Two most popular Forex indicators

Variety of Forex indicators available on advanced Forex trading platforms can sometimes create a challenge even for an experienced Forex trader. To control the situation traders need to choose only useful primary tools in order to avoid information overflow. Especially if you are a novice trader, we'd like to suggest you two most popular and widely used indicators to start planning your trades with. These are: Moving Averages and Stochastic indicator. The third place goes to MACD. While you experiment with those indicators you will discover that they can have various settings and change their accuracy and behavior depending on the time frame and currency pair you try to use them for. Don't be afraid to experiment until you find the best combination. Let...

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How to choose the best combination of Forex indicators

The goal is to pick the best indicators set. The challenge is to combine indicators in a smart way. This means that indicators should deliver different type of information about the market and confirm each other rather than duplicate signals. When two or more indicators provide identical information about prices, it hardly ever helps trading better; and while Forex traders call it "signal confirmation", it is in reality could be the same type of data, and should be called "duplication", rather than "confirmation". When money is at stake, the problem becomes serious… If you are randomly choosing indicators for technical analysis, chances are you’ll pick some with similar studies. How to avoid this? First of all traders should know what type of indicator they use. There are general...

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Stops, limit orders and trading limits: a Safety Net for Futures Traders

Through the control offered by the exchanges, and government regulation, trading in the commodities markets does offer some limited protection from manipulation. The use of prudent orders does also offer some protection from loss. The Short Futures Position This simply means taking a short position in the hope that the futures price will go down. There is nothing to borrow and return when you take a short position since delivery, if it ever takes place, doesn't become an issue until some time in the future. Limit and Stop-Loss Orders "Limit orders" are common in the futures markets. In such cases, the customer instructs the broker to buy or sell only if the price of the contract he is holding, or wishes to hold, reaches a certain point. Limit orders are...

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Options on Futures

Options on futures began trading in 1983. Today, puts and calls on agricultural, metal, and financial (foreign currency, interest-rate and stock index) futures are traded by open outcry in designated pits. These options pits are usually located near those where the underlying futures trade. Many of the features that apply to stock options apply to futures options. An option's price, its premium, tracks the price of its underlying futures contract which, in turn, tracks the price of the underlying cash. Therefore, the March T-bond option premium tracks the March T-bond futures price. The December S&P 500 index option follows the December S&P 500 index futures. The May soybean option tracks the May soybean futures contract. Because option prices track futures prices, speculators can...

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Taking Delivery of Futures Contracts

You may wonder what happens if a trader forgets to close out a long position. If he bought live hog futures, will someone deliver 40,000 pounds worth of squealing porkers to his back door the morning after his contract expires? Sorry, but no. Brokerage firms watch their open accounts and know who has long or short positions in contracts nearing maturity. Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short positions are informed that they must close out their trades or prepare to deliver the underlying commodity. In this case, they must have the required quantity and quality of the deliverable...

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