Traders use these repetitive patterns to forecast the market. Chart patterns are made up of price waves or swings on the candlestick chart, such as head and shoulder, double top , and triple top patterns.

Chart patterns are categorized into two primary types based on the trend direction. These two patterns are classified into many chart patterns based on the shape and structure of the market. There are several repetitive chart patterns in the technical analysis, but here I will explain only the top 24 chart patterns. These patterns have a high winning probability.

The double top is a bearish reversal chart pattern that shows the formation of two price tops at the resistance level. After the neckline breakout, a bearish trend reversal happens. The neckline is drawn using the last swing low after two tops. The prior trend to the double top pattern should be bullish, and it must form at the end of the bullish trend. The double bottom is a bullish reversal chart pattern that indicates the formation of two consecutive lows at the support zone.

After the neckline breakout, a bullish trend reversal happens. The neckline is drawn at the last price swing after two price bottoms in this pattern. The prior trend to the double bottom pattern should be bearish, and it must form at the end of the bearish trend. The tripe top is a bearish reversal chart pattern in which price forms three consecutive tops at the same resistance level. It is the most basic chart pattern, and traders widely use it in technical analysis. The neckline forms after connecting the last two swing lows with a trend line in this pattern.

The trend line breakout confirms the triple top pattern. The triple bottom is a bullish reversal chart pattern in which price forms three consecutive bottoms at the same support level. To learn to trade triple bottom patterns, you should first understand the price swings and impulsive waves. The neckline forms in the triple bottom pattern after connecting the last two swing highs with a trend line. The breakout of this trendline confirms the trend reversal from bearish into bullish.

The highest price swing is called the head, and the other two waves on the left and right of the head are called shoulders. It is a repetitive chart pattern, and after its formation, a bearish trend reversal happens in the market. The inverse head and shoulder pattern is opposite to this pattern, and it is a bullish trend reversal pattern.

A neckline also forms during this pattern. The breakout of the neckline always confirms the trend reversal. This chart pattern can also act as a trend reversal pattern. It depends on the location either it forms during a bullish trend or begins at the end of the bearish trend. It would be best to keep in mind that there is a clear difference between a V-shape wave and a round bottom wave.

A rounded bottom forms rarely on the price chart. It is a reversal chart pattern that shows three consecutive attempts of big traders to break or approach a specific key level. After that, a trend reversal in the market occurs. The 3-drive chart pattern consists of three impulsive waves and two retracement waves.

The number three is also a Fibonacci number, and it has much importance in trading. Pennant is a continuation chart pattern with five waves ABCDE. It shows the trend continuation after a minor pause in the trend. This chart pattern consists of two impulsive waves and three retracement waves. During the retracement wave, the market consolidated inwards, indicating indecision in the market.

After indecision, when the price breaks in the trend, the trend continues. The wedge pattern is a trend reversal chart pattern in which the price structure resembles a wedge shape.

A Wedge has a wider outer section and smaller outer section. It is also a natural pattern because it depicts the natural behaviour of price. It consists of two trend lines upper and lower trendlines and more than three waves inside the trend lines. The size of the waves continues decreasing with time, and after the trend line breakout, a trend reversal happens in the market.

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Human Resources Books. International Trade Books. Inventory Books. The TWI represents how well the currency of a country is doing against a basket of other currencies. The currencies included in the TWI are those that reflect the major trading relationships with the index currency.

Each currency receives a weight in the index that reflects its importance. For example, in Table 7. We can also see that Canada and many other nations have a very small percentage compo- nent of the TWI. Each year the central bank and economists adjust the weights to reflect changing realities of international trade.

As China increases its trading relationships around the world, it will receive more weight in TWIs. The point is that the TWI represents a way TABLE 7. dollar pound sterling 5. By knowing the TWIs of each currency, the forex trader can detect a strengthening and weakening of a currency and also get a sense of how a currency can be impacted by events in countries of their trading partners.

Many traders often ask the question: What do you think of the U. dollar or yen, pound, or euro? One important way of answering is from the perspective of the TWI. Each currency gains a trading personality, and knowing the TWI for each currency is very useful, because it will reflect the big picture much more accurately. Most recently, the International Index Company issued a new product line called iBoxxFX® , which are indices that are, in fact, trade weighted.

