Candlestick analysis on Forex

Candlestick analysis on Forex

Candlestick analysis can be called the main type of graphical analysis, in which the object of study is a Japanese candle - a structural unit of a candle chart

The candles themselves were invented a long time ago, so the candle analysis of the market has a very long history. The main idea is to understand by the appearance and parameters of a candle or a combination of several candlesticks alone what can be expected in the future and what prospects are opening up in trading. The main parameters that we are interested in are the following:

  • The general shape of the candle
  • The relationship between body and shadows
  • The ratio between adjacent candles

These are the three key points that we will evaluate in the candlestick analysis of the market. There are certain criteria that have appeared over the years of observation, and later they were described in particular in Neeson's book "Japanese Candles". For example, one candle may indicate that the market is likely to turn around, while the other suggests that the trend will continue. Of course, this is not an absolute option, but the statistics on the development of candle models are quite convincing.

The only thing that can distort it to some extent is the use of candle analysis of the forex market. This is due to the fact that initially the observations were carried out on the securities market, and only then on a relatively young forex. Very high volumes and the use of an order of magnitude of large financial levers leads to the fact that sometimes there is a deviation from the reference form, but the model itself does not lose its operability at all.

Read more: Graphical analysis on forex, stock and cryptocurrency markets

The only conditional disadvantage is the fact that the candlestick analysis of the forex market is applicable on fairly large time frames, that is, less than H4 is not even worth considering. And the ideal option that will bring the greatest benefit is the analysis of daily and weekly charts.

Consider a simple example. The Asian session is taking place calmly, no serious publications are planned for the period of the European one. But during the American session, some event occurs and prices begin to fall. Since any such events lead to the fact that subsequent trading sessions support the emerging trend, it turns out that a fall in America will give a certain shape of a candle for a trading day and in the future it can serve as a signal to enter. Then there will be another fall in Asia, which will continue in Europe.

As a result, we get that the candle signal is working out. At the same time, we are not at all interested in what happened inside the day, only the final shape of the daily candle is important to us. Due to the fact that many prefer short-term trading, forex candle analysis is not so popular, but for those who have decided to trade in the medium term, candle market analysis can become a very good assistant.

All models from the candlestick market analysis are divided into two main categories:

  • Reversal models. As it is not difficult to guess, this is a special form that indicates a possible change in the direction of the market.
  • Continuation of the trend. Here, too, everything is simple - these models, as a rule, describe consolidations, that is, periods of horizontal or slightly inclined movement against the trend.

Undoubtedly, those who have watched the chart, but are not familiar with the candlestick analysis of the market, will see very familiar combinations in the list of models. They occur quite often, given the variety, almost every day you can find the resulting patterns on the daily charts. And the more instruments are tracked, the more signals there will be. In addition, weekly candles are added here, of which, of course, there are fewer, but the signals are very reliable. So, let's look at the main forex candlestick patterns:

Reversal models

Each candle model has its own name. Moreover, the bullish model often has a completely different name than the bearish one. For example, a "Shooting Star" is a candle that forms at the end of a bullish trend, and its opposite is called a "Hammer". They look absolutely identical, only they are directed in different directions. Accordingly, reversal patterns are divided into pairs with a few exceptions - "Absorption" can be bullish or bearish.

Read more: What timeframe is the best to trade on

The reversal pattern itself in the candlestick analysis of the market usually consists of one, two or three candles. There are more complex combinations, but they do not always work out exactly on forex, besides, it is easy to get confused in a large number of candles in unaccustomed situations. In this regard, it is better to start getting acquainted with forex candlestick analysis with the following patterns:

Shooting Star

This is a model consisting of a single candle that appears at the end of an upward trend, that is, it is assumed that growth ends there. Surely many have seen it, it is often formed on daily charts. It is a candle with a long upper shadow and a not very large body. The ratios are approximately the following: the size of the shadow exceeds the size of the body by about two to three times. This is a fairly large range, so many candles fall into the category of "Shooting Stars".

If the shadow is smaller, then it is a weak signal and does not fall under the description of the pattern. If it is much longer, then it will be a completely different model - a pin bar, which we will talk about in the Price Action section. It is also worth noting that the color of the candle body plays a rather important role - if it closes below the opening point, then this is a good and strong signal, if the closing occurs with an increase, then there is a lower probability of a reversal.

In any case, it is recommended to trade only after its minimum is broken. The advantage of a shooting star in forex candle analysis is that it is only one candle and you can enter the market literally on the next one. As already mentioned, on a downtrend, this candle will be symmetrical and is called a "Hammer".

