Nov 15 2010
The quantity of Foreign currency exchange market systems has skyrocketed during the last couple of years. In case the technology is new to you - a robot buys and sells on auto-pilot in accordance with the rules set up by the programmer within its algorithm. The positive characteristic is that the silicon is completely unemotional and never takes a nap or a coffee break. On the negative side a robot has to hold a losing trade too long, or abandon a good trade too early if that's what its algorithm says to do. In opposition, an experienced human trader will become aware of changes in price movements, volume or momentum which may tell him that a modification of tactics at the moment makes sense.
Forex programs have intricate algorithms that allow them to do mathematical computations in line with actual data from the Forex market. These programs can analyze millions of data in less than a second. Some experts may say that these programs remove the human error variable. Decisions about entering or exiting a position, buying or selling, depend on the computations and trade signals encoded into the robot.
Foreign exchange trading is a very unpredictable and fast-paced market. These factors make currency trading difficult, even for the people who are experienced. That is why many beginners would rather use an automated trading system to help them, at least at the start. If you think maybe a robot may be right for you, here are some things to consider:
You should have a fast computer, a stable broadband connection and some basic knowledge about currency trading. Foreign exchange is very highly leveraged and the smallest price change in the underlying currency cross could cause significant losses in your account.
Any problem, not matter how small, that shows during setup is an unfavorable sign. Once you have any irregularity, even the tiniest glitch, get the application replaced by the vendor, or start looking elsewhere. That is why it is very important to check if the vendor offers a money back guarantee and has a good return policy before proceeding with the acquisition. Responsive customer support is essential. Be sure that online and even telephone technical support are offered to purchasers.
Simulation accounts are very important. Do not ignore them. Try the program in the beginning with a simulation account before you use real money. As expected, testimonials from others and review articles will say that the software is amazing and perfect, but you should not rely on them very much.
Your Internet connection does affect automatic robot performance. Should you be encountering any problems with throughput, it could have effect on how the signals get detected and interpreted.
Forex robots are mathematically controlled. Which means that they generate trading signals derived from calculations of technical indicators like Fibonacci levels, RSI, Stochastic and moving averages, and others.
Fibonacci trading has more to offer than a simple
Fibonacci retracement calculation would suggest. A complete Fibonacci program will include internal and external extensions and parallel projections of both price and time. No Forex robot can do that.
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Aug 27 2010
Fibonacci Retracements are a widely used technical tool used Forex traders to identify areas of support and resistance in the market. Fibonacci levels useful in defining levels in the market where pullbacks are likely to occur following a strong directional move. These levels can be used either as an opportunity to trade the pullback or alternatively as a point to position for rejoining of the major trend.
The term Fibonacci comes from an Italian mathematician named Leonardo Fibonacci who lived in the late twelfth century. He studied many ancient number sequences which had previously been observed in nature . He found that these number sequences formed a pattern. The Fibonacci number sequence that he identified was formed from adding the two preceding numbers in a sequence to create the next. What he also discovered was that in dividing any number in the sequence by the next logical number, you ended up with a ratio of 61.8%. This is referred to as the Golden Number and is part of the Fibonacci sequence used in Forex trading.
Fibonacci Technical Analysis may seem complicated to a novice trader but is actually quite simple to graspFibonacci levels are commonly applied to Forex trading in two ways.
Identifying market retracements with Fibonacci
The first use of retracement levels is to identify where a market may pull back to following a strong move. After identifying the high and low of the move the retracement levels can be plotted and traded.
Fibonacci Retracements can be used on all time frames and by all Forex traders. The retracements occur at specific levels of the preceding move. The most common levels used are 23.2%, 38.2%, 50% and 61.8%. In relation to the current market price, each of these levels will provide either support or resistance to future market moves. The 61.8% is given a special significance by Forex traders. If this level is breached on a retrace then it is assumed that the entire preceding move will be retraced.
These defined support and resistance levels are also often used by Forex traders as both areas for stop losses and profit targets to be placed.
Using Fibonacci to enter a trend
The retracement levels identified can also be used as areas in the market to rejoin the previous trend. In this case, the retracement levels are used to identify levels that the market may sell off to. This could be because of a healthy correction or consolidation in the market. By being aware of where the market is likely to pull back to, the trader is able to position themselves to rejoin the major trend.
You can easily calculate a Fibonacci Retracement level by the use of a
Fibonacci calculator.Remember that as with all techincal analysis approaches, always seek further confirmation from other forms of technical analaysis before employing any one trading indicator.
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