They allow an average forex trader to take a snapshot of the strength of a currency without the noise of the forex market. Table 7. Notice how each currency index reflects the varying importance of its different trading partners.

We will see shortly that these trade weights are a clue to defining the fundamental personality of a currency. Before that time, it was pegged to the dollar, and before that it was pegged to the British pound. By floating its currency, the market sets the value of the currency and the cen- tral bank can avoid the necessity of intervening by buying and selling dollars to keep the currency value. But a floating currency also permits capital to float out of a country. The fear of floating is great among totalitarian regimes and emerging countries that want to maintain control of their economy.

By looking at the aussie TWI see Table 7. The role of Australia as a global trading country makes it an attractive currency to trade. The recent years of economic expansion have created strength in this currency.

The currency in had a strong upward trend, which, from a world trade perspective, re- mains intact. The Australian dollar is almost as equally sensitive to the Japanese economy as it is to the euro or the U. Important also to consider are commodity-related events such as movements in cop- per and gold. Australia is a major producer of both of these commodities and is affected by price patterns.

Figure 7. TABLE 7. We can see how the movements are in sync, visualizing a strong correlation between commodity moves and the aussie-dollar pair. It shows that in , these commodities began to diverge down while the aussie FIGURE 7. iBoxx® is a registered trademark of International Index Company Limited. FIGURE 7. continued strengthening. When a trader sees divergence from the traditional relation- ship, questions arise. Why would the aussie continue to be strong if copper is weak?

The answer was that there was great strength in other sectors of the Australian economy, making copper less important. The fundamental personality of the aussie is that of a commodity- and trade- dependent currency. The aussie will be affected by global economic growth and, in particular, Chinese growth. China is now the second largest buyer of Australian exports, making the aussie more sensitive then ever before to the direction of the Chinese economy. A special feature of the aussie is that it has a multiple fundamental personality.

It can be considered an Asian currency, reflecting Asian growth, and it can be consid- ered a currency that also is impacted by the United States and Europe. This means that the forex trader should seriously look to trade the aussie pairs such as the Australian dollar—Japanese yen AUDJPY and Australian dollar—euro AUDEUR , as well as the traditional Australian dollar—U.

dollar AUDUSD pair. Growth will, however, be held back in by the effect of a drought on the agricultural sector. The cycle of growth that the aussie is in will be certainly tested. Events in China and the commodity markets will be important factors to watch. Source: Guy Debelle, head of the International Department, Australian Foreign Exchange Market, November significant over the coming year are events in Japan.

If Japan raises its interest rates, the aussie will suffer because the conditions for the carry trade will decline. The Japanese rate of 0. If this spread changes, so will the condi- tions encouraging a stronger aussie. In recent years, it has been very rare for the aussie to depreciate against the yen. This made the risks of an unhedged carry trade very low. But the risk of carry trades providing a big decline remains very real.

Domestically, the Australian economy entered with year lows in unemploy- ment at 4. The Reserve Bank of Australia increased rates to 6. At the end of , inflation rates were at 3. The combination of domestic growth and global growth makes trading the aussie in the coming years a lot of action.

dollar receives a weight of 86 percent in the trade- weighted basket. Refer to Table 7. Therefore, when the U. economy slows, the Canadian economy also suffers. When oil prices increase, the Canadian currency benefits. From a fundamental point of view, trading the Canadian dollar against the U.

pair is the most effective way to play this currency. A useful web site for tracking the Canadian economy is www. New Zealand is almost a classic example of how fundamentals can drive currency movements. The New Zealand economy is small.

Since its consumer economy is small, the fundamental char- acteristic that affects its economy is whether its exports can grow. Therefore, interest rates and the resulting currency valuation are key to its future economic vitality. Data show only 4 percent of the New Zealand firms do any exporting. But this level was recognized as having risks of slowing the New Zealand economy.

In fact, the New Zealand Central bank intervened for the first time since and sold the New Zealand dollar on June If it tries to raise rates further to slow down inflation, it can choke off exports and cause a major contraction. The fundamentals point to a mixed situation that can go either way. As a result of this uncertainty, the kiwi offers potentially very many trading strategies, as the currency will be extremely sensitive to central bank actions as well as surprises in economic data.

