Using support and resistance within Forex trading strategies

As every serious trader knows Forex trading strategies are an essential part of Forex training. They range from reversal through to continuation strategies with each one having its own specific set of rules, entry and exit points. Knowing how these Forex trading strategies work and when they are most likely to fail is a core element of the learning process for any aspiring new trader.

Another crucial element of Forex training is the notion of support and resistance. They re defined as follows:

Support – a price area where a horizontal line is drawn connecting two price hits which have bounced in the upwards direction. Market price is decreasing when suddenly it starts to pull back upwards. It then decreases again with another pull back at the same price level as the first one. The horizontal line that connects the two pull back price points is called the support line. The line literally creates support for that particular price level.

Resistance – a price area where a horizontal line is drawn connecting two price levels which have bounced in the downward direction. Market price is increasing thus moving upwards; but suddenly it starts to pull back in the downwards direction. It then reverses back into the original upward direction only to pull back downwards at the same price point as the first one. The horizontal line that connects the two price points is called the resistance line. It creates a resistance point at which the market cannot continue upwards.

The reason why it is crucial to know about support and resistance is because they can drastically slow down your profits or even reverse your Forex trading strategies back to create a loss. The point is that there is a reason why there is support or resistance at a certain price level. It does not matter what this reason is. What is important is that traders respect it as a potential profit stop. So, if a profit target is 30 pips but there is a heavy support/resistance line blocking the way at 25 pips, profit should be taken at 25 pips. If orders are left to fight the support/resistance lines you are simply hoping for the best. You may get through some of them but in the long-run it is not worth the wait.

Another factor to bear in mind is that support can become resistance and resistance can become support. For example, as price breaks through resistance whilst moving upwards it is very common to see the price pull back to the line it broke through originally and bounce back upwards as a result. In this manner historical resistance has now become new support. The same can happen in the other direction.

In summary, it pays to be extra careful when support or resistance lines are apparent in the market when Forex trading strategies are being used. It is common for a trader to lose faith in his/her strategy when they see it bounce from this horizontal line simply because they haven’t studied it in their Forex training. In this instance it is not the strategy that is at fault, it is the lack of knowledge.

What Is a Self-Directed IRA?

What is a Self-Directed IRA?

A self-directed IRA is a nontraditional retirement account that allows individuals to invest in what they already know and understand with alternative investment options not allowed within typical retirement plans, including the following:

Real estate – residential and commercial properties, land, renovation or new construction, passive rental income -Mortgages and other loans -Private hedge funds -Precious metals -Limited partnerships -Commercial paper and notes -And many more

A broader selection of allowable investments in a self-directed IRA means informed consumers can develop a more eclectic portfolio that they control; it allows them to respond to economic downturns or take advantage of opportunistic (and tax-advantaged) investments in a more nimble way than going through a conventional IRA custodian.

If you have had experience before with these kinds of investments outside of your retirement plan, a self-directed retirement plan could be a smart way to grow your savings more aggressively.

Who Should Open a Self-Directed IRA?

If you are someone who understands certain markets and investments and perhaps is already investing in those as part of your retirement plan, consider applying what you know to this new investment strategy.

People who open a self-directed IRA may:

-Be an angel investor in a company -Purchase real estate or own rental property as an investment -Invest in certain commodities -Make unsecured personal loans to friends or certain relatives and earn tax-free interest on the loan

You can do all this within a self-directed IRA and enjoy the tax advantages of these plans.

Are you self-employed? You may open a self-directed SEP (simplified employee pension plan) IRA. Individuals can roll over the funds from a traditional IRA or an old 401(k) plan. You can even choose to keep your existing IRA account for stock and bond transactions and open a self-directed account for your other investments. And you can start with an initial investment of just a few thousand dollars.

The bottom line is you must want to make the investment decisions for your account or have a trusted advisor who’s knowledgeable about the options available for these accounts who will work with you. How Do I Open a Self-Directed IRA?

Although you control your investment strategy, self-directed IRAs are administered by neutral third-party professionals, such as Next Generation Trust Services, who serve as custodians of the assets in these accounts. The custodians offer knowledge and insights to help you make informed decisions when you purchase, maintain, or sell your investments, and will ensure those transactions are properly expedited.

