis capabilities that will allow you to back test specific scenarios or use indicators that are new or less common to the forex trading community. Given these factors, MB can be used as your trading ECN if you are willing to use the MetaTrader option or other charting and analysis software that allows you to implement your preferred trading strategies.

Successful trading requires some way of accurately forecasting how prices will move in the future and in most cases, this can prove to be even more difficult than it seems. Technical indicators that make the attempt actually forecast price activity (rather than to simply measure the performances seen in prior price history) might seem like an impossibility but there are examples of indicators that seek to do just that. One example of this can be seen in the work of W.D. Gann, an early 20th century intellectual whose models attempted to forecast the outcome of a variety of world events (from the end of World War I to the outcome of the Stock Market Crash). One of Gann’s earliest discoveries was the”Market Time Factor,” which earned him a position in the history of technical price analysis. Essentially, Gann’s techniques base price forecasts on three factors (Range, Price, and Time) and operate on the assumption that markets are cyclical in nature. Viewing the markets geometrically (in function and design), Gann was able to arrive at three critical areas for determining what is likely to occur in future price activity: Price Studies (based on support and resistance levels, price angles and pivot points), Time Studies (which focus on broad social patterns to discover potential recurrences), and Pattern Studies (which use reversal patterns and trend lines to isolate swings in the market). These central areas form the basis of Gann’s Studies. Measuring Gann Angles While Gann Analysis does have many unique features, one similarity its has with other forms of technical analysis is that empirical approaches will outweigh any “hard and fast” rules in place at the early stages. But with that said, there are important rules and techniques that set Gann Analysis apart from other trading methods. When constructing Gann Angles, part of the empirical approach comes from identifying time units, which is done by studying price action and measuring the distances between significant price movements. Gann angles are then viewed in relation to these areas (often in medium term time frames) for accuracy. The second step, (also empirical) is to identify the highs and lows where the Gann Lines will be drawn. This is often done using other forms of analysis (for example, pivot points or Fibonacci), and is done to construct what Gann termed “price swings” and “vibrations.” The third step, is to select which pattern is best for your analysis. The attached pictures show the Gann options, which are variations on line slopes. In these examples, the slope of the blue picture is half of that seen in the red picture. Next, patterns should be drawn, and this will either be drawn downward and to the right (starting from the high point), or move upward and move right (from the low point). Finally, pattern repetition should be identified (if present), as Gann Analysis is based heavily on the cyclicality of price movements. While some of these steps are subjective in nature, following these steps and optimal requirements are found, the analysis can be a valuable tool for forecasting potential price movements. Gann Angles Put to Use Gann angles are often used to mark support and resistance areas, but one differentiating factor is that Gann found these lines could actually be diagonal in nature, which puts a very different twist on the ways support and resistance is viewed by most active traders. One benefit of diagonal trend lines is that they can be used to determine areas where position sizes can be increased, locations of new highs and lows, and as a means for quickly discerning the wider trend that is in place. Overall, the use of Gann Angles is simple to implement but can take time to successfully master on a consistent basis. The technique, when used in conjunction with other forms of indicator analysis, can offer traders a new way of looking at support and resistance areas (and market trends in general) but can take time to perfect given the subjective nature of some of its elements.

