The Golden Rules of Forex Trading

Before entering into any transaction, you should know your pain threshold. The best way is to make sure that your losses are controlled and that you will not enter a trade for emotional reasons. Investing in Forex trading is difficult; there are many more losses than successful transactions. Much more often the cause of failed…

Before entering into any transaction, you should know your pain threshold. The best way is to make sure that your losses are controlled and that you will not enter a trade for emotional reasons. Investing in Forex trading is difficult; there are many more losses than successful transactions. Much more often the cause of failed transactions is that investors have bad ideas as they approach to the market is mostly based on emotions. Common mistakes often include either ending their transactions too early or allowing their losses deepen too much. Here is where risk management takes its place.

Risk Management

The most rational moment for risk planning is the time before the conclusion of the transaction, when our mind is clear and our decisions are not subject to emotions. On the other hand, if a transaction is in progress, you want to maintain it until the prospects for profiting are still there. Unfortunately, this is not always the case. You need to know what the worst-case scenario for the transaction is and place the stop loss at the appropriate level. Again, we emphasize that the risk must be provided before concluding the transaction and you have to stick to the parameters that you set for the stop loss. Do not let your emotions force you to change your stop loss prematurely, as in most cases you will suffer the consequences.

The risk in each transaction is always there. No matter how careful you are, you can never be sure of the outcome aspecially for beginners it's more about guessing. When investing in the Forex nothing is certain. There are too many external factors that can change the movement of the exchange rate.

Sometimes it can change the foundations, and in another case, there are just different factors such as barriers, daily fluctuations in the exchange rate, the central bank pursuing purchases, etc. Make sure that you are prepared for this uncertainty by setting your stop loss beforehand.

Protecting your Profits

On the other hand, the level of profit is unknown. When the exchange rate changes, the traffic can be large or small. Money Managing is in this case extremely important. Referring to our principle of “protect profits”, we recommend trading with multiple flights. This can be done using a mini account. This way you can protect the profits of the first lot and move your stop loss to break even in the second flight.

Make the trend your friend

The Forex market is the market of trends. These trends can last for days, weeks or even months. This is the main reason why most of the gurus in the Forex market focus exclusively on trends. They believe that every trend movement they will catch can compensate for any loss of price spikes appearing within the Forex market.

Finally we need to remember that half of the trade is a strategy and the second is undetected part of managing your money. Even if you have lost on some transactions, you must understand what exactly went wrong and make sure to learn from your mistakes. However, if the failure is in line with the strategy, which in the past has been oftentimes more successful, then just accept the loss. The key is to make your overall approach to investments make sense, but at the same time do not bother yourself so much for every individual transaction. Once you have mastered this skill, emotion should not bother you, no matter whether you trade $ 1,000 or $ 100,000

The Three Main Keys to Successfully Invest in Forex Trading

Virtually anyone can get lucky sometimes or another and make a profit in the forex market by trading only a few times because there are moments in which the exchange of currency pairs moves up or down and following trends and entering in the right moment one could easily generate profits. After this, every investor…

Virtually anyone can get lucky sometimes or another and make a profit in the forex market by trading only a few times because there are moments in which the exchange of currency pairs moves up or down and following trends and entering in the right moment one could easily generate profits. After this, every investor in the forex market should keep strictly to his own strategy in order to achieve better results in the long term investment abiding always to his predetermined risk appetite.

Please find below the main points which allow traders to stick better to their strategies and achieve the right trading attitude.

Profit and Loss Possibilities

When you open a position keep in mind the reasonably cost-benefit ratio. You should be sure that it is more likely to gain than lose in a specific transaction, so that after losses are deducted a positive number remains which is your profit.

In other words, you should not open a position, if you do not have any reasons for doing so like an indication from economic or technical analysis. In addition, your alerting potential should always be greater than the loss potential, preferably in a ratio of 1: 2.