Evening Star

Another "star pattern" after the bullish trend, but only this time consisting of three candles. It is not very common, but at the same time there is an interesting property - it often appears on a four-hour chart and performs well. But if you follow the canons of candle market analysis, it is better to focus on the daily time frame. It is a long candle with a short upper shadow, followed by a very small candle with also short shadows.

After that, the key moment comes - if the market starts to decline and a third candle with a sufficiently large body comparable to the first candle turns out, then this confirms the reversal. Just as in the case of a shooting star, it is very easy to identify, trading is conducted on the fourth candle. Some enter the market even in the process of forming a third, but it is better to do this when there is already some experience in the candlestick analysis of the forex market. The bearish version is called "Morning Star" - just inverted. It can also be noted that often such a combination is part of a more complex one, formed, for example, on a weekly time frame.


One of the few models in the candlestick analysis of the market, which is also used on the four-hour chart. It consists of only two candlesticks that form a reversal combination. Consider the example of a bullish trend. The first candle is growing, it is also the last in this trend. The second candle closes with a decrease, and the closing point of the candle is lower than the opening point of the first one. Hence the name - the second candle seems to absorb the entire body of the first.

At the same time, the shadows of the first candle should be short, for the second it is not so important. The best option is if the second candle covers not only the body, but also the entire range, that is, the lower shadow of the first candle is also included here. In this case, the signal is very strong.

Read more: Technical analysis on the forex market

With a downward trend, everything is the same, only in the opposite direction. Sometimes there are situations when there are 4 such candles in a row, that is, each previous one is absorbed. Usually the original meaning is not violated, that is, such a structure still implies a reversal. Absorption usually ends with sharp accelerations in the last waves of the trend, so it is important to enter the deal in time, that is, not to miss the opening of the next candle.

Hanging man

A fairly reliable reversal model for a growing trend. The increase in the market ends with growth in the form of a candle, in a form completely identical to "Hammer". That is, in fact, Hung in the forex candle analysis is a hammer that only appears on a growing trend. The idea is that the market could not continue the movement it started and does not draw a new extreme.

Read more: Wave Analysis in Forex

In this regard, a similar candle of a daily or weekly time frame is obtained, which signals a very likely reversal. The trading rules are the same as for other models from one candle. In the case of a downward market movement, such a pattern is called an "Inverted Hammer" - it is a shooting star, only at the end of a bear market. At first it is easy to get confused, but over time all these names are well stored in your head, literally after the first transaction on them.

Continuation of the trend

There are not so many models of candle market analysis suggesting a continuation of the trend. For beginners, it is reasonable to pay attention to one of the main ones used in forex candlestick analysis - "Three White Soldiers" and the reverse bearish "Three Black Crows". They are well remembered and do not contain the complex structure that others have. The main idea is that the market is gaining momentum by drawing three candlesticks of the same direction in a row. In the first case, these are three growing (white) candles, in the second — three falling ones. Such a combination demonstrates the mood of the market for a trend, they can be formed both in the initial stage of formation and in the middle of a trend.

In these models, attention should be paid to how candles look. It is important that there are no long shadows directed against the trend, otherwise it may just be a gradual advance in the resistance or support zone, which will end in a reversal. It is also desirable that the candle bodies do not decrease, that is, they are either approximately the same or slightly increased with the development of the model. The best option is a smooth increase in the ranges of candle bodies with short shadows. As a rule, such a combination can be seen on strong and stable trends.

The rest of the models are complicated, because they were originally developed for the stock market, where there are gaps between candles. Gap is a gap formed between the closing price of one candle and the opening price of another. This happens because, unlike forex, the stock market is not traded around the clock, or rather, each trading instrument has a limited trading time.

