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Patterns on Forex - myths and reality
The existence of patterns in the Forex market they say is not the first year. There are supporters of both points of view, trying to prove his innocence. Today megafx.ru we will try to analyze the real pattern, to understand how to benefit from their use in trade?
First you need to decide what a market pattern, the wait is worth and what is not. Not read for yourself what the pattern on Forex, we will not work on consistently to look into the matter.
And so, from the patterns we should expect:
1. the probability of the predicted result above 50%;
2. sustainability over time;
3. the presence of a strong "Foundation" on which to base the pattern.
The pattern should not expect:
1. the manifestation of the expected outcome of an event in 100% of cases;
2. constant in time probability;
3. eternal relevance in the market.
Decipher more what was listed above. When a sufficient number of measurements (e.g., transactions) to be able to talk about statistics, we expect the result to be achieved, more than 50% of cases. Naturally, the higher the probability of a positive result for us, the more looks Forex pattern.
Sustainability over time is important because few people are satisfied with a certain sequence, which was shown a week, and then disappeared. Speaking of "Foundation", we must understand the causes that served as the basis for the emergence of regularities. We can assume in this case that while the causes remain relevant, the sequence will continue.
It is important that the pattern is not 100% result in transactions! For example, you can find on the market a feature that will manifest itself in about 70% of cases. This possibility will already be quite enough, that would surely earn in the market.
Of the constancy of the probability to wait, and that means in one month we can get 65% profitable trades and the other 83%. Eternal relevance patterns also looks doubtful, and the market is changing and working conditions on it, that still limits the "shelf life" of any found on the Forex sequence.
The types of patterns on Forex
Let's look at a few options of patterns that will help to make money, but first you need to think about what types of sequences can occur in Forex:
• one and the same event at the same time
• the pattern is one trading tool
• already formed patterns
• seasonal features.
For example, a flat in the Asian session is a pattern in time, as manifests itself at certain hours in the day. There are features in the behavior of market prices single tool for example currency pair. There are on the market and has already formed other traders patterns that are nothing like market patterns.
For example, you can remember these patterns: Head and shoulders, figure, Flag, Triangle and so on. If you remember the figure Head and shoulders, in the formation of such a situation in the market increases the likelihood of breakdown price support level, which means a trend reversal. This is the market pattern, which was seen by traders and formulated.
Can meet market features, which appear in certain seasons, for example, only in the summer.
Flat in the Asian session
Many years ago traders noticed that during the Asian session, trading instruments, including currencies of countries whose markets are at this time closed, moving typically in the range corridor. This means that more than likely is at this time of day calmer market than the trend.
During operation of the Asian markets is more likely to flat than a trend.
A pattern very fond of speculators who decided to use the situation to trade in the breakout direction, but rather Bouncing off the walls of the price channel, as shown below.
Were created a trading system designed for that price, reaching the border of the channel, will unfold in the opposite direction. Such traders are called scalpers night, and they work successfully to this day. In a separate article you can read about the intricacies of night scalping.
Pattern - news on Forex
Another example relevant to this day a trade on the market when important news are released. Thanks to economic calendar currency speculators know in advance what day of the week and at what time will the certain news that affect the exchange rate of different currencies.
We can't know in advance what type of will be the news and what market impact it will produce. On the other hand, we know exactly when the market price may start to move quickly up or down, and this is useful information. Let's consider the way how you can capitalize on regularities that goes something like this:
Knowing when it is important to market news, we know when to expect a sharp price movement. In other words, during the release of important news, the price often starts to move quickly up or down than to stay in the same position.
News that can be considered important for Forex:
• the decision on interest rates,
• unemployment,
• the head of the U.S. Federal reserve,
• nonfarm Payrolls,
• accompanying statements of banks of different countries,
• conference of the ECB head,
• the consumer price index.
One of the options to take advantage of natural market response to the emergence of important news is the pending orders right before the release of the information. This should be done before a news release, setting a Sell Stop and Buy Stop a short distance from the market price, for example, 10 points.
It would be nice just to set Take Profit, as price may start to move very quickly, and when trying to lock in profits, many of which are lost because of requotes. If the price does not reach Take Profit, and obviously begins to unfold, then it is better to close the market.
Before trading on the real account latest on demo account impact of certain news to the market, choose the ones which have the greatest pressure on the price. Especially noteworthy is the statement of the U.S. fed and Nonfarm Payrolls.
Market pattern should be the Foundation
You may eventually be able to find other patterns, but remember that such findings have to be substantiated. If it is not clear why there was a particular sequence, you should be careful, it is likely that our observation applies to the category of short term patterns.
Based on the assumption that during the Asian session the more likely sideways than trending, on a common logic. Once the markets of Europe and the United States are not working at this time of day, and demand for European currencies and canadian money is greatly reduced. Further, it is easy to understand that in this regard, the movement of these tools slows down.
The effect of important news on the market, too, has its own rationale. At the same time change some of the factors that affect the value of the instrument. Natural is the desire of investors to react to new data that could change the balance of power. It turns out that while there will be developments that might affect investors, the market will respond harshly to the release of new data.
Market Forex patterns, of course, exist. But very few find such a sequence and make sure that it will suit us for a long trade. Will have to adapt, to figure out a way to maximize the use of a particular feature in the behavior of prices. The examples in this article, I hope it became clear what could be the laws and what they are useless for a trader.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 417
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