A thorough Forex trading education must include an understanding of the effect market timings can have on trading and liquidity.
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
Check these points about fifteen minutes to half an hour before the London market opens:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, be very careful!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
What is the overall trend on the 4 hour chart?
Using the last swing high and swing low, use your Fibonacci tool and note the retracement and extension levels and see if price is approaching any of them.
Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)
Are any fundamental announcements due?
Looking at the candle that closes the first 15 minute period after London opens, do you see any distinctive patterns, or is the candle itself a doji or a hammer or any other shape indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:
trade
wait for clearer signals or a better entry point
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
There is no magic surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 22871
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
Check these points about fifteen minutes to half an hour before the London market opens:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, be very careful!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
What is the overall trend on the 4 hour chart?
Using the last swing high and swing low, use your Fibonacci tool and note the retracement and extension levels and see if price is approaching any of them.
Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)
Are any fundamental announcements due?
Looking at the candle that closes the first 15 minute period after London opens, do you see any distinctive patterns, or is the candle itself a doji or a hammer or any other shape indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
After waiting a few minutes from the time London opens, and you see a number of converging factors based on the analysis points given above, decide whether you are going to enter the market. Either:
trade
wait for clearer signals or a better entry point
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
There is no magic surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 22871
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For a free candle & chart pattern recognition reference tool click here: Candle Charting See how to use trendlines to get an optimum trade entry point: Trendline Trader
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