In practice, this means that if you open a position, you should assume that you will earn 20 pips and if something goes wrong, you will lose only 10 pips. Forex trading platforms determine such limits by using the stop-loss (closing a position after a certain loss) and take-profit (closing a position at a predetermined profit).

Keep Your Emotions in Check

One of the most important and difficult aspects from all sides of investing in forex trading is the ability to control your emotions. This means the ability to wait for a really good time to open position, wherein the risk return is really high.

Investors should approach the market without emotion, both during winning and losing transactions. After losing a trade one should not allow their ego to persist by trying willingly to win back the lost trades. After reaching a certain profit, you should also keep calm and continue to stick to your strategy. Please note that the market did not change due to your transaction in any way, so neither should your strategy change.

Investing Can Also Mean Losses

If you decide to invest in the forex market, you should definitely think about great profits. But the fact is that every single investor goes through bad periods of losing trades that have no logical explanation whatever. Such a phenomenon, without proper money management can lead to discouragement and in some cases zero deposit. This is especially true for beginners.

Experienced traders are well aware that deferred contracting losses, are an integral part of any strategy in the forex market. Of course, it is also crucial to management well your funds, have good risk management skills and be extremely resilient to stress.

Automated Software for Forex Transactions

Would not you wish to be able to establish partner with investors in the foreign exchange market, which is are intelligent, unemotional, logical, always alert and quickly capture profitable transactions, which make decisions almost immediately, as soon as there is an opportunity and then pass the profits on your account? The above description refers to…

Would not you wish to be able to establish partner with investors in the foreign exchange market, which is are intelligent, unemotional, logical, always alert and quickly capture profitable transactions, which make decisions almost immediately, as soon as there is an opportunity and then pass the profits on your account?

The above description refers to a system of automatic exchange transactions and a wide range of products available on the market. They have been designed in such a way that no physical trader is needed to analyze the market and search for profitable transactions based on pre-defined or user-preset system parameters.

In other words, having this software, you just turn on the computer, launch the application and you can do other things, while the system carries out the relevant transactions.

Who can use the system?

Beginners, experienced investors and even veterans of the foreign exchange market can use the software in the investment process. It is available in a wide price range and at different levels. Comments on websites and message boards provide guidance on the advantages and disadvantages of this type of software. When buying these types of automated software you can take advantage of the free trial period and other benefits aimed at convincing the customer to buy the product. Some vendors provide a free demo which is focused on the particular software.

We mentioned some of the advantages of automated systems useful when investing in the currency market. Neverheless, these programs are not free from defects and each user should be aware that no system can guarantee a constant bandwidth profitable trades.

How does the software work?

A program to use foreign investment is an application that analyzes pricing charts and other market tools. The software can recognize different signals, such as differences in spreads, price trends and information that may affect the market allowing investment in potentially profitable currency pairs.

For example, when the software, applies the criteria set by the user finds currency pairs that meets certain parameters, it sends a buy / sell signal and automatically performs the transaction.

Beginners, as well as experienced investors may sometimes enter into transactions guided by emotional stimuli and not by properly analyzing the market. If you invest through a computer system, such human errors do not occur.

When it comes to currency speculators, who in investment decisions are not guided by the level of interest rates but rather by an analysis of price differences, automated investment applications can be very effective because these systems immediately pick up any hesitation

Another advantage of the automated investment system is that it allows investors to manage more than one account at the same time, it is an advantage, which is no physical person can perform, especially when having only one computer.

For serious investors, who also perform other duties, have numerous other responsibilities or are working professionals, the software allows them to save precious time, as it literally liberates them from the need to study the market, analyze charts and observe the events that affect currency prices.

To conclude, automated forex systems allow traders to leave the position of the monitor and independently perform tasks related to market research and searching for other investment opportunities, conducting transactions on auto pilot, as soon as appropriate conditions occur. This means these forex systems can work round the clock without the need for human intervention exactly like money making machines!