Read more: How to read Japanese candles correctly? Instructions and examples


Another articles

The reasons for the mistakes of novice traders
The reasons for the mistakes of novice traders Mistakes of novice traders. A sad conversation about trading.Looking back, I see a very sad picture of the success of traders. Of those with whom I started trading, today there is practically no one left! Just think about these numbers. For 10 years, of the people with whom I communicated very closely (and there were 30-40 people, not counting just familiar traders), only a few remained in the ranks! Everyone else sooner or later quit this business.Let's face it without rose-colored glasses - there are very few people making money on forex. Statistics say that 95% of traders leave the market.  I would raise this statistic to 98-99%. The percentage of the newly created and ruined "traditional" business, I think, is an order of magnitude less.And many people think that here we have easy money, just a magic button called "loot".But in fact - nothing like that! We have daily painstaking work here, like slaves on galleys…It seems that everything is simple and clear when you look at history. Here it was necessary to buy, here to sell, and here it is happiness! In the form of a golden rain mixed with cars, yachts and houses on the coast… In fact, everything turns out to be wrong. There is always the eternal question - here and now, which button to press?Why are deposits merging and traders leaving the market?In the first year of trading, according to my 10-year observations, people leave the market in two cases. The first category comes to forex in the hope of fabulously and most importantly to get rich quickly. At the same time, they have no idea how everything works and turns around here. The market immediately hits the new participant in the nose, takes all the money and throws it overboard. Robbed (as he believes) and offended by the whole wide world, the failed trader leaves the market forever.The second category of people are more lucky. But money "on the ball" has the ability to relax a person. The result is the same as in the first case – draining the main deposit and all that I earned. And shouting: "Casino! A scam!" the person also leaves forex.So why is there a loss of the deposit?Read more: Forex problems – what is the "Burnout Effect"4 mistakes of novice tradersMistakes of novice traders, as we have already said, those who came for fast money and are not going to go through a long way of becoming themselves as a trader. Why, for example, you need to study for a surgeon for 6 years, then 3 years of internship, and only after that you may be entrusted to perform operations yourself. And how long does it take to become a successful, consistently earning trader? I can say about myself that I started to close a stable month without losses only by the end of the third year.The next reason for losing money is the lack of a trading system and a trading plan.  And even if you are armed with a good trading strategy, always ask yourself the question – "How good is my trading system?" Everything changes in the market over time. Following the market, our approaches to it should also change.  We have already discussed these issues, so we will not stop. Moving on.Let's say you have shown patience and are ready to move slowly but confidently towards your goal. You already have a profitable and time-tested system. We can say that half the work on the way to success has been done. But there remains a very important issue that novice speculators practically do not pay attention to. And this question is money management and risk management (MM and RM). Proper money management and compliance with the rules of acceptable risk per transaction is 80, or even 90% of your success! I repeat once again, the market has a tendency to change its habits. And he changes them at the most inopportune moment (for example, when you have a profitable streak, and you are in a euphoria of happiness from your own success). In such periods, believe my experience, it is very easy to miss changes in the market. And the only thing that can save you from collapse at such moments is strict trading discipline in relation to MM and RM. And these two components of trading are the key to stable earnings. If they are used correctly, the profit from one successful transaction can cover the loss from three or even five unprofitable ones.But the most important enemy on the way to success is yourself and your emotions! Fear, Greed, Hope. The fear of getting another stop loss does not allow you to open a deal that can become very profitable. Greed prevents you from closing a position in time, as a result, instead of profit, you get a breakeven (at best). Hope makes you hold a losing position, even when you realize that you initially made a mistake in the calculations. To keep yourself in hand and not let your emotions bloom with a double color is difficult! We are all living people, not robots. Therefore, each of us can sometimes give slack. But, as they say, forewarned means armed. The main thing is to say stop to yourself and your emotions in time!Summing up, I want to say that the path of becoming a professional trader is thorny and tortuous, but there is always light at the end of the tunnel!  It is necessary to go through the pain of losses and disappointments, through the joy of victories and achievements, to say with pride – "I am a trader! And I am among those who did not leave the market, but achieved success!"Read more: What a novice forex trader needs to know
Aug 06, 2022
Swing trading - strategy of successful traders