The forex trader looking to trade the kiwi can explore trading the dollar pair U. dollar—New Zealand dollar USDNZD , as well as the kiwi against the aussie NZDAUD , the yen NZDJPY , or the euro NZDEUR. MEXICAN PESO The peso is a currency that offers potential for trading more than ever. The OECD projects a GDP growth in Mexico of 3. Importantly, inflation is projected to be just above 3 percent www. Additionally, the peso is strengthened by its ability to attract capital flows.

It is useful to note that those traders who sell the U. dollar and buy the Mexican new peso MXN in the USDMXN pair, receive interest rate payments. So the peso can be used as a carry trade currency pair. The second major factor is the U. Mexican exports are at a level of over 80 percent to the United States, and there is a high inflow of capital coming from Mexicans living in the United States.

Oil also needs to be considered. Like Canada, Mexico is a net exporter of oil and attracts petrodollars. A major negative factor is business confidence. The Mexican busi- ness climate is often marred by inefficiencies, and the political economy generates a great deal of negative sentiment. Another factor emerging is Asian competitiveness. If Mexican interest rates fall, the peso could weaken substantially; if the U. economy slows, Mexican growth will suffer.

Based on this fundamental picture, trading the Mexican peso should be considered mainly against the dollar, and trading this pair using longer-duration charts is more advisable see Figure 7. JAPANESE YEN Japan is the second largest developed economy in the world. To understand Japan today, one has to have a sense of where the Japanese economy has come from. In , the Nikkei Index, which is a price-weighted index of the top stocks on the Tokyo exchange, peaked around 39, In , the Nikkei Index fell by 39 per- cent, and in March , it was at the 17, mark, still quite a way from the highs of the previous era.

auction prices, and surges in sales of luxury brand bags and jewelry. The Nikkei had tripled in price in the 45 months prior to its peak. Also, metropolitan land prices tripled between and Compare this to the same period growth rate of other nations, shown in Table 7. The Japanese stagnation had many causes, but a major contributor was the Japanese consumer. Studies e. Household disposable income declined, household wealth declined, and, coupled with uncertainty about the future, the result was low confidence in prospects of strong growth.

Once the forex trader appreciates what the era of stagnation was like in Japan, he or she will have a greater understanding of why Japan today is still not on firm footing of renewed growth. For example, household disposable income had a growth rate of only 0. Household wealth declined by an average 0.

Interestingly enough, there is data showing that the proportion of people saving for old age rose from The data from Japan underscores the importance of consumer confidence. This makes it diffi- cult to stimulate growth through traditional monetary measures such as lowering inter- est rates. Another important characteristic was that prices were actually in deflationary mode, and when prices keep falling there is little incentive for consumers to purchase since they expect cheaper prices.

It was before the emergence of the retail forex market. But the era of stagnation also holds clues as to whether Japan will experience robust, uncertain growth or retreat again into stagnation. Much will depend on the interest rate decisions of the Bank of Japan and business and consumer confidence surveys because the core cause of stagnation was lack of consumer confidence and spending.

Therefore, the core of recovery will be a recovery in consumer spending. But it is not easy to stimulate the Japanese consumer.

This means that the forex trader should carefully watch consumer confidence and inflation data coming out of Japan for clues as to whether Japan is overcoming deflationary fears. One such clue oc- curred in March when, for the first time in 16 years, Japanese land prices showed an increase. Other clues will be necessary before the Japanese inflation rate moves beyond its current 0.

Also important is export data on Japan. Stimulating exports becomes a critical factor in determining the ability of the Japanese economy to grow. However, any extreme level of weakening of the yen would help exports. But remember that too weak a yen against, for example, the euro may help Japanese exports but would undermine European exports.

The forex trader should note that where there are beneficiaries to a currency direction, there are also losers. The Japanese finally increased interest rates to 0. But the interest rate differential between Japan and other nations is still quite steep.

Even if the Bank of Japan increases rates to 0. This uncertainty in the Japanese economy creates a great deal of increased rang- ing behavior in the currency. Traders of the yen should almost always expect the unex- pected because economic news from Japan has a built-in greater potential to surprise us.

Also important to consider is the growing impact of China on the Japanese prospects for growth. A weak yen, in contrast, stimulates Japanese export growth. Export growth data therefore becomes very important in affecting sentiment toward the yen. With regard to Japan, perhaps the best word to describe current conditions is un- certain.

