Lines of trends, support and resistance - SigmaForex

The trendline. A trendline is a main initial element for the price chart analysis. While the market moves in any direction not along a straight line but along a zigzag, the mutual placement of upper and bottom points of those zigzags permits to plot a line connecting the significant highs (peaks) or the significant lows (troughs) of an appropriate zigzag using technical tools of the computer program.trendline,

To draw a trendline only two points are necessary and the third one is the contact point confirmation. On a bullish trend chart it should be drawn using troughs, on a bearish  using peaks. The trendline and a line which is about parallel to it and drawn on the opposite side (through peaks on a bullish trend and through troughs on a bearish) form the trade channel. Both lines are then channel's borders.

Lines of support and resistance. The upper and the bottom borders of trade channels are called accordingly support and resistance lines. The peaks represent the price levels at which the selling pressure exceeds the buying pressure. They are known as resistance levels. The troughs, on the other hand, represent the levels at which the selling pressure succumbs to the buying pressure. They are called support levels. In an uptrend, the consecutive support and resistance levels must exceed each other respectively. The reverse is true in a downtrend. Although minor exceptions are acceptable, these failures should be considered as warning signals for trend changing.

The significance of trends is a function of time and volume. The longer the prices bounce off the support and resistance levels, the more significant the trend becomes. Trading volume is also very important, especially at the critical support and resistance levels. When the currency bounces off these levels under heavy volume, the significance of the trend increases.

The importance of support and resistance levels goes beyond their original functions. If these levels are convincingly penetrated, they tend to turn into just the opposite. A firm support level, once it is penetrated on heavy volume, will likely turn into a strong resistance level. Conversely, a strong resistance turns into a firm support after being penetrated. In general, to evaluate the reliability (that is the possibility of a break) of the trade channel borders taking a decision to close or to save an existing position one should govern himself with following rules:

1. A channel is the more reliable the longer it exists. Hence, the solidity of very old channels (e.g. existing more than 1 year) decreased sharply.

2. A channel is the more reliable the more is his width.

3. The resistance may be broken if it is bounced on the background of a growing volume.

4. A steep channel is less reliable in compare to a gentle one.

5. The support may be broken independent on the volume.

SigmaForex Practice Competition

Sigma Forex Ultimate Forex Monthly Champion

Interested clients who wish to take part in this competition shall send a request via email at

contest@sigmaforex.com

Attached with the following information:

* Full name

* Phone number

* Current valid passport or government issued photo ID

It begins at the beginning of each month.

After recieving your request we will provide you with further details and with your Practice account login information which will be used in the trading contest.

Also you have to download Sigma Forex Platform to login with the account number and password after receiving them.

SigmaForex - 3 Simple Steps to Catching Big Profits

If you want to catch the big profits in forex trading you need to trend follow forex trends which are longer term. Here we are going to give you a 3 step simple method which if you use it correctly, will help you catch every major forex trend and lead you to long term currency trading success.

Most novice traders don't bother trying to trend following forex longer term - instead they try forex scalping or day trading. These methods focus the trader on small moves and they hope to catch small profits however as most short term moves are random, this leads to equity wipe out.

The other choices are swing trading and long term forex trend following and this article is all about the latter method. If you look at any forex chart, you will see long term trends that last for months or years. These moves can and do yield big profits - here we will outline a simple method to catch them.

Breakouts

By far the best way of catching the big moves is to use a forex trading strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is broken.

It's a fact that most major moves start from new highs or lows.

While it might appear that you are not buying or selling at the best level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The reason for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don't buy or sell breakouts and that's exactly why it's such a powerful method.

The only point to keep in mind is a support or resistance which is broken, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the wider the spacing between the tests the more valid the level is.

Confirmation

Of course not every breakout continues and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your trading signal.