Account Custodians understand the special processes, documentation, and regulations these accounts are subject to, and handle all the necessary paperwork so that you invest safely and securely. When you open your account, ask about phone support for when questions arise and educational seminars for you and/or your advisor so that you receive the knowledge you need to control your investments wisely.

Currency Trading for Beginners: Range Trading Strategy

Range Trading StrategyTime Scales in MT4Proper use of the time scales will help you to figure out the current price trend of your currency pair or commodity. The first thing you need to do in range trading is to establish your range to trade. To do this you will need to look at multiple time scales. Be aware of the long term range from the W1(Weekly) and D1(Daily) scales but they may be too large to see the range you wish to trade. Look at the H4(4 hour) and H1(1 hour) scales to see the current trend of your product. Watch the M30(30 minute) and M15(15 minute) scales to see the recent trading range and more recent trend. The M5(5 minute) scale will show very recent range and trend while the M1(1 minute) scale is not really useful to show a range, but does show the almost immediate movements in value. This scale can be used to try to pin point a bottom or top in the range taking care not to make reactionary trading decisions based on this fast moving scale. Movements in this scale may seem dramatic, but typically do not reflect the greater trend.Finding and Trading Your RangeFinding a good range to trade a financial product really depends on the product itself. Use the M15 through H4 scales to look for a repeating fluctuation in price that is enough to make a decent profit after covering your trading costs. Place long orders(buy) while in the bottom end of the range and short orders(sell) while in the top end. Always be aware of where the price is sitting on the D1 and W1 scales while placing orders in the shorter time scales. As short orders become profitable and get closed, look at whether or not you should be placing long orders for the next fluctuation in the positive direction and do the same as closing long orders for the hopefully coming negative price fluctuation. Be sure to leave enough free margin in your account to cover the full range that you are trading plus some as nobody likes a margin call. The indicators below will be very helpful when figuring out when to buy and sell in your range keeping in mind that the price dictates where the indicators move, not the other way around. You may find it easier and more comfortable to trade a product that you are somewhat familiar with like your home currency. Staying close to home will also keep your trading costs down and likely allow for more leverage.Useful IndicatorsStochastic Oscillator(5,3,3)The Stochastic Oscillator compares the price at which a security closed relative to the range of the price over a certain period of time using two lines. The first of the two lines is called %K representing closing price and the second %D represents a moving average of the closing price.The oscillator has a full range from 0 to 100. Leaving values set by default will be fine, but you should edit the indicator and set an upper level of 80 and a lower level of 20.When the oscillator goes over the level of 80, it is considered to be overbought. It is considered oversold when dropping below the level of 20. Generally, values will increase as the 80 level is breached and continue to rally while above this level. The oscillator leaving the overbought area and dropping back down below the 80 level is an indication that the price may have reached a ceiling and start to fall. The same concept holds true for when the oscillator drops below the 20 level into the oversold area which represents a declining value. A return above the 20 level suggests that the price may start to increase.Relative Strength Index (RSI)The Relative Strength Index is an oscillator that follows the value of the financial product being traded. The RSI oscillator has a full range from 0 to 100. It will most likely have a default 14 day period which is fine, but the indicator should be edited to include an upper level of 70 and a lower level of 30. When the RSI oscillator goes above the 70 level, it is overbought. It is oversold when dropping below the 30 level. A level of more than 70 may have a continued rally until the level turns downward and returns below 70 suggesting a possible end to the rally. A level of less than 30 may have a continued decline until the level rises and goes back above 30 suggesting a possible bottom.Commodity Channel Index (CCI)The Commodity Channel Index is a measurement of the amount of deviation between the current price of the financial product and the average price. This oscillator does not have a full range but is centered on a value of 0. When setting up CCI, the indicator needs to be edited to show a high level of +100 and a low level of -100. Between these two levels is a channel with 0 at the center representing the average price. A high level of CCI which would be considered to be anything above +100 means that the current price is high as compared to the average price for the product. A low level of CCI being anything below the level of -100 would be stating that the current price is low as compared to the average price.Average Directional Movement Index (ADX)This trend indicator is based on a 14 day period comparing two direction indicators, the positive direction indicator(+DI) and the negative direction indicator(-DI). The Average Directional Movement Index shows the strength of price movement while the positive direction indicator(+DI) and the negative direction indicator(-DI) show the direction of price movement.DivergencesA divergence occurs when and new high or low in price is not also a new high or low in the Stochastic Oscillator and/or Relative Strength Index. Value of the financial product may have a correction and follow in the direction of the RSI. To make this indication of a coming price drop stronger, look for the RSI level to drop below the level of the closest valley or low level.Divergence in CCI is much the same in that a new high price is not expressed as a new high level in the CCI suggesting a coming price correction. News and StatsWhile it is possible to trade on technical analysis alone, it is really only half of the story. A great deal of the fluctuation in value that you are tracking with the technical analysis was caused by the release of information, reports and statistics relevant to your product and the countries involved. Economic news releases from the relevant statistics agencies from your country are key to making good profits in currency pair trading just as financial reports and news updates are key to trading public company stocks. All statistics agencies have release calenders for important upcoming reports. For currency pairs, economic reports on GDP, trade balance, unemployent and income are a few critical reports that affect prices greatly. Find the agencies that release key economic numbers relevant to your product, bookmark them and be waiting anxiously minutes before their release. Find the analysts projections or forecasts on what the numbers should be before they are released. If the real numbers are better than the analysts forecast then prices will increase immediately just as they will decrease if expectations are not met as real numbers are released. For constantly updated news and statistics feeds from multiple sources around the world organized by country of origin come to using a practice account for any new trading strategies before risking your money. Foreign exchange products are highly leveraged and often very volatile. Never invest money that you cannot afford to lose!