Swing trading - strategy of successful traders One of the most successful trading strategies that traders use in their trading is swing trading.Today we will try to figure out what this concept is and how to apply it.What is swing trading?The essence of the swing trading strategy is as follows:Since the markets move cyclically, the speculator's task is to determine a market cycle lasting 3-5 days, open a deal at the beginning of the cycle and hold it for one to five days in order to maximize profit, trying to take most of the main movement of the cycle.A swing trader should be a generalist and a highly qualified specialist. He should perfectly understand the current market picture. At the same time, act clearly, quickly and flexibly, using the entire arsenal of your knowledge and tactics to work both in the trend and in the flat.There are very few such specialists on the market, but they are the ones who achieve outstanding success, and their trading account is constantly growing.In fact, swing trading boils down to trend trading. The main thing is to correctly identify the trend that you are going to trade, identify its beginning and join it.Trends - three different typesAs taught by old man Doe, the founder and inspirer of technical analysis, trends are of 3 types:Long-term trendIt can be seen on annual, monthly and weekly charts. But such trends are more suitable for strategic investors. Agree, we, small speculators, have to hold a position for months and years, waiting for its implementation, sitting out huge kickbacks, somehow out of hand. Of course, I admit that there are strategic investors among you. But this is not my style of trading.Medium-term trendIt can be seen on the daily and 4-hour charts. This is exactly what we need for swing trading. And this is exactly the trend that we want to take into work. The only point is that you should not try to look for a trend reversal before it happens. I have been beaten more than once for such attempts and it hurts a lot! Successful traders warn with one voice – "Never fight the trend! He can kill you." But we will talk about the rules of the trade below…Short-term trendIt can be seen inside the day on hourly, 5-minute and 15-minute charts. This is the domain of scalpers.  And it is interesting to us because it helps to determine the end of the medium-term trend and the beginning of a new one in the opposite direction.Read more: Dow Theory: Six basic principles of Technical analysisGeneral rules of swing trading and its advantagesWhat can be attributed to the advantages of swing trading?With the right input and output, we can get the most out of the medium-term price movement.We get the optimal number of transactions. One entrance-exit per day, allows you to avoid excessive psychological pressure.With an optimal number of transactions (unlike scalpers), we do not overpay the broker for the spread and commission.There is no need to monitor the market 24 hours a day, as a result, there is more free time.With the right exit in a sluggish, stagnant market, the chance to hang with a position on your hands is reduced to zero, you will never turn from a speculator into an investor.Now, a little bit about the general rules of swing trading. I will emphasize the general rules, since the trading technique itself is not the subject of this article. So, the rules:Before entering the market, make sure that you understand the direction of the medium-term trend well and are in its initial stage.With the right entry, your position should almost immediately move in a profitable direction for you.If the position makes a profit, but it has not reached its intended goals, move it to the next day.The opposite rule is that if a position brings a loss, do not carry it through the night. Close it at the first possible rollback and open a more profitable position (if the entry conditions have not changed dramatically) tomorrow.If the market offers you a bigger profit than you originally planned (as an example, the movement on the news), take it without hesitation.If the position is in a small plus, and you see clear signs of stopping, tighten the stop loss to reduce the possible loss or exit the transaction. Your goal is to minimize risks and transfer the transaction to a break-even state as soon as possible.Be able to wait for your profit. This point, at first glance, contradicts the previous one, but this is not entirely true. This is the skill of a trader (not for nothing is the topic of the article – the strategy of successful traders), in order to correctly determine the best moment to exit a deal.Speaking of rules, we must remember that a number of conditions are necessary for the successful application of this strategy. Namely, fast and clear execution of orders using "one-click" technology without slippage and requotes, low spreads, acceptable rates for transferring a position to the next day (swap technology), etc. All this depends on the quality of services provided by your broker.Read more: Demo account with a Forex broker: is it worth using?Trade successfully, earn money, have fun trading. You will succeed, you just have to want it!
Aug 06, 2022
How a trader's psychology can defeat his fierce enemies – fears and emotions
How a trader\'s psychology can defeat his fierce enemies – fears and emotions I'm not a coward, but I'm afraid. Of course, each of us has our own "butterflies in our heads", but there is something in common that unites us all. These are our fears! They significantly interfere with trading and poison the trader's life. And if one of you tells me that he is a "brave soldier Schweik" who is not afraid of anything, I will not believe it! Only idiots are not afraid of anything. And we have smart and adequate people gathered here.Therefore, today I will try to understand what prevents us from trading and talk about the psychology, fears and emotions of a trader.The key to success, as smart uncles and books written by them teach, is a profitable trading system, a good trading plan, discipline in the execution of transactions and compliance with the rules of money management. All this is so and you can't argue with it!But, there is one essential BUT – these are our emotions, and the psychological component of trading. We are not robots, but real people. Sometimes emotions get out of control and overshadow the mind that is trying to overcome them.What causes a storm of emotions in our heads? Most often, this is a primitive human feeling – fear! What is a trader afraid of?A simple person