December

-158 pips
-44 %

Year

- 88 %

 8.
-17 pips

9.
-46 pips
Didn't capture chart.

 16.
+2 pips
 

 21.
-58 pips
  Raging after good start.

There are 2 order types in the forex market:

• Instant Execution ( on market price )
• Pending Orders - limit and stop orders

Market Order

A market order is an order to buy or sell at the current market price.The execution of the order is instantaneous.

Limit Orders

A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active.

Stop orders

A stop order is also an order placed to buy or sell at a certain price. The order contains the same two variables, price and duration. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market, add to a pre-existing position and profit taking.

Both, Stop Orders and Limit Orders, have the following options:

GTC (Good till cancelled): A GTC order remains active in the market until the trader decides to cancel it. The dealer will not cancel the order at any time therefore it is the customer's responsibility to remember that he possesses the order.

GFD (Good for the day): A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour.




Best Regards,  
^^_Lord_Ice_^^

Lots - quantity you want to trade

  1.0 Lots  = 100,000 units of currency ( 1 Lots )

  0.1 Lots  =   10,000 units of currency ( 1 mini-lots )

0.01 Lots  =     1,000 units of currency ( 1 micro-lots )

All with up to as much as 1000:1 being available (although not in the US where the maximum is now 50:1 after a ruling by the CFTC).

Leverage

In finance, leverage (sometimes referred to as gearing in the United Kingdom) is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives.  

Leverage and risk
  
The most obvious risk of leverage is that it multiplies losses. A corporation that borrows too much money might face bankruptcy during a business downturn, while a less-levered corporation might survive. An investor who buys a stock on 50% margin will lose 40% of his money if the stock declines 20%.

There is an important implicit assumption in that account, however, which is that the underlying levered asset is the same as the unlevered one. If a company borrows money to modernize, or add to its product line, or expand internationally, the additional diversification might more than offset the additional risk from leverage. Or if an investor uses a fraction of his or her portfolio to margin stock index futures and puts the rest in a money market fund, he or she might have the same volatility and expected return as an investor in an unlevered equity index fund, with a limited downside. So while adding leverage to a given asset always adds risk, it is not the case that a levered company or investment is always riskier than an unlevered one. In fact, many highly-levered hedge funds have less return volatility than unlevered bond funds, and public utilities with lots of debt are usually less risky stocks than unlevered technology companies.

source: http://en.wikipedia.org/wiki/Leverage_%28forex%29#cite_note-autogenerated1995-0
 
Margin
 
In finance, a margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty (most often their broker or an exchange).
 

This risk can arise if the holder has done any of the following:

•     borrowed cash from the counterparty to buy financial instruments,
•     sold financial instruments short, or
•     entered into a derivative contract.

The collateral can be in the form of cash or securities, and it is deposited in a margin account. On United States futures exchanges, "margin" was formerly called performance bond. Most of the exchanges today use SPAN (Standard Portfolio Analysis of Risk) methodology for calculation of margin in 'Options' and 'Futures'. SPAN was developed by the Chicago Mercantile Exchange in 1988.


Types of margin requirements


The current liquidating margin is the value of a securities position if the position were liquidated now. In other words, if the holder has a short position, this is the money needed to buy back; if they are long, it is the money they can raise by selling it.

The variation margin or maintenance margin is not collateral, but a daily payment of profits and losses. Futures are marked-to-market every day, so the current price is compared to the previous day's price. The profit or loss on the day of a position is then paid to or debited from the holder by the futures exchange. This is possible, because the exchange is the central counterparty to all contracts, and the number of long contracts equals the number of short contracts. Certain other exchange traded derivatives, such as options on futures contracts, are marked-to-market in the same way.

The seller of an option has the obligation to deliver the underlying of the option if it is exercised. To ensure they can fulfill this obligation, they have to deposit collateral. This premium margin is equal to the premium that they would need to pay to buy back the option and close out their position.

Additional margin is intended to cover a potential fall in the value of the position on the following trading day. This is calculated as the potential loss in a worst-case scenario.

SMA and Portfolio margin offer alternative rules for US and NYSE regulatory margin requirements.

Enhanced leverage is a strategy offered by some brokers that provides 4:1 or 6:1+ leverage. This requires maintaining two sets of accounts, long and short.