Choose Only The Best Forex Automated Systems

Many users who claim to be beginners of the forex market say that they have made significant gains through the use of software. Neverheless, any such claim should be treated with some degree of skepticism. Among the numerous automated systems available on the market, there are some that are excellent, other simply good and quite…

Many users who claim to be beginners of the forex market say that they have made significant gains through the use of software. Neverheless, any such claim should be treated with some degree of skepticism. Among the numerous automated systems available on the market, there are some that are excellent, other simply good and quite a few that do not meet up to their claimed expectations.

Although some companies advertise themselves claiming that they “provide over 95% of successful transactions (profitable)”, any future buyer should independently verify the accuracy of these claims. The best software distributors usually provide reliable records providing the efficiency and effectiveness of the products they are selling.

Your needs

As automated trading systems differ in terms of speed, performance, programmability and ease of use, what works for one investor may not be appropriate for another. Some traders will prefer a program that creates reports and that they simply need to enter stop loss points and buy orders. Monitoring real-time is also a necessary component of any electronic system.

Remote access capability is crucial for investors who frequently travel or plan to stay away from their computer for a long period of time. The selected program should allow access to and instant access of all the functions, regardless of location via Wi-Fi or other Internet communication (access). The Internet may be the most useful and practical way to meet the needs of the traveling investor. Hosting VPS-head (Virtual Private Server) is a service that serious investors should consider. These services are available for a fee by many companies that provide very fast access, security and technical support.

Fees and guarantees

Some service providers charge extra while others do not. Fees and costs of access can help to reduce the profitability of trades and therefore, before signing, please read the text written in small letters. The most serious companies offer the option of returning the product. After the purchase, within a specified period of time if you come to the conclusion that the software does not meet your expectations, serious suppliers accept returned goods and refund the purchase price.

“Test drive”

Some vendors provide a videos showing the performance of the software available on the market, including buying and selling prices of currency pairs. Take a look at, as many videos as possible with screenshots showing the accounts and operations performed.

During the testing of new software, run the training module or user manual to determine if it is suitable for your needs and weather it includes the answers to all our questions. It may also be necessary to contact support to obtain information on the more complex issues of the software. If the button “Help” is given, set it in an easily accessible place in order to facilitate the connection and navigation.

Many of the best companies also offer free testing of their software at no additional charge so that the potential buyer can check whether the program meets its needs. This way, you will be able to check whether the software is simple to install and easy to understand and use. You should also verify that the software is programmable and flexible enough to allow changes to the default settings.

What is worth remembering

The most popular systems are the main trading currencies pairs characterized by the highest volume of turnover and the highest liquidity, such as USD / EUR, USD / CHF, USD / GBP and USD / JPY. Investment strategies will vary from a conservative scalping based on a few selected items until the more risky strategies and related risks. You will decide which approach to choose which strategy to change, and how to follow the trend. Consumer reviews of products appearing on various websites are a good source of information about the software. We recommend that you familiarize yourself with them before purchasing the product.

The current strong price competition is good for consumers, so try to look for the best opportunity and remember that this must not be at the expense of quality. Package prices can range from several hundred to several thousand dollars. You should also save yourself the trouble and check that level of technical assistance and support is appropriate. This is particularly important for all investors, regardless of their level of experience and is undoubtedly one of the most important attributes for beginners and inexperienced investors.

Regardless of the level of knowledge and experience of the investor – novice, experienced, veteran – or in a situation where the buyer is only likely to consider entering this potentially profitable, fast-growing global currency market, automated software can be helpful for the success of the investment. They can help you avoid the worst of failures. More importantly, keep in mind that no system can guarantee 100% profitable trades and that past performance is not definitive as to the achievement of good results in the future.

