Forex Trading SetUp; Doji-Let the market decided

Today we will discuss about DOJI. Below you can see EURUSD weekly price movement. The second candle from right is DOJI, which surrounded by light blue box.

DOJI, do you know about it? 

DOJI is undecided price action. 

The trader don't have a clear picture where the pair will go. It's not because the bullish and the bearish have the same strength. The fact is trader wait for a confirmation. 

Because DOJI is undecided price action, where should the DOJI appear? 

It's like you don't now which road to pick, it's most like choose one from two choices. 

It's like choose BUY or SELL. So where's the best place to choose open BUY or open SELL? 

My answer is at the price level. At the support or resistance. Ok let's take a look EURUSD chart again. This time I will minimize it. 

Bingo. The DOJI appears exactly at the resistance level. Will it break the resistance or pull back. This what I mean by undecided. 

To trade DOJI, we should wait until the price break and close below the lowest price of the DOJI candle stick or break and close above the highest price of the DOJI candle stick. 

Today, April 13 2016 EURUSD break the the lowest. We can't trade it now. We should wait till the week finished. If the price close below the lowest DOJI candle it will trigger our sell signal. 

ENJOY YOUR TRADE 

Forex trading tips: How to choose which pair to trade, the YEN example

April 4 to 8 2016 the JPY is strong again EUR, GBP and USD.
1. EUYJPY

2. GBPJPY

3. USDJPY

If you have to choose, which pair will you trade?
Here is my step:
1. Get to know what the market fell about the pair

To do this I use three different moving average, 200 MA, 50 MA and 20 MA. Bullish if the price is above all the three MA. Bearish if the price is below all the three MA. Try look at the three pairs. Do you know which pair to trade? Yup you should trade EURJPY or GBPJPY. 

2. Is there any violation at the price level (support or resistance)

This is my strategy, I called it MARS. It based on a breakout or a violation at the price level. Because we fell bearish, we looking for sell opportunity then we must find breakout at the support level. Can you see which pair is breaking out it support? GBPJPY! 

3. The biggest pay check

Because we have the pair, I wil discus this topic next time. 

I have open sell position this morning. My target is the next support around 148.00

ENJOY YOUR YRADE.

Forex Trading Tips: Understanding Market Psychology

Psychology is my favorite books topic.
I read so many psychology books, for what, to get to know my self and to understand others.
The point is, psychology will help you to understand what other people do and why they do that.

In forex trading (stocks or option), because we are a single player, with a small amount of money we can't move the market. What we can do is to be a follower, follower of the big players.
To follow them, we need to know what they think and what they fell about the market.

To do that, the idea is using three different moving average. 200 moving average (long term), 50 moving average (medium term) and 20 moving average (short term).

Before we continue, do you know how to use a single moving average?
If you use a single moving average to trade, the buy signal appears when the price cross from below the line to above the line.

 Easy and very simple strategy.

When using a single line, the market psychology turn form negative to positive by crossing the line. In the picture above I using 20 MA as an example. Now the short term trader has a negative feeling about the pair, they predict and push the pair lower.
What if other trader using a different Moving Average, their psychology will be different. Take a look at the picture below:

Let see what other group though about the pair.
The medium term trader, who used 50 Moving Average has the same perception about the pair. They now think that the pair will go down further.

But wait, the long term trader has a different perception. This group think that the pair was corrected and soon will be rise up again.

The scenario will be like this:
1. the price is above all the three moving averages
This mean that most of the trader believe the pair is moving up ward. They think BUY

2. the price is below all the three moving averages
This mean that most of the trader believe the pair is moving down ward. They think SELL

3. the price is below two of the three moving averages

4. the price is above two of the three moving average

This technique help you understand what other traders think about the market (pair).
Remember, this method just to know what other fell.
BUY and SELL is up to you. It's depend on your strategy.

ENJOY your trade.

Best Time to Trade Forex : The End of The Week

Many trader try to find when is the best time to trade.
Do you have one?
In the first hour of the market open?
Which market?
Japan, wall street?
Many trader believe that the overlapping between European market and US market is a good time to trade every pairs. Why because there is a lot of trader around the world who joining the market. Lot of traders mean lot of money.

For me, who do not know what happen to whole market, it very difficult to trade around that time. As we know forex market is very volatile market.

To avoid this very volatile market, some traders came up with a solution. They said " The best time to trade is at The End of The Day".

i'll give you an example why these two approach is difficult to applied. I'll use Euro to explain it.

First, 4 hour time frame at EURUSD

The red box is EURUSD 4 hour price movement at April 1 2016. At the European open, the pair is rising up. When the US open the pair continue to climb, but it fail to maintain the price. Around this overlapping market, the pair is going down but at the end it rising again. I can't handle a such market like this. Perhaps some traders can.

Second, EURJPY daily price movement

Trade at the end of day? March 31 2016 the pair break the resistance, but the day after, April 1 2016 the bar engulf the previous bar. Volatile market.

To avoid getting eat by the market volatile, i suggest you to trade weekly time frame.

I'll use EURGBP as example

Inside the red box, is the EURGBP price movement start form March 28 to April 1 2016. The first day of the week the pair going down, but the last three bar give you a very different picture.

Below is weekly EURGBP chart. The last bar break the 200 MA (red dotted line). It trigger the buy signal

Then why weekly time frame is better than others time frame. WEEKLY TIME FRAME SUMMARIZE WHAT HAPPEN IN THE WHOLE WEEK. There is a lot event, you can't analyze such a lot of news, information. The weekly time frame do it for you, just by a SINGLE bar, you will get conclusion how the market response to that news and information.

Enjoy your trade.