23.06.2010 Post in Trading

Besides reversal patterns on the charts of technical analysis of Forex market the figures of the trend continuation can be singled out. The trend figures illustrate a short period of the market correction. The most important figures of the market continuation are flags, pennants, triangles, wedges and rectangles. Below we will discuss every figure in detail.

Flags and Pennant

Flags and pennants are the most often models of the trend continuation, as a rule, they can be noticed in a very energetically developing trend. The dynamics of the flag and of the pennant have much in common. Both of these figures arise after a dynamic market movement, forming almost a straight line on the graph.

The figure actually is a pause in the trend development, during which the price is almost at one and the same level. A pennant looks as a small triangle on the chart whereas a flag is a short-term price range. After the figure has broken the curve, the prior trend continues, passing the distance equal to that of the figure.

Flag and pennant are the reliable trend continuation figures, when they are moving against the trend. Thus, a flag which is inclined downside gives a bullish signal. If the flag is inclined upwards, the signal is bearish. Before the emergence of the figure, the market activity is high. After the trend continuation pattern has arisen, the activity starts to fall. When the break happened, the activity is upturning again. Another feature of a flag is that when the market is lowering, the figures are being formed much faster, than during the ascending market. The appearance of these patterns on the actively expanding market denotes that a puncture is possible.

It should also be mentioned that flags and pennants are directed not against but along the prior trend and are more a trend retrace.

flag

Flag

pennant

Pennant

Unlike rebound figures, the figures of the trend continuation can very often denote the false direction of the trend. The things are more complicated with the figure of the trend reversal “triangle”.

Triangle

Triangles can be viewed as flags without flagpoles. Four types of triangles are distinguished: symmetrical, uprising, downfalling and expanding.

A symmetrical triangle is built by symmetrically converging support and resistance lines, drawn though at least four points. The symmetrical convergence of these lines reflects the existing on the currency market balance between demand and supply. Consequently, the breakthrough can emerge in any direction. But if there is a bullish symmetrical triangle, the break is likely to be directed like the previous trend, proving the name of triangle as a figure of trend continuation.

Triangle

Uprising Triangle

An uprising triangle is formed by the horizontal resistance line and the uprising support line. This figure demonstrates the situation when the demand exceeds the supply considerably. The break is upward, and further on the target is the price level which is positioned at a distance equal to the base of the triangle from the point of the break through.

Downfalling triangle

A downfalling triangle is a mirror reflection of the uprising one. It is formed by a horizontal support line and a declining resistance line. The figure illustrates the situation on the market when the supply is much higher than demand. The price breakthrough happens in this situation to the bottom. The trading volume is gradually declining in accordance to approaching the high, but it surges at the moment of the break.

Expanding Triangle

An expanding triangle, or megaphone, is an inverted image of any prior discussed triangles, where not the base of the triangle, but its corner is adjusted to the line of the prior trend. The change of the trading volume happens accordingly, the volume increases proportionally to the formation of the expanding triangle.

The break can be considered concluded if the close price was fixed outside the corresponding line, that is either above or below one of the triangle sides. After the break the curve is usually rebounding towards the punctured side.

Wedges

Wedge is closely related to the patterns of triangle and pennant. It is similar in form and the time of formation, but from the viewpoint of form and analysis, it resembles a pennant without a flagpole more. It’s usually broken through in the direction opposite to its incline, but coinciding with the direction of the prior trend. Depending on the trend, the wedge can be bullish or bearish. By the wedge on the chart it is possible to see only the trend continuation.

Wedge

Rectangles

The figure Rectangle demonstrates the market consolidation period. After its breakthrough, the currency is likely to continue the previous trend. But its disruption can, however, lead to the transition from the trend continuation to the recoil.

Rectangle

This figure is easily distinguished, and it can be considered as a small sideways trend. When it is formed along the up-trend and the price breaks though it upwards, the rectangle is called bullish.

Added by Andrey Misyuk,
InstaForex Clients’ relationship manager

17.06.2010 Post in Trading

The arbitrage concept means several ‘buy’ or ‘sell’ deals in order to profit from unequal prices of the same or resembling assets at the same time in different markets or in one market, but at different times.

Also there is the concept as Forex arbitrage. It is ‘buy’ or ‘sell’ operations made by a trader and a required further reverse deal for the purpose of making profit.

Controlling its risk, Forex arbitrage can be very beneficial. The meaning of Forex arbitrage is following: profit is made by mean of buying/selling of financial instruments at different times. In addition, a trader has opportunity to complete financial transaction in different market. Forex arbitrage means obligatory making both buy/sell deal in Forex and a reverse operation, which will bring a profit.

There are several types of arbitrage available. It is simple arbitrage, which involves using of just two currencies and a complicated type, which involves trading with three and more currencies.

Depending on what profit one can make there are following types of arbitrage:

– Temporary arbitrage is the most accepted type of arbitrage. Its meaning is in quotes difference of currency pairs at different times. The temporary arbitrage can be of two kinds:

1. “Purchase-Sale”. A trader buys a currency at a lower price in order to sell it at a higher price and get profit.

2. “Sale-Purchase”. Trader sells currency at higher price in order to buy at lower price in the future.

– Crossing arbitrage is one of the most complicated types of arbitrage. During the crossing arbitrage simultaneous synchronous exchange rates changing takes place in two pairs. Such cross-imbalances appear in Forex all the time.

– Intermarket arbitrage occurs in case of if you want to earn on exchange rates difference in different currency markets.