Three Major Markets That You Need to Pay Attention to When Investing in Forex

Most investors, both new and more experienced, based almost all of their investments only on a variety of technical indicators. Very rarely, they pay more attention to aspects that provide a lot of helpful tips in determining the direction in which a currency pair will follow. Sometimes, certain assets of investment markets is the key…

Most investors, both new and more experienced, based almost all of their investments only on a variety of technical indicators. Very rarely, they pay more attention to aspects that provide a lot of helpful tips in determining the direction in which a currency pair will follow. Sometimes, certain assets of investment markets is the key to winning the opening position or to avoid failure.

The managers of investment funds for years examine secondary markets for confirmation before they open a position. These professionals, by using very sophisticated software charts, are able to see the relationships that exist between certain types of markets, so that they have the information about the investment. Some of these correlations are commonly known – oil and the Canadian dollar and gold futures and the Australian dollar. Some are not so well known, such as the exchange rate of the US dollar / Japanese yen and the short-term rate of return on Japanese government bonds.This article presents some of the key markets that may offer valuable information about the direction in which the price will change in the forex market.

The underestimated bond market

While it may seem very strange, treaties and bonds are strongly linked. The direction for both of these investment assets is closely linked with the state a country's economy and its fiscal policy. If the economy of a country is in good shape and is strong, international investors will buy bonds issued by the government of a country – in search of a secure and stable rate of profit. This situation will naturally increase demand for the currency of that country and henceby increase the value of the currency. International investors who are interested in investments in other countries, always have to make trades in the currency of that country.

This is why all the managers of investment funds, observes the short-term bond yields in order to confirm that they are in relation to the favorable currency trend. The movement in one asset records can predict or confirm the movement in another.

One of the couples, which is subject to this relationship is the exchange rate of the US dollar / Japanese yen. The forex currency pair USD / JPY turns into a near synchronization with Japanese short-term bonds – and exactly two-year government bonds. This relationship was very strong especially in 2010.Most of the participants in the foreign exchange market had seen a strong currency in the yen. The global economy is coming out on track after the recession, the Japanese export companies fared much better than their American counterparts – which resulted in a greater increase in Japan as a country. As a result of this international investors saw more opportunities and prospects in the Japanese market and began to invest in short-term government bonds. This in turn caused an increase in the value of the yen against the dollar.

Foreign currency short-term contracts (futures)

Derivative financial instruments (derivatives) – such as short-term contracts on contracts are another great tool for confirming the formation of short-term trends in exchange rates.

Market brokers and investors are looking for the right moment that will be pointed to the right number on the market. In forex trading in order to determine whether the currency is in demand, investors will keep an eye on the number of open contracts on a short-term currency. This information can be used not only to predict the demand for a currency but also to other products on the market rotated (commodities).

Some analyzes point out both the commercial transactions and non-commercial, but the most important thing, is however to keep a close eye on the commercial items. Non-commercial positions are mainly concluded by individuals engaged in speculation of the market. The point is to have information about closed for the day demand for a given currency in order to determine or confirm the potential direction of the market. For example, many are interested in a particular currency (a large number of contracts) means that most investors are on the same side of the market – which means that the opposite result on the market is more likely. When most investors think that the value of a pair will increase or has open long positions, what happens when all of a sudden they decide to sell holdings?

Contracts CDS – Credit Default Swap

The CDS market is relatively unknown. CDS is a derivative instrument used for credit risk transfer and is an excellent tool for illustrating the demand for currency data.

CDS contracts are in the market for about 14 years and serve to protect the position of the buyer before any claims for payment are made. For example, the manager of the funds can insure credit on the amount of $ 100 million in Japanese government bonds by paying a premium insurance. The credit crisis manager will be then able to recover the value of the bonds. As in the case of short-term contracts on contracts, CDS contracts allow you to specify whether a currency is overvalued or undervalued. During the credit crisis in the European Union in 2010, confirmed CDS contracts, lack of interest in European assets – CDS contracts (insurance costs) soared to record high levels.

These indicators can provide invaluable information when making investment decisions and thus increase the rate of return on their investment projects, especially in the current days of global economic instability. For the economies that are inter-related to one another it pays to understand what the relationship between the different markets is.