The uncertainty whether the Japanese consumer economy is strong enough to grow, combined with the uncertainty of whether Japanese interest rates will rise, dom- inates trading of the yen. The complexities facing the Japanese economy also involve aging workforce and potential shortages in labor. All these factors make trading the yen more challenging than the other currency pairs.

CARRY TRADE The Japanese big picture implications are profound. With interest rates at 0. This is where Japanese investors can borrow at extremely low rates and place the capital in bonds of other nations and receive a net gain in interest rates. New Zealand and Australia have been major beneficia- ries of the carry trade. For example, New Zealand interest rates are almost the highest in the world, at 8. It therefore is a major attraction for the low-interest-rate costs of borrowing yen.

A popular way to do this is called the Uridashi bond. The total flow of such bonds is in billions more. These bonds are of short duration, most being two to three years. If the market perceived that Japanese rates will increase, the huge amount of carry trade money outflow could suddenly decline.

On February 27, , this is ex- actly what happened, with a sudden sell-off of the dollar against the yen. This caused simultaneously a sell-off of the Dow Jones Industrial Index as big funds got out of equity positions to cover losses in their previous selling of yen. Even gold sold off during this crisis. Refer back to Figure 1. The big picture on Japan is one that focuses on uncertain growth and relatively low interest rates.

Preliminary edition, November During , the yen had a wide range between its index lows and highs and ended near its lows see Figure 7. Its value largely depends on what happens in the economies and the currencies of the United States and Europe. Refer back to Table 7. The first is the bet that the interest rate differences between Japan and the rest of the world will continue. An additional strategy is simply to be selling yen until the key fundamentals change and the trade-weighted index reverses toward the mean of The fact that the trader may observe that the yen is weakening, even in the face of good economic news, should not be a surprise.

Instead, the trader looking to buy yen would wait for the period of technical strengthening to run its path and then look to go long the yen. Any surprise news that is positive for the yen can just mean to be prepared for a reversal toward strengthening. The USDJPY pair and the EURJPY pairs are the best trading instruments for the yen. A third strategy is to buy into the longer view that the Japanese economic recovery will continue and that interest rate increases are inevitable.

The trading strategy is to buy the yen sell USDJPY —of course, at the right technical locations, which we discuss in Part II. EURO The euro as a currency is the most complex in the world. The creation of the euro was a tectonic event in world economic news. Other currencies reflect one unified economy, whereas the euro reflects 13 economies comprising the Eurozone: r Belgium r Germany r Greece r Spain r France r Ireland r Italy r Luxembourg r The Netherlands r Austria r Portugal r Slovenia r Finland When combined, the Eurozone economy presents a powerful part of world trade.

Managing to control the multiple economies of the Eurozone makes the mission of the European Central Bank ECB one of the most challenging of all central banks.

To succeed, the policies of the ECB need to succeed in all of the member countries. Keep in mind that this is not easy. Each country has its own domestic policies, and its own TABLE 7.

Events in any country can undermine, achieving the average inflation rate that the ECB sets. The forex trader has to expect the unexpected in regard to the euro. We can observe these trading relationships in the Trade- Weighted Index for the euro refer to Table 7. dollar has the greatest weight, with the British pound and then the yen following. There is more than one trade-weighted index that the trader should be aware of.

For example, we also have a fairly new trade- weighted index for the euro called the Dow Jones Euro Currency 5 Index Table 7. The DJEC5 places a greater weight on Japan and less weight on the United Kingdom. It also includes Australia, which is ignored by the TWI. dollar to euro In any case, trading the euro in the absence of knowledge about which countries the euro trades with will undoubtedly lead to misjudgments about the performance of that currency. The importance of the euro as a currency reflects the fact that its trading partners are global, and as a result the euro as a currency may become less dependent on U.

economic prospects. Traders have many choices of pairs to shape the trade. The EURUSD pair is the most popular, followed by the EURJPY pair and the EURGBP pair. The fundamental picture of euro performance at this point in time is that of sustained strength.

It has been probing trade-weighted highs, which reflects strong economic per- formance in its member countries. The economic growth of the Eurozone has led to interest rate increases by the European Central Bank to contain inflation near a 2 per- cent level.

This increase in rates has served to further strengthen the demand for the currency. The ECB raised its benchmark interest rate seven consecutive times, from 2 percent in December to 4. However, the Eurozone also faces a relatively high unemployment rate of nearly 8 percent.

