Forex Trading and The London Open
Part of your Forex trading education should include a study of the effect market timings can have on trading and volume.
One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
About 15 to 30 minutes before London open check the answers to these questions:
MACD indicators on the 4 hour and 1 hour charts - if they are not going in the same direction exercise great caution!
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.
On the 4 hour chart 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.
Look to see where price is in relation to the 200 Exponential Moving Average (EMA) on the 4 hour, 1 hour and 15 minute charts. If price is above the 200 EMA on the 15 minute chart but below it on the 4 hour and 1 hour charts, then price is bucking the trend and you can expect it to go the other way at some point. (The opposite will be true if price is below the 200 EMA on the 15 minute chart but above it on the higher time frames.)
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
Increase your Forex education by carrying out this kind of analysis around the time of the London open.
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. - 23204
One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
About 15 to 30 minutes before London open check the answers to these questions:
MACD indicators on the 4 hour and 1 hour charts - if they are not going in the same direction exercise great caution!
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.
On the 4 hour chart 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.
Look to see where price is in relation to the 200 Exponential Moving Average (EMA) on the 4 hour, 1 hour and 15 minute charts. If price is above the 200 EMA on the 15 minute chart but below it on the 4 hour and 1 hour charts, then price is bucking the trend and you can expect it to go the other way at some point. (The opposite will be true if price is below the 200 EMA on the 15 minute chart but above it on the higher time frames.)
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
Increase your Forex education by carrying out this kind of analysis around the time of the London open.
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. - 23204
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 @ 2:14 AM
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