Technical Analysis Part 3

 Pls download my chart for better understand

https://www.dropbox.com/s/emen0ke9i5hq50z/stochastic.gif?m

 https://www.dropbox.com/s/ble3co86ipukbdh/New-Picture-%286%29.gif?m

*Stochastic : It is a momentum indicator. It is developed by the Dr Gorge Lane in 1950.It provides the trader the location of a current  price and a relation of the price range over the periods. It calculated where high, low, close price and and %D of 3EMA of K% and %D of slow EMA %D. It's formula = %K = 100[{C -L14)/(H14 - L14).
It displays the over bought and over sold area. Traders usually enter trades by stochastic when price is overbought/oversold area (above 80 scale and below 20 scales)

*RSI (Relative strength index): It is developed by J. Welles Wilder in 1978.It's a momentum indicator. It measures volatility and direction of price movement over a period. Generally 14 day time frame measure 0 to 100 scale where 30 and 70 scale show price oversold and overbought condition. Wilder recommended 14 EMA smoothing periods. Wilder also believed that divergence between RSI and price action is also a strong clue market turning point.

*Parabolic Sar ( Stop & Reversal)  : It's a trade following indicator mean lagging indicator. It also developed by J. Wilder. It finds potential reversals of the price direction. The sar is calculated one period in advance using present data. The Extreme Point value is set off 0.02 in parabolic sar. When the market up trading or preparing up then sar point you find below the candlesticks and vice verse. But be careful you may be mislead so wait for 3 dots above or below and then enter a trade. If dots below buy signal and above then sell signal.

Technical Analysis Part 2

 Download Chart for better understand below indicator analysis

 https://www.dropbox.com/s/3uivk81n30gv3rg/Moving%20Average.gif?m

 https://www.dropbox.com/s/5jm4su8y3zl5x0r/Bollinger.gif?m

 https://www.dropbox.com/s/yh9xs34s40d7xgv/MACD.gif?m

*Moving Average : We confirm price which is numerical or number or points in the meta trader4.For example 1.3200,1.3205,1.3209,1.3045 so on.These are price and price always move to move at a direction up or down.So what average the price on a certain period?Now you probable calculating it.Wait! Moving average an average price for a certain period.
1.3025+1.3026+1.3027+1.3028+1.3029 = 6.5135/5 = 1.3027
Now what useful information you get from it? You just get now what is moving average price, it is just simple but have some clue too......
In the meta4 you will find some kinds of moving average, like ...
1. SMA ( Simple Moving Average)
2. EMA ( Exponential Moving Average) 
3. Smoothed
4. Linear Weighted
Moving average used by Open / Close / High / Low /Median / Typical / Weighted close prices.

Mostly use SMA & EMA.If you wish to trade longer time frame then use SMA if you trade shorter time frame use EMA because EMA display quick price average movement since trader want to trade in short frame quickly.
When you use it you find a curve line or graph line upper and lower. Trader usually enters trades when the line break since its focus on pressure for price movement. And SMA & EMA generally use the close price method. ( Please download my chart for better understanding)

*Bollinger Band: It is developed by John Bollinger near 1980.Mr. John uses Moving Average and deviation, where upper, lower and standard deviation in the middle. It is Volatility indicator. It provides the trader a relative definition of high and low price act as upper and lower bands.
Traders usually trade by Bollinger bands when its band breakout or buy at  lower band and out at middle band sell at the upper band and out of the middle band. The middle band they use just neutral purpose.
Another way by  Bollinger band when Bollinger bands become squeeze and wait for breakout!
In 2010 Mr. Bollinger release 3 types bands know as BBImpulse,percent bandwidth(%),bandwidth delta.1st is measure price changing 2nd is band width over a certain periods.3rd measure how changing the width of the band.

*MACD ( Moving Average Convergence  Divergence ): It is created by Gerald Appel in near 1970.It is a momentum or oscillator  indicator which measure direction of changing trends and strength. Today it is vastly used in currency business. It displays trader signal calculating over a periodical data of closing price. It used 12,26 EMA and 9 EMA. There are 3 signal lines in MACD. Blue line (Minus of 26,12 EMA), Red line ( 9 EMA of blue line), Histogram (Bar graph) Minus of blue and red line.

How do you can follow it:

***Look at when the MACD (blue line ) cross the  signal line (red line)
***Look at when the MACD (blue line ) cross the zero scale.
***Find out Higher high or Lower low on the chart
 (Later I will be discussing these on the chart pattern lesson, OK )

So MACD is 12.26.9 EMA (Fast, Slow, Signal). Another popular set of MACD is 5,35,5 for short time frame. The longer time frame you use it then it provide the best results.

Technical Analysis Part 1

Technical analysis is based on indicator/s ( indicators are trading tools, it's inside is coded mql4 language or lite c  ) which is built in meta trader4 and also you can use more developed indicators, these are called custom indicators. For technical analysis I hereby notice  you there are only 2 types of indicator in the Forex market. They are

1. Leading indicators / Oscillators : Tell you market movement before trend occurs. Ow..w you think that's very nice. I just use it and make pips easy and be rich very quickly. You are wrong. Many times it doesn't work or mislead you  because the market may be  change very quickly. And these types of tools just help to guess or analysis better for profitable trading.

2. Lagging indicators / momentum: Tell you signal after a price changing movement and new trending is going to happen so that you can be prepare yourself for  some catch pips....

And costumes indicators are either leading or lagging indicators.

Which type of indicator best? A million dollar question? Um....m it is depending on trending and vary from trader to trader. Remember indicators are just helping tools for trading. So you won't relay with it but learn market deeply.

Fundamental Analysis How to Approach

Fundamental analysis for the Forex market here you have to  draw attention of Economics, Social and Political affects or force which guide market movement for longer periods. You have to look up why the country's economy is better now or why it suffer and how? This is basic economics that probably you may learn at school.
Economics has a lot of data or parameter that influence over the economy. If a currency is strong today that means that country is better economy now. But how do you determine it? Since these data  passed away day by day.
*If a country having a strong economy then more invest will be coming that influence the whole economy. Now a big question why and what types of economic data that must be followed by an investor? These are

*GDP rate (Gross Domestic Products)
*Interest rate
*Labour cost / Manpower cost
*Employment rate
*Monetary Policy of  the Central Bank
*Bond
*Taxes rate
*Inflation rate of the currency
*Export & Import ratio
*Earn / Income  & Cost/ Expense ratio
And more............................................................................

Therefore you have to gain knowledge  a country profile from its Gov. Web site and analysis data to determine if its economy is OK or not or If any chance to turn on good in the near future.

2nd Stage of Forex learning

From my previous lesson you may read these topics  1st to last. Now I am turning on the 2nd stage of learning Forex market. I say 2nd stage because you are now a little familiar the Forex Market. So now it is time to learning  deeply.
To be a professional in this market you have to be an expert in knowledge three types of analysis, they are
*Fundamental analysis
*Technical analysis
*Sentimental analysis
You also have continued your  journey about learning this market. And of course updated knowledge. Today for this you have a lot of resources over the internet. But to gain professional knowledge you have to search better. Here I am always wishing to assist  you to do so you believe or not doesn't matter.