If the currency continues to have strength against a weakening yen, the Eurozone may face a slowdown on exports, of which Japan is an important trading partner Figure 7. The trader should carefully watch the EURJPY pair Figure 7.

Fundamental forces will kick in and provide the impetus for a sell-off. BRITISH POUND CABLE Great Britain remains a vigorous part of the global economy. Consider the fact that over half of the profits coming from the Financial Times and London Stock Exchange FTSE are profits from overseas activity. The British economy is intimately linked to global trading patterns.

The TWI of the pound as tracked by iBoxx® see Table 7. This immediately suggests that in trading the pound, the EURGBP and the USDGBP pairs would be the main pairs to trade. We can see in Figure 7. In , it broke the index number of We can also see that the pound is getting close to topping out in global strength, and traders need to watch for a possible probing or trend break in its TWI, as we can see in Figure 7. The Bank of England BOE , in response to the hot British economy, raised rates in a surprise move in August , and raised rates again to 5.

These actions of the BOE show that its policy on raising rates is very sensitive to data and that the central bank is not ideological about it. The key factor for traders to watch will be what the BOE does on interest rates.

As indicated in the section on fundamentals, housing continues to be a major com- ponent of decisions of central banks. But any data that shows a slowing of inflation would translate into a selling of the pound. Beyond the critical components of interest rates and GDP, Great Britain has unique economic challenges due to an increase in migration levels. The surge in migration can affect inflation and employment levels in a variety of ways, and those who watch and trade the pound must not ignore these aspects of fundamentals and Great Britain.

Sources: Reproduced with kind permission of Land Registry. The house prices data being used is Crown copyright and is reproduced with the permission of Land Registry under delegated authority from the Controller of HMSO. SWISS FRANC The Swiss franc represents an interesting niche among the global floating currencies. Over the years, it has been used as a safe-haven currency because it had a link of convertibility.

This link was abandoned in , but the Swiss National Bank SNB , the central bank, still holds 30 percent of its assets, about tons in gold. Even though it is more than 70 years after the global collapse of the gold standard in , there is still an association of gold and the Swiss franc.

In a speech commemorating this anniversary, John Pierre Roth, chairman of the gov- erning board of the SNB, said the following: As I said at the outset, the role of gold has faded over the years.

But gold had an afterlife long after it ceased to be relevant in any form for the conduct of mone- tary policy. The constitutional changes that severed this link took effect in , followed, within the same year, by the correspond- ing changes in the relevant law. The new law no longer includes an obligation on the part of the SNB to redeem banknotes for gold—an obligation which—in practice—had been suspended for decades. Moreover, it has abolished the mini- mum gold coverage of the banknotes in circulation and the gold parity of the Swiss franc.

With these changes, gold finally became a normal and marketable asset for the SNB. In May , the SNB began to sell part of its gold stock. About 50 percent of the gold once owned by the SNB has now been sold. It reflects the fact that it is embedded in the European economy. From a trade-weighted point of view the most important currency impacting the franc is the euro followed by the U.

dollar see Table 7. Trading this currency offers several alternative strategies. It can be used as a hedge against the EURUSD trade; it can also be used as a method for buying dollars. In fact, in trading the news, the hedge effect of the USDCHF against the EURUSD is employed to implement a trading the news strategy. The Swiss franc also can be used as an alternative to the yen for those traders looking to construct a carry trade.

They would be selling the Swiss franc, which has an associated low interest rate of 2. Finally, by understanding the state of the Swiss econ- omy and evaluating the trade-weighted index charts Figure 7. com and register. You will then be able to generate the latest TWI charts in a few simple steps. Dollar aining a fundamental understanding of the U. economy is a critical part of being G prepared fundamentally for forex trading. economy is still the largest developed economy in the world, and therefore the U.

dollar reflects this im- portance. It is true that we are in a period when the world economy is growing, particularly with the growth of Asia.