These indicators give you an idea of the strength and velocity of price and there are many to choose from. We don't have time to discuss them here (simply look up our other articles) but two of the best are - the stochastic and Relative Strength Index RSI

Stops and Targets

Stop levels are easy with breakouts - Simply behind the breakout point.

If you have a big trend then you need to be careful you can milk it, so don't move your stop to soon and keep it outside of normal volatility. If it is a big move, trailing stops should be held a long way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don't know when the trend is going to end, so don't predict.

It's ok to give a big back, as that's the nature of trading forex. Keep in mind if you got 50% of every major trend you would be very rich. When you are long term trend following you have accept giving a bit back and taking dips in open equity as the trend develops - this is noise and does not affect the long term trend.

The above is a simple way to trend follow forex and catch the high odds moves that yield the big profits. If you are learning forex trading and want a simple method that is robust and will help you catch every major move, then you should base your Trading on the above method.

Sigma devotes serious effort to serve the emerging retail segment of the Forex community. Its commitment to providing an excellent customer service, innovative currency trading technology, and dealing practices, establishes Sigma as a notable force that traders look forward to for an advanced Forex charting, Forex news, and fund safety.

Customers funds deposited with Sigma, are held and maintained separately in separated trading accounts at our partner banks. Sigma also provides its customers a variety of account plans, and services to choose from when creating or adjusting a profile.

The professionals at Sigma are dedicated to providing the guidance you need to accomplish your investment objectives.

The Magic of Moving Averages in SigmaForex

Perhaps, the first indicator you’ve seen and used when you first started to trade Forex was Moving Average. For me it was that. Moving averages come in several forms — simple, weighted, exponential, smoothed, etc. And they present the most basic way to measure the current trend direction and to spot its change. At a first glance simple moving average indicator looks like a miraculous tool that is easy to use and can tell you where to enter a position and where to exit one. Let’s try to understand this indicator — is it really as good as it seems?

What moving average shows? No matter if it’s a simple, exponential or any other form of MA the only thing it’s showing is the average rate of the currency pair over a certain period of time, hence the name. For example, MA with a period set to 7 on a daily chart for any given bar will show the average price over the previous 7 bars (days). That’s not a magic, right? Various forms of moving average just influence the way to calculate the average value (to make the line look more smooth or sharp, or to throw out spikes), but in the end we get the averages of the previous periods.

So what happens when the current price crosses MA? Faster MA crosses slower MA? 3 MAs cross each other? The cross of the MA and a price or other MA (or any amount of other MAs) is usually considered as the buy/sell signal or at least a partial signal. Why? Because they really show a change in the trend. The problem is that the change could have happened long ago (up to the MA’s period bars ago). When the moving average is crossed by the price chart from below that simply means the current price became higher than the average price for the last N bars (where N is the period of MA) — that’s it and nothing else. If MA with a period of 7 days crosses MA with a period of 14 days from below that means that the average price in the last 7 days is higher than the average price during the last 14 days (the actual trend change here could happen up to 14 days ago). Some strategies employ even 5 moving averages cross — that won’t change the fact that the only thing you’ll know when such cross occurs is the ratio of the average price over 5 different periods.

So is there any point to use moving average? Yes, I think that the moving average is a good indicator, but not as a signal producer or a trend change indicator. What does it do best? It indicates the average price. So, it’s better to use it when you want to know the average price over a certain period. You can compare current price to the moving average to consider overbought/oversold state, measure the volatility comparing the price action with the large-period MAs, use the long-term moving averages as the support and resistance levels (because so many traders and even institutional traders use it in this way), etc.

Maybe that’s not a pleasant thing to know if you base your trading strategy on moving averages’ crosses, but the facts don’t lie and with more trading experience it becomes clear that moving averages can’t do magic and shouldn’t be used as an easy way to create another Forex strategy.

Forecast And Win An Account

Get A Free Real Account

Through Sigma indicators you can forecast the upcoming prices of the pairs & get a chance to win a $ 50 live Sigma account.