Marketplace Un-Fairness Act?

This Summer, MFA, the “Marketplace Fairness Act” was passed by U.S. policymakers amid a combined 69-27 bipartisan vote. The Marketplace Fairness Act gives states the opportunity to enact laws which force retailers to take a sales tax for their home state, even if the purchaser does not live in the state in question and has no legal connection to it. For example, if a boutique store in Washington sells jeans to a person who lives in Arizona, the merchant would collect Washington tax on the purchase and take it for Washington.The case Quill Corp. v. North Dakota (’92) is mainly responsible for The MFA. In the case, the U.S. Supreme Court prohibited North Dakota from forcing a sales tax on sales to North Dakota residents by a strictly out-of-state seller. The Supreme Court went on to urge Legislative officials to respond to the matter with new legislation; The MFA is the Senate’s (belated) acceptance of the court’s invitation.The meaning of the bill is twofold: Firstly, under their current legislation, states don’t earn the income that they absolutely need. Under current legislation of most states, if purchasers are not charged sales tax on a purchase, they are required to concede a use tax to their state of residence. Due to the lack of enforcement, it’s not surprising that many buyers do not perform this legal obligation when they buy an item from an online, out-of-state retailer; MFA seeks to address this issue by asking retailers to aid in the tax collection process.Second, the new piece of legislation wants to balance the obvious advantage that online retailers with no presence in a state have over brick-and-mortar retailers. If buyers acquire a good for 1 dollar at a shop, the seller will charge the current states tax (maybe 5 percent), creating a total of $1.05. On the other hand, if he/she purchases that exact item for the same price from an e-commerce business with absolutely no connection with the state, and does not self-report the particular state tax, he or she has basically purchased the good at a lower price. Brick-and-mortar stores (understandably) think that this puts them at a serious disadvantage, particularly in consideration of the fact that they typically provide more tax revenue, employment and capital investment for the state than online, out-of-state stores.Small retailers and Ecommerce businesses are strongly opposed the legislation. Although The Marketplace Fairness Act requires the assignment of free software to businesses in order to help them collect the proposed sales taxes, the majority of small companies disagree that such software will be compatible with their current ordering systems. Not to mention, even though MFA won’t apply to companies that generate less than one million annually, lots of small companies with modest profits may find themselves getting hit with compliance costs that are much greater than the tax revenue generated by their collections. Perhaps most importantly, the bill’s opponents emphasize that a small business which ships to 30 states could be subject to an expensive and cumbersome sales tax audit in each of those 30 states.Although The MFA will ultimately make states simplify their taxing tendencies, it does not explicitly ease the apprehensions that many sellers have about suffering from more than one state sales tax audit. Furthermore, there are several trade groups, such as the American Society of Pension Professionals and Actuaries, who have indicated that the broad language of the bill essentially authorizes states to apply tax many purchases not currently addressed in the current draft of The MFA – even employee contributions to retirement and 401(k) plans could be affected.