Learn the basics of forex trading 4

Learn the basics of forex trading 1
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71. Patience is important not only in waiting for the right trades,but also in staying with trades that are working.

72. You are superstitious; don't trade if something bothers you.
73. Technical analysis is the study of market action through the use of charts,for the purpose of forecasting future price trends.

74. The charts reflect the bullish or bearish psychology of the marketplace.

75. The whole purpose of charting the price action of a market is to identify trends in early stages of their development for the purpose of trading in the direction of those trends

76. The fundamentalist studies the cause of market movement, while the technician studies the effect.

77. Rising commodity prices generally hint at a stronger economy and rising inflationary pressure. Falling commodity prices usually warn that the economy is slowing along with inflation.

78. The longer the period of time that priced trade in a support or resistance area,the more significant that area becomes.

79. There are three decisions confronting the trader ?whether- to go long, go short or do nothing. When a market is rising ,the best strategy is preferable. When the market is falling, the second approach would be correct. However ,when the market is moving sideways ,the third choise ?to stay out of the market- is usually the wisest.

80. Channel lines have measuring implications. Once a breakout occurs from an existing price channel ,prices usually travel a distance equal to the width of the channel .Therefore, the trader has to simply measure the width of the channel and then project that amount from the point at which either trendline is broken.

81. The larger the Pattern ,the Great the potential. When we use the term ?larger? ,we are referring to the the height and the width of the price pattern. The height measures the volatility of the pattern. The width is the amount of time required to build and complete the pattern. The greater the size of the pattern-that is ,the wider the price swings within the pattern (the volatility ) and the longer it takes to build ?the more important the pattern becomes and the greater the potential for the ensuing price move.

82. The breaking of important trendlines . The first sign of an impending trend reversal is often the breaking of an important trendline. Remember however ,that the violation of a major trendline does not necessarily signal a trend reversal.The breaking of a major up trendline might signal the beginning of a sideways price pattern ,which later would be intedified as either the reversal or consolidation type.Sometimes the breaking of the major trendline coincides with the completion of the price pattern.

83. The minimum requirement for a triangle is four reversal points. Remember that it always takes two points to draw a trendline.

84. The moving average is a follower , not a leader. It never anticipates;it only reacts. The moving average follows a market and tells us that a trend has begun, but only after the fact.

85. Shorter term averages are more sensitive to the price action ,whereas longer range averages are less sensitive.In certain types of markets ,it is more advantageous to use a shorter average and ,at other times , a longer and less sensitive average proves more useful.

86. When the closing price moves above the moving average , a buy signal is generated. A sell signal is given when prices move below the moving average.

87. A buying signal on a two-moving average combination occurs when the shorter term of two consecutive averages intersects the longer one upward. A selling signal occurs when the reverse happens, and the longer of two consecutive averages intersects the shorter one downward.

89. Shorter average generates more false signals ,it has the advantage of giving trend signals earlier in the move .The trick is to find the average that is sensitive enough to generate early signals, but insensitive enough to avoid most of the random ?noise?.

90. Cutting losses is painful for every trader.The ability to cut one?s losses in time is the sign of a seasoned trader.

91.A channel breakout suggests a target for the currency price equal to the width of the channel.

92. Long term charts provide important information regarding long-terms or cycles. The trader can get a correct perspective regarding the real direction of the market in the long run, the strength or direction of the current trend occurring within that trend, or the possibility of a breakout from the long-term trend.

93. Common Points All Of Reversal Patterms
A)The first signal of an impending trend reversal is often the breaking of an important trendline.
B)The larger the pattern,the greater the subsequent move
C)Topping patterns are usually shorter in duration and more volatile than bottoms.
D)Bottoms usually have smaller price ranges and take longer to build

94. The head-and-shoulders formation is confirmed only when the completion of the three rallies and their reversals is followed by a breach of the neckline. The failure of the price to break through the neckline on closing prices basis puts on hold or negates the validity of the formation.

95. The double-top formation is confirmed only when the full completion of the two rallies and their respective reversals is followed by a breach of the neckline (the closing price is outside the neckline ).The failure of the price to break through the neckline puts on hold or negates the validity of the formation.

96. The flag formation is a reliable chart pattern that provides two vital signals: direction and price objective. This formation consists of a brief consolidation period within a solid and steep upward trend or downward trend. The consolidation itself tends to be sloped in the opposite direction from the slope of the original trend, or simply flat.

97. A Breakaway gap provides the direction of the market.

98. The runaway or measurement gap provides the direction of the market. This gap confirms the health and velocity of the trend.

99. The runaway or measurement gap is the only type of gap that provides a price objective. The price objective is the previous length of the trend, measured from the runaway gap, in the same direction as the original trend.