Example 1
    An investor sells a call option, where the buyer has the right to buy 100 shares in Universal Widgets S.A. at 90¢. He receives an option premium of 14¢. The value of the option is 14¢, so this is the premium margin. The exchange has calculated, using historical prices, that the option value won't go above 17¢ the next day, with 99% certainty. Therefore, the additional margin requirement is set at 3¢, and the investor has to post at least 14¢ + 3¢ = 17¢ in his margin account as collateral.

Example 2
    Futures contracts on sweet crude oil closed the day at $65. The exchange sets the additional margin requirement at $2, which the holder of a long position pays as collateral in her margin account. A day later, the futures close at $66. The exchange now pays the profit of $1 in the mark-to-market to the holder. The margin account still holds only the $2.

Example 3
    An investor is long 50 shares in Universal Widgets Ltd, trading at 120 pence (£1.20) each. The broker sets an additional margin requirement of 20 pence per share, so £10 for the total position. The current liquidating margin is currently £60 in favour of the investor. The minimum margin requirement is now -£60 + £10 = -£50. In other words, the investor can run a deficit of £50 in his margin account and still fulfil his margin obligations. This is the same as saying he can borrow up to £50 from the broker. 

source: http://en.wikipedia.org/wiki/Margin_trading

Best Regards,  
^^_Lord_Ice_^^

Time frame - a time period during which something occurs or is expected to occur; In Forex, that time is made by candlesticks.

For ex: 1 Hour TF, means that each candle represent 1 hour of trading, 4 H represent 4 hours of trading and so on.

Depend of your forex broker and the platform provided by him, TF should be: M1( 1 min ), M5 ( 5 min ), M15 (15 min), M30 ( 30 min ), H1 ( 1 hours ), H4 ( 4 hours ), D ( Daily ), W ( Weekly ), M ( Monthly ).

For beginners, I recommend to start on 4H or Daily chart, to practice on demo accounts and minimum Daily chart for real accounts. You won't have many trades / week and might be a problem with "speeding in learning" on practicing account, but on higher TF, you won't need much fundamental analysis for news and corrections.

For ex. here, on H1, with ups and downs, those 24 candles = 1 Daily candle 09 dec 2011, during EU Economic Summit:

 After at least 1 year of experience on the market, you can try under H1, after you will learn how to trade during news. ( on major pairs almost every day, all day we have news - you can't practicly avoid them by not trading during news )

Best Regards,

^^_Lord_Ice_^^

A gap is defined as an unfilled space or interval. On a technical analysis chart, a gap represents an area where no trading takes place. On the Japanese candlestick chart, a window is interpreted as a gap.

In an upward trend, a gap is produced when the highest price of one day is lower than the lowest price of the following day. Thus, in a downward trend, a gap occurs when the lowest price of any one day is higher than the highest price of the next day.

For example, the price of a share reaches a high of $30.00 on Wednesday, and opens at $31.20 on Thursday, falls down to $31.00 in the early hour, moves straight up again to $31.45, and no trading occurs in between $30.00 and $31.00 area. This no-trading zone appears on the chart as a gap.

Gaps can play an important role when spotted before the beginning of a move.

Types of gaps

There are four different types of gaps, excluding the gap that occurs as a result of a stock going ex-dividend. Since each type of gap has its own distinctive implication, it is very important to be able distinguish between such gaps.

    Breakway gap : It occurs when prices break away from an area of congestion. When the price is breaking away from a triangle (Ascending or Descending) with a gap then it can be implied that change in sentiment is strong and coming move will be powerful. One must keep an eye on the volume. If it is heavy after the gap is formed then there is a good chance that market does not return to fill the gap. When the price is breaking away on a low volume, there is a possibility that the gap will be filled before prices resume their trend.

    Common gap : It is also known as area gap, pattern gap or temporary gap. They tend to occur when trading is bound between support and resistance level on a short span of time and market price is moving sideways. One can also see them in price congestion area. Usually, the price moves back or goes up in order to fill the gaps in the coming days. If the gap is filled, then they offer little in the way of forecasting significance.

    Exhaustion gap signals end of a move. These gaps are associated with a rapid, straight-line advance or decline. A reversal day can easily help to differentiate between the Measuring gap and the Exhaustion gap. When it is formed at the top with heavy volume, there is significant chance that the market is exhausted and prevailing trend is at halt which is ordinarily followed by some other area pattern development. An Exhaustion gap should not be read as a major reversal.

