Forex Trading and The London Open
As part of your Forex trading education, you need to examine and understand the effect market timings can have on trading flow.
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
Around London open time develop recognition skills and add them to your Forex trading education so you can capitalize on this productive market session.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
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!
Look out for divergence on the MACD on the 4 hour, 1 hour or 15 minute chart. Then check to see if there are any other signs price may go in the direction of the divergence.
Looking at the four hour chart, ask yourself, what is the overall trend?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
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 Economic Reports imminent?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
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
Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
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!
Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.
A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won't be too long before the trader experiences the satisfaction of consistent profits on a regular basis. - 23162
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
Around London open time develop recognition skills and add them to your Forex trading education so you can capitalize on this productive market session.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
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!
Look out for divergence on the MACD on the 4 hour, 1 hour or 15 minute chart. Then check to see if there are any other signs price may go in the direction of the divergence.
Looking at the four hour chart, ask yourself, what is the overall trend?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
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 Economic Reports imminent?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
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
Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
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!
Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.
A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won't be too long before the trader experiences the satisfaction of consistent profits on a regular basis. - 23162
About the Author:
For a free candle & chart pattern recognition reference tool click here: Candlestick Charts See how to use trendlines to get an optimum trade entry point: Drawing Trendlines
posted by X - Men @ 5:08 AM
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