Forex Spread Difference – Everything a Trader Should Know

Spread difference or bid-ask spread or simply spread is a common forex trading term with high signal on trading profit and loss. In simplest words this means cost of trading . Spread difference is defined as the difference between ask and bid prices for a currency pair offering by a foreign exchange trading broker. And,…

Spread difference or bid-ask spread or simply spread is a common forex trading term with high signal on trading profit and loss. In simplest words this means cost of trading . Spread difference is defined as the difference between ask and bid prices for a currency pair offering by a foreign exchange trading broker. And, it can also regard as the fees charged by the brokerage firm for executing the trades. Unlike most other financial instrument trading, currency trades do not include any direct brokerage commission or market maker fees.

The forex spread difference is presented in pips , the smallest unit of price change. For example, if the currency trading platform shows a bid price of 1.3012 and an ask price of 1.3014 for EUR / USD currency pair then the spread difference is 2 pips. And, if the platform shows a bid price of 1.30193 and an ask price of 1.30208 then the difference is in 1.5 pips.

Over the past the spreads have become increasingly tight. This has resulted in great reduction in cost of trading and more profitability for the traders. Before seven years or so, the tightest spread available for trading most popular currency pairs was 5 pips. So a trader trading a standard lot of EUR / USD currency pair should suffer a $ 50 worth transaction cost ($ 0.0005 x 100000). But now most brokers charge 2 pips or less. So a trader having standard position size should pay only $ 20 toward transaction cost. Also, from a trader point of view, with wider spreads a profitable trade can only be executed when there is price swings exceeding the spread difference. For example, with 5pip spreads the profit can only be realized with the price swings 6 pips or more favoring the trader. But today's traders require much lower price swings to profit from the market. The increasing popularity of forex trading, ever-increasing transaction volume and high brokerage competition are the main driving factors of these spread tightening.

The ask-bid spread offered by forex brokers depend on many things like the currency pair, market liquidity and brokerage service. Usually the most popular currency pairs have the tightest spreads, and EUR / USD is so far the most liquid and tightest spread pair in the market. Brokerage firms offer spreads in fixed, variable and in combination options. Fixed spreads are flat and pre-determined pip differences for respect currency pairs. Variable spreads means tighter pips when market is liquid for the pair and wider when the market is less liquid. Some brokerage firms offer combination of both to help traders to choose their option on each trade.

Earning Money With Forex

Have you heard of Forex, or the foreign exchange market? This is where countries from different parts of the world exchange their international treaties. Excluding weekends, the market is active 24 hours for five days a week. Different currencies have different values ​​compared to one another, and the foreign exchange market determinates these values. You…

Have you heard of Forex, or the foreign exchange market? This is where countries from different parts of the world exchange their international treaties. Excluding weekends, the market is active 24 hours for five days a week. Different currencies have different values ​​compared to one another, and the foreign exchange market determinates these values. You can make a lot of money with Forex by trading currencies with other currencies of a higher value. This is called “buying low and selling high.” Learn more about Forex in the following article.

How it Works
Trading in Forex works in currency pairs. There are four main currency pairs that you use when dealing in Forex: the United States Dollar (USD) and the Swiss Franc (CHF), the USD and the Japanese Yen (JPY), the Euro (EUR) and the USD, and the British Pound (GBP) and the USD. One currency acts as a commodity and the other acts as the actual money. A pair is quoted on Forex like so: GBP / USD = 3.00. This means that one British Pound unit is equal to about three US Dollars. The first currency in a pair is the “base currency,” and the second currency in a pair is the “quote currency.” If the base currency is going to be worth more than the quote currency, then you want to open a long position. This means that you are buying the base currency and selling the quote currency, which earns you a profit because it takes more than the quote currency to buy the base currency. I know this is all very confusing, but bear with me here. I was confused at first as well, but once I became a little more experienced the whole process became a lot easier. Now, the opposite of a long position is a short position, and you want to open this when it will take more base currency to buy the quote currency.