    Measuring Gap : Also known as Runaway Gap, a Measuring gap is formed usually in the half way of a price move. It is not associated with the congestion area, it is more likely to occur approximately in the middle of rapid advance or decline. It can be used to measure roughly how much further ahead a move will go. Runaway gaps are not normally filled for a considerable period of time.

source: http://en.wikipedia.org/wiki/Gap_%28chart_pattern%29

Best Regards,

^^_Lord_Ice_^^

Japanese Candlestick ( or Heikin Ashi Candlesticks ) charts are one of the oldest type of charts used for price prediction. They date back to the 1700s, when they were used for predicting rice prices. In this next section we’ll briefly look at some Japanese candlestick patterns, which are in wide use today.

Below I have provided a brief description and appearance of many candlestick patterns. I am sure there are many more but you have to drawn the line somewhere, right?

Candlesticks allow you to gain an insight into the interaction between buyers and sellers, and can therefore be used to analyse stocks, commodities, or forex.

Before we continue let’s quickly digress to the basics - candlesticks are constructed as follows:

The body of the candlestick is called the ‘real body’, and it represents the range between the open and closing prices. Notice how the open and the close can be at either end of the body of the candlestick. You need to know how your charting software displays the difference. Generally, a hollow candlestick body represents the close being higher than the open. Conversely, a shaded or solid candlestick body represents the close being lower than the open. Often a hollow candlestick will be referred to as a ‘bullish candle(stick)’ and a solid candlestick as a ‘bearish candle(stick)’. These two terms are used often in the explanatory text below.

One more thing to note; above and below the body of a candlestick there are usually thin lines. These are known as shadows (or wicks). These represent the price extremes of a particular period i.e. the upper shadow represents the high for that period, while the lower shadow represents the low.

A note about candlestick patterns. In my opinion, their application is limited to the short term (1 week or so). In other words, 1 pattern is not going to influence what happens to that price in 1 month's time. Notwithstanding that, they can be quite effective - here they are below.

Candlestick Patterns

Bearish 3 Method Formation A large black candlestick followed by three smaller candles that are within the range of the first candle. These are followed by another large black candle. This five period pattern is seen as a continuation pattern of the already bearish sentiment.

Bearish Harami A large bullish candlestick engulfs a smaller black bodied candle. Its interpretation is similar to that of an inside day, in that it foreshadows an explosive move. Moreover, when preceded by an uptrend this pattern is bearish.

Bearish Harami Cross A large bullish candlestick engulfs a doji (refer to doji below). This indicates indecision after a strong move and can precede a trend reversal.

Big Black Candle A large bearish candlestick; where the close is lower than the open.

Big White Candle A large bullish candlestick; where the close is higher than the open.

Black Body Simply, a candlestick that has closed lower than it opened. This differs from that of a big black candlestick in that its length is unimportant.

Bullish 3 Method Formation The inverse of the “Bearish 3 Method Formation”; where a large white candlestick is followed by three smaller candles. These candles are within the range of the first candlestick. This five period pattern is seen as a continuation pattern of the already bullish sentiment.

Bullish Harami A large bearish candlestick engulfs a smaller white bodied candle. When preceded by a downtrend, this is considered a bullish pattern.

Bullish Harami Cross A large bearish candlestick engulfs a doji (explained below). It’s important to note that when a pattern includes a doji its significance is increased. Therefore, its interpretation is similar to the Bullish Harami, only it’s considered more powerful.

Dark Cloud Cover This is a two period pattern where a long white candlestick is followed by a black candle. The black candlestick opens higher than the close of the initial candle and penetrates 50% or more of its body. This is a bearish reversal pattern.

Doji The open and close are the same, representing indecision. This indecision can be the precursor to an explosive move.

Doji Star A doji that has gapped above or below the previous candlestick. This can be a potential reversal signal, since it too shows indecision.

Engulfing Bearish Line This is considered to be a key reversal pattern; it’s where a small white candlestick is engulfed by a large bearish candle. This is seen as a top reversal signal.

Engulfing Bullish Line This too is considered a key reversal pattern; it’s where a small black candlestick is engulfed by a large bullish candle. An ‘Engulfing Bullish Line’ is seen as a bottom reversal signal.

Evening Doji Star A three period pattern where a large white candlestick is followed by a doji. This doji has gapped above the white candlestick. A third black candlestick follows and pierces the initial white candlestick. This is considered to be one of the most reliable key reversal patterns, especially at new highs.

Evening Star A pattern similar to the ‘Evening Doji Star’, except the second candle isn’t a doji. Instead it can have a small body (white or black). This is seen as a key reversal signal however, its significance is decreased since it doesn’t involve a doji.