can be afraid of anything. Darkness, heights, loneliness... Yes, you never know what else… But the main fears of a trader can be formulated as follows:losing moneymaking a wrong dealmissing a profitable dealnot taking the profit on "paper".What consequences can our fears have for us? Early entry and exit, overexposure of a position – these are just a few unpleasant moments that may be a consequence of our fears in trading.Read more: What a novice forex trader needs to knowHow to overcome your fears?The psychological attitude of a trader is a great thing that can significantly improve (or worsen) your trading results. It depends on how we set ourselves up and what emotional signals will rush through our head… A lot depends!And first you need to deal with your fears and try to overcome them. I will take the liberty and offer you some solutions that help me psychologically tune in and cope with my trading emotions.How to overcome the fear of losing money?First of all. It is necessary to trade only on the money that you have already mentally lost. If the money you deposited is too valuable to you, the fear of losing it will never go away. It is better to start with the minimum possible amount, which means nothing to you (or at least, its loss is not critical for you). And gradually increase the deposit, taking into account your psychological resistance to the number of zeros on the account.Secondly. Even with a large deposit, trade with a minimum lot size. Until you feel that you are no longer afraid of losing money, put such stops (risks), the triggering of which will not cause painful sensations in the soul. Naturally, they should still be reasonable and competent, but we are now talking exclusively about their monetary equivalent. For example. If the comfortable amount of loss on a trade is $50 for you, then based on this, you need to calculate the number of points and the size of the position so that the loss does not exceed the amount of $50.Third. Never exceed the size of the allowable aggregate position and do not overload your deposit! Otherwise, you will get the following situation: a trader opens a bunch of positions, observing the allowable stop size on each one, and it seems to him that everything is fine. But when all this cumulative mass begins to move against him, he realizes that he is very close to losing the entire deposit, and then fear turns on. Then there is a series of stupidities and wrong decisions. That's all. The job is done – there is no deposit, and the fear of losing money settles in the trader's head for a long time.These tips rather relate not to the psychology of the trader, but to money management. But believe me, until you learn how to manage your capital, the fear of losing money will not go away.Read more: Forex problems – what is the "Burnout Effect"How to overcome the fear of making a wrong deal? Everything is simple. There are a couple of axioms:Only the one who does nothing is not mistaken.You can't be 100% right always and everywhere. Losing trades and getting a stop should be taken as necessary and unavoidable production costs. There is always a chance that we did not take something into account, did not notice something, or simply missed the danger warning signals.It is always necessary to find at least 3 reasons why you need to open a deal here and now. You can make mistakes in calculations, but psychologically it is much easier when a deal is opened not on a whim, but according to a clear calculation and plan.How to overcome the fear of missing a profitable deal or not taking profit?There can be only one solution – a plan, a plan, and a plan again. We plan to trade and trade according to the plan. Unfortunately, you can't think of anything else here. Plus, discipline in conducting the transaction. We have outlined the entry and exit levels and act on them according to our plan.Remember, the market is not going anywhere! He was yesterday, he will be tomorrow. And most likely, tomorrow there will be better opportunities for a safer deal. Therefore, take your time and do not be upset if you missed some movement. We have everything ahead of us.And finally, a few more general tips. Do not trade if you are upset, sick, have financial problems, or are not sure that you understand the market situation correctly.Read more: The role of luck and intuition in tradingI understand that I have given the most general recommendations regarding the psychology of a trader. But you have to fight and win with your fears.
Jul 26, 2022
The Libor rate. Is bargaining appropriate?
The Libor rate. Is bargaining appropriate? It was 2012, and nothing foreshadowed trouble. The global crisis of 2008 slowly began to subside. And then, like a bolt from the blue, the LIBOR rate scandal broke out.The British regulator FSA and the American CFTC have published data that in the period from 2005 to 2009, the British bank Barclays, along with Royal Bank of Scotland, Lloyds, HSBC, American Citigroup, Swiss UBS and German Deutsche Bank, actively tried to manipulate the LIBOR rate. Thereby hiding their own liquidity problems and earning good money on derivatives.But, as worldly wisdom says, everything secret sooner or later becomes clear. The fraud was revealed, and Barclays alone had to pay a fine of $454 million for its art.But this is already one of the final parts. And what was the essence of the question?What is LIBOR?The LIBOR rate (London Interbank Offered Rate) is a weighted average refinancing rate based on the interest rates at which banks entering the London interbank market lend to each other in different currencies and for different periods (from 1 day to 12 months).The LIBOR and EURIBOR rates are calculated at 11:00 GMT on the basis of applications for loan rates from 8-16 banks (selected by the regulators of the British Bankers Association and the Foreign Exchange & Money Markets Committee, according to the scale and reputation of the bank), for which they are ready to provide loans.  