A Little More Information
That last paragraph will be hard to work through if you are new at Forex. However, once you do work through it, it will be worth the effort to trade with Forex. If you become good at it, then you could end up learning a lot of money with it. There are ways to predict whether or not the base and quote currency rate will rise, and the two methods are the technical method and the analytic method. With the technical method, you will use a price chart analysis and a few other tools. If you become good at reading these, then you can use the technical method very efficiently. The analytic method involves researching a country's economic situation. Say that a country's economic stands are 2% better one month vs. a previous month. This means that the currency will be worth more. You can use this information to further decide on how you will proceed with your trading. Using both the technical and analytical methods is the recommended approach to Forex. You should definitely try it out today, and see if you are good at analyzing the market!

What Is The Exchange Rate Index In Forex Trading?

In this article we will take a look at the Exchange Rate Index in the Foreign exchange market. This index assesses the price changes on the foreign exchange market. Thus, we will focus on the calculation of the ROC indicator. The ROC stands for “Rate Of Change indicator”, so it corresponds to the index of…

In this article we will take a look at the Exchange Rate Index in the Foreign exchange market. This index assesses the price changes on the foreign exchange market. Thus, we will focus on the calculation of the ROC indicator.

The ROC stands for “Rate Of Change indicator”, so it corresponds to the index of the exchange rate in the Foreign exchange market. The ROC indicator provides a comparison between the closing rate of the day and that of number days earlier. When prices tend to rise, the ROC indicator increases and when they tend to lower the ROC indicator also decrease. Thus, it reflects the magnitude of change in prices.

The ROC indicator of 10 days information on the levels of overbought and oversold. The market is more secure and the exchange rate is high. A rally is approach, meanwhile, indicated by a decrease in prices. When your transactions, it is particularly appropriate to carry out the control of the ROC index, and to estimate when the potential market changes.

The index assesses the exchange rate increase in points or percentage during the day and compares it to the previous days. You can get similar data through the Momentum indicator, but as a ratio.

When taking a look at the ROC, the figures are reliably reversible. A change in expectations is caused by the resistance to decrease and increase and this creates a sinusoidal curve type.

We can calculate the index of the exchange rate in the Foreign exchange market from different periods. It is the volatile set daily chart measured on a period of 200 days or more. Most commonly, observation periods of 12 and 25 days for the short-and medium term are used. This topic was addressed by Fred Hitschler and Gerard Call in their publication, Stock Market Trading Systems.

Levels of overbought and oversold courses are very easy to identify with the ROC to 12 days. The finding of an overbought currency we do when the ROC indicator is high and the oversold in the opposite situation, when the ROC is low. We would like to specify that it is not always wise to wait for the turnaround, as it often happens that the trend of these figures is maintained for some time.

We hope you have well understood the use and importance of the indicator and that you will take advantage of this knowledge in your future trades.

The Great Importance of Leverage in Forex Trading

The term leakage refers to two elements. Firstly, the mechanism for making a much larger than the corresponding to the money, an investor has actually position. Secondly, the expected profitability of a financial product or derivative forward transaction compared to the profitability of transactions underlying only on assets of these products or these these futures.…

The term leakage refers to two elements. Firstly, the mechanism for making a much larger than the corresponding to the money, an investor has actually position. Secondly, the expected profitability of a financial product or derivative forward transaction compared to the profitability of transactions underlying only on assets of these products or these these futures.

The leverage associated with forex is much higher than that offered on other financial markets such as stock markets or commodity markets.

Currency volatility rarely exceeded the threshold of 1% per day, which is considered on the forex market like a rather significant movement. Leverage allows to make significant changes from relatively small market gains. Moreover, very often, currencies are traded by lot (the amount of a standard lot is 100,000 units of an account for a classic margin).

The use of leverage is almost essential in order to invest and make money in forex. It is necessary that transactions are significant enough to take advantage of the price differences.

What is leverage?

