Friday, December 12, 2008

How I Use Fibonacci to Identify Key Support and Resistance Levels


The definition of synchronicity is meaningful coincidence. In the methodology
I use to trade and advise clients, I look for the “meaningful coincidence” of price
parameters and time parameters that are projected using the ratios derived from
the Fibonacci number series.
These coincidences help me to define low-risk high-probability trading setups.
In this first tutorial, we are going to start with how we apply these ratios to
price levels.
First, let’s look at the Fibonacci number series.
Number Series:
0,1,1,2,3,5,8,13,21,34,55,89,144,233, etc.

This series starts with zero and one and goes on to infinity by adding the prior
two numbers to get the next number in the series. Thus:
0 + 1 = 1
1 + 1 = 2
1 + 2 = 3
2 + 3 = 5
3 + 5 = 8
and so forth...
As you move further out in the series, the constant that is found when you divide
one number by the next is the ratio of .618 or what is commonly known as the
“golden ratio."
For example, 144 divided by 233 is .618.
This ratio, and others derived from it, is actually what I use to analyze the market.
You may be wondering what in the world is the significance of these ratios? Well,
we won't get into that here because we can get into some rather lengthy
discussions. What is most important about these ratios is not where they come
from and why they work…but the fact that they continually show up in both
nature and the marketplace.

The ratios that I have found work best in my analysis are:
.382, .50, .618, .786, 100, 1.272 and 1.618
Sometimes I also use .236, 2.618 and 4.236 when appropriate.
There are three types of price calculations we make from the key highs and lows
in a particular market. These are price retracements, price extensions and
price projections or objectives.

We make these projections to identify potential price support and resistance.
We pay special attention to an area or price zone when we see the coincidence
of at least three or more price relationships come together within a relatively tight
range. This is called a price cluster. If you were to learn only how to use price
clusters effectively, you will greatly improve your trading. Please understand that
this type of analysis is not stand-alone. It's capable of giving you some great
results, but you must look for patterns to set up and confirmatory price action at
these price clusters before there is a trading opportunity.
(The following chart examples were done on a 60-minute soybean chart of the
November 2000 contract (SX0))

This methodology can be applied to both stocks and futures and all time
frames therein. It works very well in all liquid stocks, stock indexes and
commodities with adequate price history.
Retracements: Price retracements are calculated by measuring prior highs to
lows or lows to highs and then determining the Fibonacci ratio retracements of
this range. The ratios most often used for retracements are .382, .50, .618 and
.786. In the following example, we measured the 446 low to the 515 1/2 high and
ran all the price retracements from that low to high swing. This showed us
potential support at 489, 480 3/4, 472 1/2 and 460 3/4, which coincided with the
.382, .50, .618 and .786 retracements.


Trade and scalp the market ForexGen has the pleasure to announce the availability of both Dealing Desk and No Dealing Desk Platforms. No Dealing option provide traders with direct access to the best bid/ask prices through multiple bank access.

No re-quotes & No dealer confirmation is the main characteristic of the no dealing option made specifically for “scalpers” and active FX professionals. Absolute freedom to trade during news and economic events. The no dealing desk option allows traders to place entry orders inside the spread! Unlike competing FX firms, ForexGen offers traders all the advantage of a “no dealing desk” option.

Wednesday, December 10, 2008

Engulfing pattern


Forexgen and the Harami pattern is the reverse of the Engulfing pattern. The Japanese word harami means pregnant or body within.

Recognition Criteria:

  • A long body followed by a shot body with opposite color.
  • A short body is completely within the prior day's long body.
  • The color of the second candle (the baby) is not important.

Harami pattern

By Forexgen Platform in Harami pattern, if the small candle is a doji, the pattern is referred as Harami Cross. It is an important reversal sign, especially after a long body in a downtrend.

Recognition Criteria:

The second day's open and close are the same (Doji).

The Doji is in the range of the previous long day.

The long day appears within a trending market.