This growth may mean that in the coming years, the preeminence of the U. economy will diminish. However, as the U. economy re- mains the critical pivot point of the world economy, forex trading will continue to pay close attention to U. In particular, the forex trader, in trading a currency pair involving the dollar, is actually making a judgment or a bet about the direction of the U.

dollar with regard to the other pair. This can be a five-minute bet or one that goes substantially longer in duration. But the fundamental question the trader has to answer is whether to be bullish or bearish on the dollar for his next trade. A first approach to getting a picture of the global position of the U. dollar and gauging whether it is strong or weak is by looking at the Trade-Weighted Index TWI. In Figure 8. dollar has declined significantly. It is probing the lows of this index, and if it breaks below 80, the world, through global trading forces, will demonstrate an unprecedented decline in dollar values.

This year chart certainly provides a perspective missing from day-to-day trading, but a forex trader can zoom in on the U. dollar performance by generating a nearer- term chart. For example, in Figure 8. Dollar Index—TWI recent patterns. The trader can use this chart and generate strategies to prepare for future moves if they occur.

FIGURE 8. Source: Board of Governors of the Federal Reserve System. Dollar 71 based on a review of Figure 8. dollar is in a compressed triangle and that it is testing historic support near 80 on the TWI.

Gaining insight into the strength of the U. This index is traded at the NYBOT and is a weighted index. But the USDX is traded by major funds and is considered an important barometer of sentiment regarding the dollar. It can easily be tracked at www. STRUCTURE OF THE USDX The USDX has its own basket of currencies, just like the TWIs.

The question arises of which is better? The answer really depends on how you use it. The USDX is more popular and provides a trader an accepted way to track dollar sen- timent, though it is less accurate from an economic point of view. When the USDX is showing a dollar decline, it may be exaggerating the real decline from a global trading point of view.

The USDX chart provides a good way of checking dollar sentiment. It should be clear that there are many ways to evaluate the dollar.

In fact, new mea- sures are always being introduced. Citigroup recently introduced its own dollar index called the Citigroup Flow-Weighted Index. This index scrutinizes international capital flows, which have become an important influence on forex. Dollar Index Currency Weight European euro 0. Morgan Dollar Index, which looks at the dollar in terms of a basket of 18 curren- cies. The bottom line is that the forex trader has now an improved ability to answer the question of how well the dollar is doing in terms of its fundamentals by looking at the different TWIs of the dollar.

FOREIGN DEBT AND WHO BUYS U. ASSETS One of the fundamental variables that affect sentiment regarding the U. dollar is the fact that as a nation the United States has huge foreign debt. For example, economist David Levy said recently: The current account deficit measures the difference between what U. residents spend abroad and what they earn abroad in a year. It now stands at almost six percent of GDP; total net foreign liabilities are approaching a quarter of GDP.

Sudden unwillingness by investors abroad to continue adding to their already large dollar assets, in this scenario, would set off a panic, causing the dollar to tank, interest rates to skyrocket, and the U.

economy to descend into crisis, dragging the rest of the world down with it www. Another way to look at the current account deficit is that it reflects the excess of im- ports over exports. The question is: Why is there a current account deficit in the United States, and why do nations such as China have a current account surplus? The answer is that the fundamental personality of the U.

The fear is that if foreign investors of U. Treasury notes suddenly became unwilling to buy these notes, the U. economy would suffer. Here is what happened in Foreign ownership of U. Treasury securities has often been the subject of con- siderable public debate. Discussion of this issue arises particularly at times of uncertainty about either the outlook for the exchange value of the dollar or the need for cash in countries holding large stocks of Treasury assets.

In June of , for example, there was a flurry of activity in the U. financial markets when the Prime Minister of Japan, Ryutaro Hashimoto, suggested that Japan might find it necessary to sell some of its large Treasury holdings. On the day following Mr. Dollar 73 falloff on October 19, financial markets to sudden decisions by foreign holders of U. debt to undertake large-scale sales of their dollar assets. Laurence H. pdf The U. Trea- sury Securities www.

The fear that someday foreign own- ership of U. Treasury securities will stop and cause interest rates to increase and destabilize the U.

The trader will find that this fear continues to resurface in newspaper headlines and will likely become part of the U. national political dialogue. When the U. Treasury report comes out, it can move the forex market. securities see Table 8. From a fundamental view, this is supportive of the dollar. We can see that the Organization of Petroleum Exporting Countries OPEC accumulates dollar surpluses from its petrodollars.