The five largest and five smallest bids are cut off, and the average value of the remaining bids is published on behalf of the British Bankers Association as the LIBOR and EURIBOR rate.Read more: What is the SOFR interest rate?What is the LIBOR rate for?Without going into the financial wilds, let's just say:The LIBOR rate is an indicator of the demand for liquidity in the banking sector, and the morning application reflects the demand for loans from a particular bank.Such financial derivatives (derivatives) as a simple interest rate swap and interest rate futures are linked to the LIBOR rate.Swaps allow you to play on the difference between fixed and floating rates calculated on the basis of LIBOR.Futures contracts with different maturities (3-month and 6-month) allow you to play for narrowing or widening the spread between these contracts.And to put it even simpler: the LIBOR benchmark rate shows the degree of confidence of banks in relation to each other.Large banks directly link loan rates for their corporate clients and mortgage loan rates to LIBOR.The essence of the scandalAs you understand, if something depends on something and something is tied to something, then there will always be kind fellows in expensive suits who will want to use it for their own purposes.This explains the desire of top managers of banks to influence the LIBOR rate to reduce losses, make profits and conceal the true state of affairs in these banks.As a result, many corporate clients did not count the profits on their assets, and the general public demanded to lynch these "fat cats". Agree, it's a shame to find out that mortgage interest does not depend on the situation in the economy, but on the machinations of a dozen dashing guys manipulating the rate.Read more: SONIA Interest Rate: calculation and applicationMoreover, it was not about a single case, but about the coordinated actions of 15-20 banks on both sides of the ocean for 4 years.We live in a world where capital rules. And it's no secret that large banks and investment funds employ people who are not distinguished by firm ethical principles and high morals.
Jul 23, 2022
Five principles of healthy indifference in the philosophy of trading
Five principles of healthy indifference in the philosophy of trading Who are we – traders? What are we doing and what are we doing? Where are we going, and what awaits us ahead?Questions, questions, questions... to which, unfortunately, there are not always answers.Well, talking about the meaning of life and your place under the sun is the topic of a separate article or even a series of articles. Today I don't want to take a swing at such global topics. Therefore, we will leave the discussion about the philosophy of trading and the profession of a trader for later, but for now we will talk about more mundane things – about the philosophy of trading.If you discard all the beautiful tinsel, then the philosophy of trading boils down to one simple thing – making money.And that's where the catch lies. The fact is that if you set making money as an end in itself, then you will not earn money in the market!A simple example.  You have set a goal for yourself – to make a 50% increase in the deposit per month. And then bam… You made a loss (within reason of course and within your money management strategy), or missed a good entry and a good deal, and the market ran away without you. I don't even know which is worse – getting a stop or missing a good move. In both cases, your worst enemies are turned on – emotions that begin to load you from the inside and put pressure on the psyche.And here comes to the trader's aid the philosophy of healthy indifference and its motto – the magic words "I DON'T CARE!"Five principles of the philosophy of trading, when everything doesn't matterI hear that others are threshing money so that only have time to substitute bags. And I don't care, I tell myself. Firstly, it is not a fact that their words are true. And secondly, the principle works in the market: do not lose – consider that you have made money. And it doesn't matter how many points I earn and how much money I take home $1 or $10,000 today. The main thing is not to lose.I hear that others are taking the whole movement from start to finish. The nasty mosquito of greed itches in the ear: "You closed earlier and didn't make a profit." And figs with him! I take a fly swatter and swat this annoying insect. Greed leads to poverty.I hear that others use a bunch of strategies and masterfully earn both on trend and in correction. So what? I don't care about all this! I choose one or two templates and trade only them. It's like hammering a nail every day for a month. In the first week, your fingers will be broken, and the nail will go crookedly into the board. But by the end of the month, you will learn how to score it with one punch blindfolded and in the dark. In no case do I urge you to stop in your development as a trader. But new strategies should be introduced into your arsenal very carefully and gradually.I hear that others always have a ready answer where the market will go and which way to trade. Well, figs with them! If I do not understand what is happening in the market, I will stay "on the fence" – the deposit will be more secure. And let me miss a good move, but I will enter the market only when there is an understanding of what is happening and at least 3 reasons to open a deal here and now.I hear that others are trading every day. And I don't care about that either! Who said that you need to trade every day? It is necessary to trade according to a pre-planned plan and only when there is synchronization with the market, and not because you just need to trade.The list can be continued indefinitely. Whether you agree with me or not is up to you. But personally, it really became easier for me to breathe in the market when I changed my goal-focused trading philosophy to a non-optimistic one.Read more: Forex problems – what is the "Burnout Effect"I'm sure each of you has your own trading philosophy. Do not take the trouble and share your thoughts on this topic in the comments.For today, I say goodbye to you. And let healthy indifference be only in your trader philosophy, and in life you will remain an active and responsive person.
