Forex Trading and The London Open
As part of your Forex trading education, you need to examine and understand the effect market timings can have on trading flow.
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.
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
About 15 to 30 minutes before London open check the answers to these questions:
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!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
Looking at the four hour chart, ask yourself, what is the overall trend?
Using the last swing high and swing low, use your Fibonacci tool and note the retracement and extension levels and see if price is approaching any of them.
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.)
Are any fundamental announcements due?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
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
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
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 surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
Finally, the trader learns the emotional and mental disciplines necessary for successful trading - no doubt the most important part of 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. - 23208
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.
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
About 15 to 30 minutes before London open check the answers to these questions:
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!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
Looking at the four hour chart, ask yourself, what is the overall trend?
Using the last swing high and swing low, use your Fibonacci tool and note the retracement and extension levels and see if price is approaching any of them.
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.)
Are any fundamental announcements due?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
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
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
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 surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
Finally, the trader learns the emotional and mental disciplines necessary for successful trading - no doubt the most important part of 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. - 23208
About the Author:
For a free candle & chart pattern recognition reference tool click here: Candle Charting See how to use trendlines to get an optimum trade entry point: Trendline Trader
posted by X - Men @ 2:42 AM
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