Forex Trading and The London Open
A thorough Forex trading education must include an understanding of the effect market timings can have on trading and liquidity.
Good trading opportunities often arise at the time the London market opens as this can be one of the busiest trading times of the day.
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
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!
If there is divergence on the 4 hour, 1 hour or 15 minute charts on the MACD indicator, look for other signs that 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.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Is the market approaching a key fundamental announcement?
As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
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 formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.
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. - 23199
Good trading opportunities often arise at the time the London market opens as this can be one of the busiest trading times of the day.
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
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!
If there is divergence on the 4 hour, 1 hour or 15 minute charts on the MACD indicator, look for other signs that 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.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Is the market approaching a key fundamental announcement?
As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
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 formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.
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. - 23199
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For a free candle & chart pattern recognition reference tool click here: Candle Chart Tutorial See how to use trendlines to get an optimum trade entry point: Trendline Break
posted by X - Men @ 2:15 AM
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