However, the using of Forex arbitrage is not always profitable, as in today’s conditions exchange rates in various exchanges do not differ often that does not allow traders to obtain additional profit.

The main essence of arbitrage is the complication of fixed-date buy/sell deals of currency options. The option must be executed without fail and its conditions depend on its type and the conditions of the contract.

In general, the choice of strategy depends on many factors related to each other, which trader must consider during the trading.

Added by Alexandr Kornilov,
InstaForex Clients’ relationship manager

10.06.2010 Post in Trading

There are two model of people’s activity –work or gaming. Game is always a risk, but in addition it is freedom of choice. Game can bring you huge winning and at the same time huge loss. However, it is insignificant how much efforts you spent for achieving the goal. So the main characteristic of a game is risk.

Work, on the contrary, is disciplined process, completely excluding any risks. The result of working process is salary.

Considering trade on the international currency market Forex, there cannot be any unambiguous answer for the question “What Forex is”. Everything depends on trader’s choice. Thinking of trading at Forex in terms of work, we can find many significant differences between it and usual working process. A trader does not have supervisors, position, career ladder, trader does not get fixed monthly salary, he does not need to go to the office every day. All this is both advantages and disadvantages of being a trader. It is not usual notion of work which everybody got used to.

Let’s now consider trading in the context of game. Opening and closing positions, traders parlay – what happens with the currency, whether its rate will move down or up. So having given correct forecast, trader gets profit, and, on the contrary, if he failed to predict changes on the market, he loses everything. It can be compared with casino but can not be called work.

As of today, many traders tend to suppose that trade on the international currency market Forex is work. The difference between casino game and trading on Forex consists in constant self-development, market analysis, basing on fundamental and technical factors of market behavior. A trader should monitor the quotations, follow the most important economic and political events in the world. And according to the information, he should make a decision on execution of operation.

If trader relies only on his intuition, the trading process adds up to casino game. If trading on Forex, you adhere to the basis of fundamental and technical analysis, you are always aware of economical and political situation in the world, estimate probable risks beforehand, then, undoubtedly, trade on the international market Forex is work.

Added by InstaForex Staff

28.05.2010 Post in Trading

Popularity of Forex market is growing from day to day and due to development of the Internet and modern technologies currency trading became available for everybody. Thereby, many people with lack of experience and knowledge came to the Forex market. However, sooner or later every beginning trader faces the necessity of learning the basis of currency trading. So books about Forex will teach traders the essence of currency trading on the international currency exchange market Forex.

At present day, Internet carries a great number of literature on Forex trading – these are books on fundamental and technical analysis, books on the psychology of trading, books on capital management and so on. Thus, not only the beginning but also the experienced traders have a huge variety of literature on Forex to choose.

Below let us discuss a few categories of books on Forex, why they are useful and what every trader can find useful in them.

The books on fundamental analysis comprise the literature on economy, which dwell on different financial sides of not only Forex market but the whole global economy. Though not all books on the economy will be identically helpful, you should select only those who are destined for traders.

It is necessary to remember that in the process of trading not all traders keep to fundamental analysis. However, those traders who do, will have a handicap as due to the fundamental factors the international currency market starts to move more often. From the stated above it follows that even those traders who do not adhere to a based on fundamental analysis trade should definitely study the books on Forex fundamental analysis.

The books on technical analysis

The books on technical analysis are most popular among novices of the market. This happens because technical analysis is easier and in simple words deepens a trader into the principles of Forex trade. Exactly with reading these books the majority of traders begin their Forex work. Nowadays it is possible to find plenty of books on technical analysis in the Internet. Though there exists one disadvantage, connected with applying this analysis in trading process. Most part of the available books are too old, so a trader will not get the desired effect. Nevertheless it does not mean that technical analysis should be avoided, simply every trader using technical basis for operating on Forex should modify the applied strategies for himself.

The books on trading psychology

This type of literature should be read by absolutely every trader irrespective of his experience on the market. As it is psychology of a trader’s behaviour which can determine the traders correct actions and the correct schedule for the working day with no harm to health and your funds. Very often traders are making actions not in the accordance with the situation on the market but overwhelmed by emotions. The books about Forex psychology will teach you how to suppress your emotions without letting them into your trade.

The books on capital management

This section of Forex literature is very important and it cannot be omitted. Every participant of the market should study the books about managing the capital. These books help a trader to work out the maximally profitable and correct trading strategies. Moreover, this type of books is significant also because in the Internet there is not so much information devoted to capital management and reading it will not take much time.

Absolutely every participant of trade irrespective of his experience on the market should practice self-education. Analyzing Forex literature together with permanent practice will make your trading profitable and exciting.

Many of the described above sources of information can be found on the educational website of InstaForex Company – www.instafxeducation.com. This is the largest Forex library in pdf-files.

Added by Olga Vitkovskaya,
InstaForex Clients’ relationship manager

24.05.2010 Post in Events

There was the regular seminar held in Johor, Malaysia on May 8. The seminar was organized by the leading Forex broker InstaForex Company within the series of seminars 2010. Professional Forex lecturers of InstaForex Company Ismail Bin Mohamad and Asri Bin Mohamad and visitors had opportunity to discuss such topics as “Using medianline for high probability trading set up” and “Fundamental news trading”.

seminar-johor01

InstaForex educational seminar impressed by its friendly and constructive atmosphere of dialog. Everyone who visited this event on the 8th of May was satisfied with a lot of useful information.

InstaForex Company thanks all guests and participants of the seminar and invites everybody to attend our next arrangement.

Added by Dmitry Golynsky,
InstaForex
Development manager