It also purchased more U. Monitoring the levels of foreign owners of U. securities is an important part of sensing the true dollar sentiment in the world. Forex dollar bulls can point to the fact that essentially a consistent stream of buyers of U.

treasuries has provided a floor against a steep and quick fall of the U. Major Foreign Holders of Treasury TABLE 8. Economists are in agreement that the effect of foreign purchasers of U.

Treasury securities is to lower interest rates. Without such purchases, U. rates might be nearly 1 percent more. Here is how analysts at the U. Treasury Department portrayed risks to the United States related to foreign ownership of U. r The trade balance has been weaker. r Econometric evidence suggests that recent heavy central bank buying has helped keep interest rates low.

edu no longer supports Internet Explorer. To browse Academia. edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser. Frequently, they will complain that a strategy doesn't work. Few people understand that successful trading of the FOREX market entails the application of the right strategy for the right market condition.

Grace Cheng highlights seven trading strategies, each of which is to be applied in a unique way and is designed for differing market conditions. She shows how traders can use the various market conditions to their advantage by tailoring the strategy to suit each one.

This revealing book also sheds light on how the FOREX market works, how you can incorporate sentiment analysis into your trading, and how trading in the direction of institutional activity can give you a competitive edge in the trading arena.

This invaluable book is ideal for new and current traders wanting to improve their trading performance. Filled with practical advice, this book is a must-read for traders who want to know exactly how they can make money in the FOREX market. wilson putra. this is something you have looking for when making serious decision about Dollar investment stuff.

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How To Trade Dollar. Download Free PDF View PDF. How to Make a Living Trading Foreign Exchange. The 10 Essentials of Forex Trading -free-ebook-download. com Website: www. com First published in Great Britain in by Harriman House. Copyright © Harriman House Ltd The right of Grace Cheng to be identified as the author has been asserted in accordance with the Copyright, Design and Patents Act ISBN British Library Cataloguing in Publication Data A CIP catalogue record for this book can be obtained from the British Library.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher.

This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher. Printed and bound in Great Britain by Biddles Ltd, Kings Lynn, Norfolk.

Index by Indexing Specialists UK Ltd No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher, by the Author, or by the employer of the Author. Designated trademarks and brands are the property of their respective owners. Dedication I dedicate this book to my husband, Pedro.

Thank you for your constant encouragement, support and love. This book is also dedicated to my loving parents who have always believed in me. She has also been featured in newspapers, magazines, newsletters and on TV. Grace is the creator of the PowerFX Course which is designed for both new and intermediate traders to jump-start their trading performance.

Grace has mentored hundreds of independent traders through her PowerFX Course. Her web site is at: www. And the development of sophisticated online foreign exchange trading platforms in recent years has attracted many traders to the market — traders who seek an income in addition to their day job or those who wish to trade a new market besides stocks and futures.

Who this book is for This book is primarily for those who are new to the world of currency trading and are curious about how they can make money from the forex market. Existing traders who are trading on demo or live accounts should also find some useful advice in this book. Some knowledge of candlestick charting is assumed as I will be using candlesticks to display the high, low, opening and closing prices in the charts throughout the book. All you need to start is a computer with fast and stable internet access and a relatively small account with a broker.

About this book This book describes seven fundamental and technical trading strategies for trading the foreign exchange markets. The purpose of this book is to show you how you can trade forex with these winning strategies. I will share with you some new ideas, interesting concepts, and the nuts and bolts of how you can implement each strategy more effectively. This book is quite different from traditional technical analysis books because, while those books may document the reliability of certain technical patterns, I will explain in this book why certain technical patterns do not work as well in the forex market and therefore need adapting.

For example, I have increasingly noticed that in recent times the first attempt of a price breakout more often than not results in a failure. The strategies that I am going to share with you are suitable for trading the forex market in any time frame — ranging from minutes to weeks.

Throughout the book I also explain certain aspects of the forex market so that you can gain an insight into how the market behaves. Flexibility is required for the trader to adapt his or her strategies to different market conditions, as well as for the trader to customise trading strategies to suit his or her own trading style and personality. Therefore, feel free to tweak or modify any of the parameters of these strategies to suit your own preferences.

The 7 strategies in this book must be applied with discipline and a huge dose of common sense. Their rules and guidelines are not set in stone. What I provide is a guide to implementing these strategies so that you can tilt the odds of success to your side. How this book is structured The book contains the following chapters. Getting Started Find out why the forex market is constantly growing, and why an increasing number of people are turning to trade this particular asset class in their quest to accumulate wealth.