Falling Window This is effectively what is known as a gap down.

Gravestone Doji A doji where the open and close are at the low of the period. Its appearance is similar to that of a gravestone, hence it’s name. Moreover, as a gravestone is seen as sombre, so too is its interpretation. It’s a bearish top reversal pattern.

Hammer A small body (white or black) that closes near its high with a long lower shadow. There is typically no upper shadow, or a very small one. This is a reversal pattern that can be either bullish or bearish, depending on its placement.

Hanging Man This formation is similar to that of the “Hammer”, however, the difference being the length of the lower shadow. The hanging man exhibits a shadow, two or three times the height of the main body of the candlestick. This length gives it greater significance as a reversal pattern.

Inverted Black Hammer A small black body that closes near its low with a long upper shadow. There is typically no lower shadow, or a very small one. This is a reversal pattern that can be either bullish or bearish, depending on its placement.

Inverted Hammer As the name indicates this is the inverse of the “Hammer.” A small body (white or black) is near the low with a long upper shadow. There is typically no lower shadow, or a very small one. This is a reversal pattern that can be either bullish or bearish, depending on its placement.

Long Legged Doji A Doji pattern with very long upper and lower shadows. This indicates market indecision.

Long Lower Shadow A candlestick (black or white) where its lower shadow is two-thirds or more of the total candle’s range. This indicates rejection of lower prices and is therefore seen as a bullish signal.

Long Upper Shadow A candlestick (black or white) where its uppper shadow is two-thirds or more of the total candle’s range. Opposite to the “Long Lower Shadow”, this shows rejection of higher prices and is therefore seen as a bearish signal.

Morning Doji Star The inverse of the Evening Doji Star; the Morning Doji Star is a three period pattern where a large black candlestick is followed by a doji. This doji has gapped below the black candlestick. A third white candlestick follows and pierces the initial black candlestick. This is considered to be one of the most reliable key reversal patterns, especially at new lows.

Morning Star This formation is not as powerful as the “Morning Doji Star” however it is still a key reversal signal. It’s where a black candlestick is followed by a candle, of either colour, that has gapped below it. A third white candlestick follows and pierces the initial black candlestick. This is similar to an island pattern on standard bar charts.

On Neck-Line A black candlestick is followed by a small white candle. The small white candlestick’s close is near the low of the black candlestick. This indicates a continuation of an already bearish sentiment.

Piercing Line A two period pattern where a long black candlestick is followed by a white candlestick. The white candlestick opens lower than the close of the initial candlestick and penetrates 50% or more of its body. If the low of the white candlestick is broken, in subsequent periods, the market usually continues to move downward.

Rising Window This the same as a gap up.

Separating Lines In an uptrend, a black candlestick is followed by a white candle with the same opening price. In a downtrend, a white candlestick is followed by a black candle with the same opening price. Both these situations are seen as continuation patterns.

Shaven Bottom A candlestick, of either colour, with no lower shadow. This is a reversal pattern that can be either bullish or bearish, depending on its placement.

Shaven Head A candlestick, of either colour, with no upper shadow. This is a reversal pattern that can be either bullish or bearish, depending on its placement.

Shooting Star A small bodied candlestick with a long upper shadow and little or no lower shadow. Usually this is a top reversal signal, however, this depends on its placement.

Spinning Top This pattern is similar to the doji however there is a greater range from the opening to the closing price. Additionally, the candlestick can be of either colour and it indicates market indecision.

Three Black Crows Three long black candlesticks with consecutively lower closes that close near or at their low prices. Obviously numerous large black candlesticks have bearish implications.

Three White Soldiers The inverse of the “Three Black Crows”; exhibits three white candlesticks with consecutively higher closes that close near or at their high prices. Obviously numerous large white candlesticks have bullish implications.

Tweezer Bottoms The lower shadows of two or more candlesticks at the same price level. The size and colour of these candles are insignificant. This indicates support and can be used as a spring board to higher prices; on the other hand, if this spring board is broken (the low is breached) this can kick start a downtrend.

Tweezer Tops The highs of two or more candlesticks are at the same price level. This indicates rejection of higher prices and is therefore seen as a top reversal.

White Body A candlestick that has closed higher than it opened. This differs from that of a big white candlestick in that its length is unimportant. This is a bullish signal. Best Regards, ^^_Lord_Ice_^^