One of the newer additions to the forex trading platform offerings can be found in cTrader, created in 2011 by the London based cTrader Limited. The platform is tailored specifically for ECN brokers, offered initially by FXPro (one of the leading ECN brokers in the forex business). The cTrader platform shows competitive pricing from global forex sources (as opposed to those of Market Makers which, will display their own rates). With efficient trading execution and a clean, attractive charting package as its central strengths, cTrader is an uncluttered, intuitive and easy to use alternative for traders looking to start with an ECN broker. Here we will look at some of the specific features available in the platform to get a better sense of the benefits and drawbacks of cTrader as an option for placing positions and conducting technical analysis. Summary of Features A quick summary of the features made available with the cTrader platform shows an attractive list, relative to many of its counterparts. 1. One-Click Order Execution 2. Fail Safe Sell/Buy Limit Orders 3. Detachable Options in the Charting Station 4. Ability to Switch Between Multiple Accounts 5. Advanced Technical Analysis Tools 6. Advanced Charts 7. Expanded Trade Watch Feature 8. Level II Market Pricing (complete market depth) 9. Fully Customizable 10. Intuitive User Interface Trading Execution Next, we will look at one of the aspects that will be of central importance to all traders but particularly to those with shorter term time frame strategies. Visually, the layout resembles what is generally seen in metatrader (which will be a positive, as it contributes to familiarity). With this, prices are displayed on the left while charts are located on the right side of the platform. A key difference, however, can be seen relative to the fact that this is a platform accessing ECN price feeds. Specifically, the price feeds on the left of the platform will show current volume levels under the bid/ask prices in each currency pair, and these will change and update in real time. This is highly valuable information for many trading strategies (such as scalping), where it is important to see how sentiment in the majority is beginning to shift. Upticks and downticks are color coded (green and red) and trading execution can be customized for either one or two clicks, depending on your requirements for trading speed and additional confirmation. For more conservative traders, there is a safety setting (which brings up a standard pop up entry order) rather than allowing one click trading. Trading sizes, however, are relatively limited. This will be viewed as unfavorable for traders looking to place mini- or micro-lots. Trading sizes can be altered in a field that is conveniently located with respect to the BUY and SELL buttons, and this will be another significant benefit for traders with short term strategies. Simply click on your currency pair and the quote will expand, allowing an order to be placed. Overall, the cTrader platform is designed to allow traders to place trades in an aggressive manner (if desired), as the platform provides all of the necessary tools to maximize trading efficiency with its clearly laid-out interface. Entries, Stop Losses and Take Profits In each trade, entries,stop losses and take profit orders all must be entered as separate orders. Essentially, these orders cannot be bracketed, so if a long position will be taken in the EUR/USD, and you want a price that is below the current market price, you must enter common Buy Limit order and a separate Sell Stop order which will work as a stop loss. When the Buy Limit is filled, another order (your Sell Limit order) can be placed to work as a take profit order. Once the stop loss or take profit is filled, the other order must be cancelled manually. This activity does require a certain amount of care, as each part of the trade (each order) must be equal to the correct position size, so it can be easy to make mistakes. So for example, mistakes would be seen if a 2 lot position was incorrectly coupled with a 3 lot stop loss order, but the process does become easier once a few trades are placed. Pending orders can be displayed on the chart itself, which makes it much easier to track a position once it has been opened. Traders can also view the tabs labeled Positions, Orders and Deals tabs to monitor pending trades. Another way to make trades easier to place is to use the Favorites column where your most frequently traded pairs can be collected. The quote box in this column expands to give you quick access to these pairs. Charting Software The charting software provides a thorough set of trading tools and are relatively easy to use. cTrader offers dual modes: multi-chart and single-chart. Traders can view multiple, tiled charts or fill the chart area filled with a single chart, just as with MetaTrader. Charts can be detached to a separate window outside of the platform itself, which creates its own Windows taskbar for easier use. The color setting in each chart can be easily customized from the default view (which is set every time a chart is opened), but this must be done for each chart, individually. But this does not need to be done each time the platform is opened (just as with MetaTrader). In terms of time frames, there is a great deal more flexibility, with cTrader offering a much wider variety of options with 2, 3, 4, 10, and 30 minute charting options all available below the 1 hour level. Above this level, the more common 4-hour, daily, weekly and monthly charting options can be found. One difference with cTrader is the 12-hour option which is also available. Timeframes can be changed with a pulldown menu, which helps to save screen space. Available Indicators cTrader includes more than 40 indicators, divided into various categories (Trend, Oscillators, Volatility and Other), with all of the regular choices available. One area of weakness here, however, can be found with the Fibonacci tools, which do not allow traders to make custom Fib levels along with the defaults. For example, between 61.8% and 100%, 78.6% and 88.6% cannot be added. Additionally, there is no Fib extension tool for taking wave measurements but this can be done manually if the retracement tools are used. For these reasons,some traders might opt to use more than one platform for analysis if these are critical factors. Conclusion Looking at the overall performance of the cTrader platform, there are a lot of advantages (in terms of design and execution scope) that place the application in a strong position relative competitor offerings. While there are some small features that are not available, the platform does cater to a wide variety of trading styles and performs well in terms of speed and execution. The interface is clean and intuitive and allows trades to be easily tracked without the use of multiple monitors (using the Smart Multiple Charts feature). The Advanced charting features provide most of the necessary tools to conduct technical analysis (with some exceptions in the Fibonacci area) with easy object control and user schemes that are easy to control and customize. The Expanded Trade Watch makes it relatively easy to control open orders and margin levels so that positions can be tracked easily before and after they are opened. Overall, the cTrader ECN platform is a solid means for accessing these markets, which is why it has steadily grown in popularity since its initial offering.