Jul 23, 2022
Is Forex a casino? One, but a global difference
Is Forex a casino? One, but a global difference You can often hear from people who have lost money on forex that this is a casino. Well, let's figure it out and look at the root of the issue.What does a trader do? He opens a position hoping to earn.What does a casino player do? He makes a bet in the hope of winning.What does an ordinary businessman do? He buys a barge of bananas and at the same time hopes that half will not rot on the way and, by selling the rest at a higher price, he will make a profit.What unites all 3 categories? Risks and risk management!We do not trade currency pairs and exchange instruments on the market! We trade forecasts and probabilities of the occurrence of an event.Now imagine a card player who sees the opponent's cards. How many times do you think his chances of hitting the jackpot increase? And add to this the opportunity to put as much money on the line as you are willing to lose painlessly. Or don't bet at all if you see that the opponent's cards are stronger. At the same time, you can withdraw your money and exit the game at any time. This is what distinguishes stock speculation from casinos. A professional market speculator has the opportunity to risk his money only when the probabilities and chances are in his favor!What happens next? Where does money come from and where does it go in forex? Yes, they are not going anywhere. They just flow from pocket to pocket. I mean the pockets of traders, not the pockets of unscrupulous brokers who initially set out to rob you (we have already discussed this in a separate article).It's all about emotions and banal laziness. Success in forex, as in any other business, comes only to those who are used to working hard and hard. To those who polish market skills and do difficult, and sometimes tedious work every day.What does a casino player do? He risks his money on contradictory odds, relying on luck and luck. And what does a professional trader do? He risks his money only when the chances and trading opportunities are in his favor, while not forgetting to manage his risks (this is probably the only thing we can manage 100% in forex).As a result, those who invest their time, energy and effort in mastering stock trading receive rewards from those who do not. These lazy people are the loudest and shout that forex resembles a casino.This is how our life works. And what about our life? Our life is a game!Read more: What is Forex and how does it operateGiven all of the above, what is the conclusion?For those who came to the market for fast money, forex is a casino. And for those who came seriously and for a long time – this is work as work.
Jul 22, 2022
Why investors choose to earn money on PAMM accounts
Why investors choose to earn money on PAMM accounts Earning on PAMM accounts is interesting, first of all, to those who have liquid capital. Money, as you know, should work. And make money. You can, of course, use the good old way and put your savings on deposit. But, alas, decent banks don't need money now ... It's ridiculous to say – a famous French brand with stars flying up on a green background now has 1.5% per annum on deposits in dollars. It's like putting it in a safe for storage… So the alternative in the form of PAMM accounts is very useful now.PAMM account (Percentage Allocation Management Module) – this is a kind of trust management. The name speaks for itself – you trust a Professional to manage your capital. With the development of banking and IT technologies, some convenient functions that were previously unavailable have become possible. For example, the manager now does not need to press 5 buttons and his sixth one if he has 5 accounts in management. All deposits are combined into one pool. Moreover, the size of investments from each investor can be completely different! Profit (as well as loss) is distributed proportionally to the contribution.PAMM technology appeared a long time ago. The investor can observe the actions of the manager in real time. Moreover, there is a function of instant disconnection of a separate account from the manager's management. Each client can individually set the maximum available drawdown level and stop loss size for his deposit. In addition, the bank guarantees that your funds will be available to the manager only for trading operations! Agree, this is important!In addition to the trading platform itself, the broker provides professional reporting for traders and clients. And also makes payments between project participants.Everything is worked out and reliable. But! There is a big "but", which I, as a professional and just as an honest person, cannot but say. Earning on PAMM accounts is an activity with a fairly high degree of risk. This is not a safe ... do not believe anyone who promises guaranteed profitability in this case. Or a profit of 100% per month. It's impossible!  Such "managers" have seriously lame money management and risk management.Read more: What is a PAMM accountWe have come to the point where we started – the capital should be liquid. In no case, do not take a loan, do not mortgage real estate and do not use the last money for such an investment.
Jul 22, 2022
Forex problems – what is the "Burnout Effect"