Wednesday, November 26, 2008

Why you should consider using a mortgage broker:


Mortgage rates and fees vary from lender to lender, and it's not always easy to compare all the details to find the best deal. Mortgage brokers help consumers sort through all those details and find the best mortgage solution possible, often through resources and connections that an ordinary consumer does not have access to. Using a broker can save both time and money. The broker is very familiar with the industry, and can be a valuable asset to a home buyer looking for a good deal on a mortgage. In addition to having substantial connections, the broker will have good insight into the process and how best to qualify. The broker will often have close connections with lenders, who view a good broker as a valuable customer and will sometimes make special rates or discounts available to brokers that are not available to the general public because of this leverage.

Because mortgage brokers make the process simpler for their customers, many loans in Australia are initiated by brokers. There are many reputable brokers in every state. Choose one with a good reputation and that is in good standing with the Mortgage Industry Association of Australia, a self-regulating body that imposes a set of ethical best practices on all of its members.

Look for an independent and unbiased broker. Of course, one expects a broker to receive a commission for their services, but some brokers attempt to sell mortgages with high fees that are not in the consumer's best interest, in order to receive higher commissions. The Australian Securities and Investments Commission, has cracked down on brokers that advertise that they are impartial when they are not. The ASIC recommends that if a consumer plans to use the services of a broker, to first look around to get an idea of existing rates, to be informed enough to know if they are receiving a good deal.

In the past, there has been some reluctance to use mortgage broking services because of the lack of regulation. Financial services of all types tend to be heavily regulated, and for good reason. Consumers must be protected against unscrupulous and predatory operators. And make no mistake; there are predatory mortgage brokers, just as there are predatory members of every segment of the financial community. Nonetheless, most are honest and provide a useful service. And more recently, there has been significant attention on the mortgage broking industry, and Australia is in the midst of a regulatory overhaul designed to keep mortgage brokers on an even keel.

How To Find A Forex Broker That Won`t Rob You Blind:


It`s not always easy to know what to look for in a forex broker, especially in any market, much less a market as complex as currency. But, if you want to trade in the market you need a good firm to work with. While it might be tempting to simply ask the brokers what they can do for you, you can`t always depend on them to give you a straight answer. So instead, I`ve put together a few things to consider when choosing your forex broker. You will want a forex broker that has low spreads. The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time. Since forex brokers don`t charge a commission, this difference is how they make money. Low spreads will save you money.

Along with this, you should be looking for a forex broker attached to a reputable institution. Unlike equity brokers, they are usually attached to large banks or lending institutions. The firm should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).

Once you`ve narrowed your choices down to brokers that won`t cost you too much, and that are reputable, consider the trading tools that they are offering you. Forex brokers have many different trading platforms for their clients, just like brokers in other markets. These often show real time charts, technical analysis tools, real time news and data, and may even offer support for the various trading systems.

Before you commit to any one company, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a forex broker who will give you everything that you need to succeed.

The next item that you will need to evaluate carefully is the number of leverage options your potential partner has. Leverage is a necessity in forex trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your forex broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits.

If capital is not a problem, any forex broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs.

Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage.

The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the partner you choose has the right leverage, tools, and services for the amount of capital that you are able to work with.

A brokerage firm that meets all of these needs should be a good forex broker for you, but you still need to be certain that they are honest. Dishonest brokers can be prone to prematurely buying or selling near preset points (commonly referred to as sniping and hunting) or may indulge in other habits that will cost you money.

Obviously, no brokerage firm admits to doing things like these, but there are ways to know if they have. The best ways to find out more about your potential forex broker is to talk to fellow traders. There is no list or organization that reports dishonest activity, but a visit to online discussion forums, or a simple conversation will often reveal who is an honest forex broker.

You should also watch to see if a brokerage firm has strict margin rules. Since you are trading with borrowed money, your forex broker has a say in how much risk you are able to take. You agree to this when you sign a margin agreement for your account. This means your firm can buy or sell at his discretion, to cover the brokerage firm's interests, which could have repercussions for you.

Say you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low point. This action on their part can cost you dearly. You can only find out whether the firm is prone to this kind of activity by talking to other traders. Being informed on all aspects of a forex broker before you make the decision to trade with them will allow you to start trading the forex market with confidence.