For those who are new to trading, take a look at the differences between investing and trading, and the various choices of trading time frames. Spot Forex Market Structure The forex market has long been the exclusive playground of the big players, namely banks, institutional investors and hedge funds.

But the playground is no longer restricted to just them; individuals can also participate in this speculative game. It is essential to know where you, the trader, stand in the overall big picture.

How To Overcome The Odds Of Trading Forex How are you going to tackle the odds that are stacked against you from the start in the forex trading business? In this chapter, I will highlight the three Ms that have brought me success in this field: Mind, Money and Method. Many traders, especially the inexperienced ones, are too fixated on finding the perfect trade setup, the perfect trading system or the strategy that never fails, thus neglecting the other more important aspects that are crucial to good trading performance.

Find out what defines the current market sentiment, and how you can incorporate market sentiment analysis into your trading. Strategy 2 — Trend Riding There is so much more to riding trends than simply closing your eyes and buying at any point during an uptrend or short-selling at any point during a downtrend. This chapter shows you how you can jump on a trend when the trend is the most robust, rather than when it is about to end.

This way you can ride a trend with a higher chance of success. Strategy 3 — Breakout Fading Many false breakouts occur in forex price charts, and the occurrence of these fakeouts provides the perfect opportunity for fading breakouts, that is, trading against those breakouts.

In this chapter, I explain why most breakouts fail, and how you can identify high-probability fading opportunities. Strategy 4 — Breakout Trading When currency prices break out of certain price levels, a large sustained move in the direction of the breakout may occur, giving rise to a situation whereby big profits could potentially be captured in the least amount of time. The main problem with trading breakouts is that many of these breakout attempts fail.

In this chapter I walk you through several guidelines of how you can better identify potential breakout opportunities for this strategy.

This particular strategy, however, requires that the forex market registers a period of relative calm and low volatility before the strategy is to be implemented. Strategy 6 — Carry Trade This is a fundamental trading strategy that is highly favoured by institutional investors. In this chapter, I explain how a carry trade works, and highlight some points which you should keep in mind when adopting this strategy in the forex market.

Strategy 7 — News Straddling The forex market is extremely sensitive to economic and geopolitical news from around the world, especially those which relate to the industrialised countries. Find out how you can trade news releases with a higher probability of success. Risk disclosure Trading forex involves substantial risk, and there is always the potential for loss.

Your trading results may vary. No representation is made that any information in this book will guarantee profits or prevent losses from trading forex. You should be aware that no trading strategy can guarantee profits. Further information For more information about my trading strategies, the proprietary PowerFX Course and other forex market information, please visit the following website where I also host a daily forex blog — www.

This book, however, shall focus on the trading of spot forex. The most significant difference between spot forex and futures is that spot forex contracts are traded over-the-counter at no central location, while forex futures are traded on an exchange.

This gives rise to another unique aspect of spot forex — the hour non-stop action; this is one major reason why I enjoy trading spot forex. With round-the-clock trading a person in any time-zone can trade spot forex at any time — whether during the day or night. The best career decision I have made was to trade forex full-time. Forex trading has brought me both financial and emotional satisfaction, even though my initial learning journey was long and arduous.

When I started in forex, I could only find one book on forex trading. Forex was not as popular as stocks or options trading, so there were very few articles in magazines that focused on this field.

I spent the first one and a half years learning how to trade forex and honing my skills on a demo account, before progressing to a real account, when I became consistently profitable. The breakthrough came when I incorporated fundamental and sentiment analysis into my predominantly technical-based analysis. Even though I was able to dedicate myself to full-time trading, I found the initial learning curve to be extremely steep, as I had no mentor and had to learn all the ways of losing in the market before I learnt how to profit from it.

I hope that through this book, aspiring and current traders are able to fast-track their learning, and greatly improve their trading performance.

Branding Books. In order for forex brokers to increase the number of trades available to its customers, they need to provide capital in the way of leverage. As the title suggests, this one is a bar chart, and each time frame a trader is looking at will be displayed as a bar. There are many factors that contribute to the net supply and demand for a currency and the strength of the economy. Remember me on this computer. In fact, the New Zealand Central bank intervened for the first time since and sold the New Zealand dollar on June

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