For participation please select the pair that you are predicting for it, then fill in the following form & don't foreget to write down your
forecasted price.

Sigma Forex encourage the clients to study and analyze Forex Market by giving them more promotion and more chances to begin trading at
Forex Market.

• First: Choose one pair from the platform.
• Second: Try to use Technical And Fundamental Analysis to predict Friday's closing price for this pair.
• Third: Write down in an email the following data:

1) Your Telephone Number
2) Your First and Last Name
3) The Choosen Pair
4) The Predicted Price
5) Your E-mail Address

• Fourth: Send this emails at If at any time you need assistance please click on the Live Chat button on the right menu and one of our customer support staff will help you through the process.

SigmaForex | 3 Advantages of the Long-Term Forex Trading

As a long-standing supporter and practitioner of the long-term Forex trading it's hard for me judge this style of trading objectively, but pointing out the advantages is an easy task in this case. Apart from the obvious subjective advantages that are appealing to the certain features of the trader's character, long-term Forex trading has some features that are good for everyone:

1. Spread economy.
If you trade on the long-term periods you tend to get more than 100-200 pips from every position, if you trade on the short-term periods your trades will rarely go beyond 50 pips in profit. Assume a broker with 2 pips spread and you make 2,000 pips a month with it (more optimism!). With 10 profitable trades yielding 200 pips each you get 2,000 pips of profit minus 20 pips paid in spread to your broker — that's 1 percent. With 100 trades yielding 20 pips each you get 2,000 pips minus 200 pips left to broker in spreads — that's 10 percent.
2. Resistance to the short-term volatility.
Long-term Forex traders don't have to worry about stop-hunting or the intraday spikes. Their positions are safe from the usual daily market volatility. If you trade long-term you always have enough time to change your position's parameters when something important happens.
3. Long-term trading is simple.
To trade successfully on the long time periods you have to forecast the general trend and the possible exit points and on the long-term charts that's not a difficult thing to do usually. And since you trade rarely you won't need to make the decisions too often, while in short-term trading you have to develop the complex strategies to succeed.

I can't make you switch to the long-term Forex trading if you don't like it and the majority of the traders enjoy the short-term trading, but now at least you know the advantages of the other trading style. If you experience difficulties trading inside the day you could always switch to the long-term trading.

Sigma Forex is leading European professional online trading Brokers registered in the Switzerland and most of the EU countries. It was founded by professional private investors including (banks, traders, brokers, and software developers), which enabled Sigma to identify the essential needs of the Forex participants from the start.

Since 2003, Sigma’s aim has been to provide the best, powerful and most suitable currency trading technology along with superiority in execution, competitive services, and dependable customer service. Over the past years, Sigma has quickly become one of the world’s leading online retail currency trading institutions, providing integrated global trading systems, analysis techniques and the most reliable and sophisticated online trading software. We offer internet trading through Meta Trader. This trading platform is very stable and reliable. It is highly regarded and very popular among traders.

Understand This Equation for Success and Win in SigmaForex

Most forex traders lose and the reason they do, is they don't understand the simple equation for forex trading success enclosed in this article.

So learn it as part of your forex trading education and get on the road to currency trading success. Here is the equation and we will discuss its significance in a moment. Robust Logical System + Confidence in = Discipline to Apply = Forex Trading Success Now that's nice and simple - but most traders fail to understand it's significance.

Of course, some traders simply get the wrong forex education, try and apply it and lose - here are some common beliefs of losing traders: - Believing forex day trading or scalping works - Believing prices move to a scientific formula - Trying to predict forex prices in advance - Trusting their money to a forex robot with a simulated, paper track record Believe any of the above and you will lose at forex trading. To win you must understand that having a logical robust forex trading system is not enough, you have to apply it with discipline.