Leverage is offered by brokers in forex in the form of prizes. It provides the possibility to position a total of $ 100,000 with a deposit equivalent to a $ 1,000 account. This is called leakage.

Different leverage levels are available from broker to broker. The effect of leverage allowed may vary depending on the broker from 20 to 400 times the amount deposited into the account of the investor. Each investor has the ability to choose their leverage in terms of its risk aversion and the yield search.

In turn, the greater the leakage, the higher the importance of the risk involved.

Indeed, each change in pip (point of forex trading) in the opposite direction from the position taken by the investor will result in a loss much greater than the effect of leverage. If prices are moving to the detriment of the position taken by the investor may, a significant loss of funds may occur. The leverage has to be used with extreme caution and in a very reserved manner.

An example of leakage

A customer has 5050 euros on his margin account opened with a broker. It has a lease of 100. He bought five lots (each lot of 100 000 means to pay 1000 euros) for the EUR / USD rate of 1.3950. The margin used is 5000 euros.

If the market moves in his favor and the exchange rate reaches 1.4050 (which represents an increase of 100 points), his profit is $ 5000 (100 points x $ 10 per point X 5), an increase of 3558 euros (5000 / 1.4050) . The performance is 70% compared to 5050 euros deposited in his account. Of course, the risk is in the event that the exchange rate moves against him. Thus, if the exchange rate reaches 1.3850 (range 100 points down), it shows a loss of 3610 euros (100 points x $ 10 per point X 5 / 1.3850), the traders initial capital can suffer from great losses. If the trader wants to maintain his position, he will definitely need to invest more funds.

To conclude, leverage is a very powerful tool and can assist in generating huge profits only and if used wisely and of course in moderation. If used without a proper strategy and purely as a tool of greed in an attempt to become suddenly rich, the results can really be detrimental.

Forex Candlestick Charts – The Oldest Method for Analyzing Graphs

Japanese Candlestick charts is one of the oldest methods for analyzing graphs. In the United States and Europe they appeared very late, at the end of the nineties, however, they immediately gained a huge crowd of supporters. Today, candles provide very useful information for all kinds of investors, either at a beginner or very advanced…

Japanese Candlestick charts is one of the oldest methods for analyzing graphs. In the United States and Europe they appeared very late, at the end of the nineties, however, they immediately gained a huge crowd of supporters. Today, candles provide very useful information for all kinds of investors, either at a beginner or very advanced level.

Japanese candle is made up of four elements: the opening price of the period, the closing price of the period, the lowest price of the period, the highest price of the period. A generic term used in the graph is OHLC (open, high, low, close).

A candlestick chart is a type of chart that analyzes the cause, not the effect and offers the ability to quickly follow the psychology of short-term actions in the market. However, do not ignore the emotions which are guided by the investors and their direct impact on the exchange of data values. Statistics can not under under circumstance measure the psychological impact of the market behavior, in some form, it is able to do this multidimensional technical analysis but even then, the results are not always consistent with the facts.

Neverheless, Japanese candles are able to read the changes in the investors' perception. This is then reflected in the movements of the exchange rate on the Forex market. Candles are much more than just a way to identify the formation. They show very accurately the interdependence between buyers and sellers. Graphs constructed using candlestick charts provide direct insight into the financial markets, which is not easy with the use of other methods of ploting. Furthermore, candlestick charts can be enriched with additional related techniques as filtering candles or candle charts, taking into account the market, which definitely enhances the analysis of new opportunities and broaden its horizons.

Each candle formation may contain one or more candles, but rarely more than five or six. Most candle formations have also their opposite counterpart – each band promoting growth has its counterpart. There is however, a significant difference between them rarely relative to their position in the short-term trend of the foreign exchange market.

The candlestick chart is the most perfect chart and it is best used for technical analysis for both beginners and advanced investors, not only because of the very accurate representation currency rates but also the very important fact that it absolutely reflects the psychological aspects of the Forex market .