Trading and Investing in the Forex Markets Using Chart Techniques
The very nature of trading and investing makes it a difficult business. The uncontrollable human emotions that rotate around greed, fear, and hope, are the elements of the human reaction in the markets that form the same repetitive scenarios time and time again.
This book demonstrates how a few relatively straight forward techniques can create a technical plan that will eliminate the emotional element. It will show you how to find opportunities in the market that are ever present and help to prevent trade and investments becoming subject to irrational thinking brought about by heightened emotions during moments of volatile market conditions.
Finding opportunities within the financial markets is about interpreting the price action. This book demonstrates that by observing certain chart techniques, markets that are changing from bullish to bearish and bearish to bullish can be interpreted in light of the change in market sentiment and produce early warning signals. Entry and exit points can then be located and positions that are already in the markets can be monitored for signs of change or weakness. This book will equip you with the skills to create a plan that can be forged and implemented to make the entire process of trading and investing easier.
By reading this book you will be introduced to some of the familiar chart techniques in such a way that it will not take long to understand how best to apply these techniques to your own charts and study them for potential market opportunities. This book does not dwell on the already known signals and techniques but instead concentrates on demonstrating their use and how to confirm the signals with a variety of techniques that have stood the test of time, pulling them together to create a technical picture that visually displays a change in market sentiment and a plan for trading and investing the markets.
These techniques are covered in a step-by-step process through the chapters of the book that include exercises to test your knowledge as the book proceeds. By learning to read charts you too can find great trade and investment opportunities.
Gareth A Burgess has over 10 years experience applying chart techniques to investment analysis creating technical views and strategies and is a dedicated private investor himself. He is founder of the chart workshop (a href='a provider of technical views for investors. His current research interests are on moving average based signals from which many trading systems are based today. Burgess studied at the University of Liverpool and the University of Konstanz, Germany, and graduated with honours. Burgess also went on to complete a Masters research degree, M.Phil.
Trading and Investing in the Forex Markets Using Chart Techniques
1 Candlesticks = Signals INTRODUCTION
Traders and investors have been looking at charts for well over 85 years as Edwin Lefe'vre wrote (1994, p. 61), "I should say that a chart helps those who can read it or rather who can assimilate what they read". The problem today, however, arises not only from the interpretation of the chart but also how best to apply the mass of indicators and what indicators are best applied. This book and the techniques that are discussed set out to demonstrate how to use a chart in the context of the market price action, that is, what to look for on a financial chart and then to place the signal into some form of technical context that will make it possible to gain insight very quickly into a particular currency market, thus saving many hours of fundamental research. This book demonstrates chart analysis that can give you, as a technical trader, an edge for entering a position in the financial markets, allowing the position to be monitored on a daily basis for signs of change or weakness. The purpose of this book is not to teach you how to trade the markets, but instead how to find opportunities in the markets that present themselves as trade and investment opportunities. The signals, the warnings about market sentiment become apparent once you understand how to apply some of the familiar chart techniques that have stood the test of time, examples made available in such a way that it will not take long to understand how to apply these techniques to your own charts and find trade and investment opportunities. Regardless of whether you are a part-time trader or full-time trader, your only concern is to find important signals that represent opportunities that will lead you to a profit. The daily market price action that appears on charts in the form of Japanese candlesticks or patterns are, for whatever reason, the result of the actions of market participants, but a technical trader is not interested in the crowd's reasons for doing what they do, but instead the result of their buying and selling. It is, however, during the buying and selling that the emotional responses of many market participants are heightened and these emotionally loaded responses to the market occur time and time again and are categorised as FEAR, HOPE and GREED. In light of the vast amount of information that is available via the internet or news channels, these emotions are quite often heightened to such an extent that it is almost impossible to make a clear decision leading in many cases to badly executed trades. The opinion of some expert somehow gets the message across that undermines your objective thinking, and it is ultimately the recommendation that is the technical trader's worst enemy. To invest in the financial markets it is absolutely necessary to create your own plan based on your own analysis. A trade should be executed from a position of power and confidence not from uncertainty or based on feelings. In this book the techniques are applied in a relatively straightforward manner so as to create a technical picture on which to base an investment decision that does not rely on any outside recommendations but instead on your own visual analysis of the markets. A chart should be used to identify the opportunities that are ever present in the financial markets, monitor long-term investments and help to plan an investment decisively. Charts should also be used to find the appropriate level at which to enter or exit a position. Chart analysis is a cold hard study of the markets, it is a study of the price action and nothing more. If the closing price of the Euro continues to move higher in the week then foreign exchange traders and investors will be buying that currency, which is a fact, in spite of what the fundamental and economical reasons may be. Int