Forex problems – what is the \ From love to hate is one step.This is what our conversation will be about today.At the beginning of your trading career, you are burning with the market, you are interested in everything and you are ready to work 20 hours a day. You are full of optimistic hopes, expectations of freedom and financial independence. That's great!But at some point…You are no longer able to trade consistently and profitably. You understand that trading, the market and everything connected with it, are tired of you to hell! There comes a state in which you completely lose interest in forex, feel accumulated emotional and psychological fatigue and physical exhaustion. You don't want anything and nothing pleases you. You start hating yourself, the market and the whole world around you (as if he is to blame for something).Is this condition familiar?I "congratulate" you! You have a "burnout" effect, you have fallen into one of the psychological traps of trading and you have forex problems.If you think that you are alone in your worries, I can reassure you – the vast majority of traders have been through a similar state. Someone had the strength to overcome this trap in forex, and someone gave up trading forever…Personally, during the time of trading, which is almost 13 years, I wanted to quit forex 2 or 3 times and send everything to hell. And the number of guys with whom I have been in close contact and who have given up trading is in the dozens!But it's not that bad.  Let's dig into the depths and try to understand together WHY a trader's emotional burnout occurs, HOW to recognize its symptoms and WHAT to do.To treat the disease, you need to know the reasons that led to it, diagnose the first signs of a possible disease in time and prescribe the right treatment.Read more: Emotions in the market – how to get rid of them?Causes of "burnout"Monotony of trading. Trading is a difficult, boring, monotonous activity. Every single day you, as a robot, do the same thing. Market analysis – preparation of a trading plan – implementation of the transaction. No creativity for you, no flight of fancy for you, no diverse tasks for you. In a word – routine!Market uncertainty. It should be understood that you are not trading currency pairs, but the probability of the occurrence of a particular scenario (the price will go up or down). And no matter how well you do your homework and preparatory work, there is always a chance that your script will not work. And this in turn leads to the feeling that you are not in control of the situation, do not achieve the desired result and as a result – disappointment.Workaholism and isolation. Trading is an individual activity. Forex works 24 hours a day, 5 days a week. And if you follow the market all this time with a break of 2-3 hours for sleep, then you simply do not have time and energy for everything else. Your whole life is spent at the monitor screen, in fear of missing your best deal. As a result, you sacrifice other areas of your life for the sake of trading. Turning into a kind of reclusive recluse, who has only charts in front of his eyes.Pessimism in life. If a negative view of yourself and the world around you incinerates you from the inside and leads you into wild despair, you give yourself an internal installation at the start that you are a loser and you will not succeed. Thoughts materialize, and you get what you were thinking about – another failure.Health problems. Incorrect regime, problems with sleep and chronic lack of sleep, lack of physical activity (you spend the whole day in a chair) sooner or later lead to health problems. And when there is no health, nothing pleases, you don't want anything and you don't need anything.Symptoms of "burnout" at an early stageYou are haunted by the feeling that a new day will not bring anything good, that a new trade (even before the opening of the transaction) will be unsuccessful.It is morally difficult for you to trade. There is a feeling that you are wasting time and effort on a completely useless activity.You feel physically tired. You are deprived of vitality and energy.You are tired of everything you do. The idea that you have to trade again depresses and irritates you.You lock yourself in and stop communicating with your family and friends.You are trying to get at least some kind of buzz from life and begin to "jam", "drink" or "sniff out" problems.Read more: Trader's suicide. Psychology of trading or what to do if you lose on Forex?What to do with "burnout"?Difficult question! And there are no universal solutions. Emotional burnout in trading is dangerous because in the wake of disappointment in trading and forex problems, you can completely ruin your whole life. Therefore, it is necessary to solve this problem in a complex.I will try to outline banal tips that we all understand and know, but do not always follow.In relation to tradingFirst of all, we need to stop trading. Maybe for a week, maybe for a month, or maybe for six months. Then, when you cool down and relax, take a piece of paper in a calm atmosphere and formulate your goals, objectives and expectations:What are your trading goals for the month, for the week, for the day? Mathematics is a strong thing and helps in setting goals perfectly. For example, you want to earn 20% per month from your deposit on forex. Divide by 4 weeks, we get 5% per week. Divide by 5 working days, we get 1% per day.Ask yourself the question, how realistic and doable are the goals you have set? Will you be able to achieve them by following your own rules of money management and risk management?What changes do you need to make to your trading system in order to return to trading and trade without stress? For example, reduce the size of a position, stop or profit to a value that is comfortable for you. Review your market analysis, adjust the definition of entry and exit points and position tracking.Where can you find communication, support and feedback with other traders? As I have already said, you are not alone – 95% of traders have experienced the same problems in forex to one degree or another and have gone through the "burnout" effect.Applied to life in generalLife is multifaceted and interesting, you should not focus on one trade. Set yourself clear boundaries. Every day, set aside a certain time for trading, and then stop and turn off the computer. Set aside time for sports (when was the last time you were in the gym?), get a hobby, chat with family and friends, and just walk in the fresh air. Occupy your brain with thoughts about something good and pleasant, besides trading.Read more: Why do 90% of traders lose on Forex and binary options?And I am 100% sure, then you will not burn in the market and you will not need firefighters!
Jul 20, 2022
Message sent successfully.
We will contact you soon!