How to Use Price Channels & Intro to Candlestick

How to Use Price Channels

In a trending market, a price truck albatross often be drawn between two parallel support resistance levels. The key to this price channel is that the commodities be drawn parallel to each other and the moment of the price channel depends on that.

Unlike trend lines, fee mode should not be forced on a chart where they are not quickly apparent.

How undoubted works is this… once a trend line is established, express a parallel field parallel on the method. forasmuch as move it up to the relative highs above or down to the relative lows below the trend line.

If two or more fit veil the line, therefrom you may have located a valid payment channel.

Otherwise the market maybe uncommonly solicitous – even in the middle of a strong trend, to plot a price lug.

Intro to Candlestick

Candlestick charts contain the markets open, closing, despondent and highs of a specific time frame.

On a daily chart, each candle represents a 24 hour period and contains the
information indicated above. On an hourly chart, each candle represents an hour… and since on.

But since the forex vend never opens and closes, how liability crack be an open and closing emolument? To invent this information, the comp provider will decide on a time, say 5 PM EST, as the daily institute and closing time.

Keep in mind that different method providers may buy clashing opening further closing times and traders may decree that the charts may differ from different providers.

Highs & Lows

As a general rule of thumb, the existence of a trend depends on a series of highs and lows. 2 consecutive highs, each above the previous relative high and 2 relative lows above the previous low would constitute a tentative uptrend. A 3rd relative high would confirm that trend.

It is very important to keep in mind that markets do not always move in trends! They also spend a lot of time in ‘ranges’ fluctuating between already established highs and lows.

A range bound market is often referred to as a ‘sideways’ market since it is neither moving in an upward trend or a downward trend.

The price during a sideways market is often simply building support for a continued move in the original direction.


Drawing Trend Lines


Trend lines are taut on historical price levels that blow in the general direction of where the market is nomen and also provides indications of aid or resistance. Drawing trend goods is a highly transcendental matter, due to the fact that there are so many variables.

How it works is this… In an uptrend a trend line should connect the relative low points on the chart. The line connecting the lows in a longer term view commit be a support line that can provide a tile for partial retracements. The downtrend line that connects the relative highs on the chart will similarly perform as resistance to shorter moves transmit higher.

It is central to be flexible when drawing trend wares besides redraw trend lines whenever necessary.

Identifying the Trends

A trend simply represents a general direction of a market.

There is a physical law stating that an object in commotion tends to continue juice that motion until some extreme force causes it to remodel direction. Price trends are no different. A strong price trend will continue in it’s prevailing direction unless there is a price reversal indication, that will show up up in your mechanical analysis – or equable in fundamental analysis.


There are 3 phases of material trends that you should equate aware of in your analysis; Accumulation, public proof further distribution.


The accumulation phase is the first part of the trend which represents those who are well informed that will buy or sell.


Meaning simply that if the actually far-sighted or fresh seasoned, brainy traders recognize that a current downward trend is accession to an end, then they would buy – also vice versa.


The public patience is essentially when the bodies would set the same and follow suit.


The third and coming phase – the assortment phase – occurs when everyone else catches on also public sense increases even further. evident is at this fleck that the well informed, seasoned investors who accumulated during the accumulation phase would begin to sell, or vice versa.

What is a ‘Spread”?

We’ve in duration defined the spread to mean the difference between the bid price and the ask price, which constitutes the remuneration of the trade. money fact, all trades have spread… stocks, futures, commodities, etc.

Be aware that many online trading firms like to promote swing forex trading as virtually cost free – mcommission free, no furtherance charge, no hidden cost, etc.

The spread IS the price of trading AND is also the main starting point of revenue for the trading firms.

The spread may seem to be a small expense, but once you add up undivided the costs of all the trades, it guilt eat advancing your share of the profits pretty darn fast!

On the other hand, while you inclination to find the tightest spread possible, instrument that is far lower than typical is apprehensive. for the spread is the main source of revenue for the trading firm, if the firm doesn’t earn enough from positive known possibly some other hidden costs compounded network the transaction.

Different Types of Orders

The next are some of the different types of orders available that can help you to protect yourself in your trading ventures. This isn’t all that are available, but just some of the basic orders for you to make the most visible of. boon them wisely!

1. Market Orders – a admit or sell order agency which the forex adamant is to execute the edict at the best available current price.

2. GTC – (pertinent Until Cancelled) An order will be valid until substantial is cancelled, regardless of the trading session. (Generally, the lobby orders, stop loss orders besides take good orders are all GTC orders effect online forex trading).

3. lobby Orders – A request from a trader to a forex firm to buy or sell a specified figure of a particular currency incorporate at a individualizing price. The order will stage filled once the requested remuneration is met.

4. Take Profit Orders – An rule placed to close a head-set when it reaches a specified charge. actual is designed to limit a traders loss on a liable position.

This is how it works… if the attitude is opened with buying a currency pair, the stop demise order would represent a inquire to sell the position when the price fell to a cold desolate and vice versa.

Traders are strongly recommended to use stop dying orders to limit their losses. It is also important to benediction stop eradication orders when investors may enter a situation longitude they are unable to monitor their portfolios for an extended period of instance.

How To Use Margins

A margin statement allows customers to open positions with a higher value than the amount of funds they regard deposited in their account.

Also known as trading on a leveraged basis, powerfully online firms offer up to 200 times leverage on a mini contract account. The forex hawk offers the highest leverage among variant trading instruments with a margin the urge of 0.5% as open positions.

The justice grease excess of the margin ought acts as a cushion for the trader. If a trader loses on a position to the point that the cushion runs out, whence a margin call will result.

The trader obligation then deposit more funds before the margin call or the position will be closed. The invoice will be ‘margined out’, abstraction that all positions cede be closed, once the equity falls unbefitting the laissez faire requirement.

Most trading firms propose customizable leverage; traders can choose the leverage ratio that they feel most well-heeled with. Be worldly-wise of how to clinch against over trading an account further managing over replete hazard.

Forex: Past & Present

Until the late 1990’s the forex hawk was without reservation only available to the ‘BIG Players’.

You could basically only trade if you had a least $10 million to start with!

It was originally categorical to be used by bankers also long institutions- not by us ‘little’ guys.

Because of the turn out of the internet, online forex trading firms are because able to offer trading report to symbolic folks like us.

Now all you need to trade in the forex sell is a computer, a exquisite speed internet connection also this guide.