This means you must have confidence in the logic, because you are going to have to apply it with discipline and remember - if you can't apply your forex trading system with discipline, you don't have a system! Most traders hear about the word discipline but have no idea what it means and how important it is and it's a hard trait to acquire. You need to hold your discipline when your trading system is taking loss and after loss (this happens to even the best traders) and keep executing you're trading system with discipline. In a famous experiment, David Carter taught a group of traders who had never traded before to trade and he did it in 14 days.

The trading system taught was basically simple (a long term breakout system) but Carter didn't just tell them to follow it blindly - he taught them to have confidence in the logic, so they would have the discipline to apply it. The result was stunning - these traders made over $100 million dollars in just 4 years and went down as trading legends.

When Carter taught the group, he knew the importance of mindset and sticking with a plan through short term losing periods, to make long term profits and you must to. Discipline is not easy, but if you get the right forex trading education and have the right mindset, you can enjoy forex trading success and you will be doing what over 90% of traders fail to do. The rewards in forex trading are huge and you can generate a great second or life changing income, you must however be prepared to take your losses to get your profits. All successful traders know this and you must to.

Read more in SigmaForex

PIP VALUES | SIGMAFOREX

Pip Values

In most cases, a pip is equal to .01% of the quote currency, thus, 10,000 pips = 1 unit of currency. In USD, 100 pips = 1 penny, and 10,000 pips = $1. A well known exception is for the Japanese yen (JPY) in which a pip is worth 1% of the yen, because the yen has little value compared to other currencies. Since there are about 120 yen to 1 USD, a pip in USD is close in value to a pip in JPY. (See Currency Quotes; Pips; Bid/Ask Quotes; Cross Currency Quotes for an introduction.) Because the quote currency of a currency pair is the quoted price (hence, the name), the value of the pip is in the quote currency. So, for instance, for EUR/USD, the pip is equal to 0.0001 USD, but for USD/EUR, the pip is equal to 0.0001 Euro. If the conversion rate for Euros to dollars is 1.35, then a Euro pip = 0.000135 dollars.

Converting Profits and Losses in Pips to USD

To calculate your profits and losses in pips to your native currency, you must convert the pip value to your native currency. The following calculations will be shown using USD as an example. When you close a trade, the profit or loss is initially expressed in the pip value of the quoted currency. To determine the total profit or loss, you must multiply the pip difference between the open price and closing price by the number of units of currency traded. This yields the total pip difference between the opening and closing transaction. If the pip value is USD, then the profit or loss is expressed in USD, but if USD is the base currency, then the pip value must be converted to USD, which can be found by dividing the total pip profit or loss by the conversion rate.

Example—Converting Pip Values to USD.

You buy 10,000 Canadian dollars with USD, with conversion rate USD/CAD = 1.100. Subsequently, you sell your Canadian dollars for 1.1200, yielding a profit of 200 pips in Canadian dollars. Because USD is the base currency, you can get the value in USD by dividing the value by the exit price of 1.12. 10,000 CAD x 200 pips = 2,000,000 pips total. Since 2,000,000 pips = 200 Canadian dollars, your profit in USD is 200/1.12 = 178.57 USD.
For a cross pair not involving USD, the pip value must be converted by the rate that was applicable at the time of the closing transaction. To find that rate, you would look at the quote for the USD/pip currency pair, then multiply the pip value by this rate, or if you only have the quote for the pip currency/USD, then you divide by the rate.

Example—Calculating Profits for a Cross Currency Pair

You buy 100,000 units of EUR/JPY = 164.09 and sell when EUR/JPY = 164.10, and USD/JPY = 121.35. Profit in JPY pips = 164.10 – 164.09 = .01 yen = 1 pip (Remember the yen exception: 1 JPY pip = .01 yen.) Total Profit in JPY pips = 1 x 100,000 = 100,000 pips.Total Profit in Yen = 100,000 pips/100 = 1,000 Yen Because you only have the quote for USD/JPY = 121.35, to get profit in USD, you divide by the quote currency’s conversion rate:
Total Profit in USD = 1,000/121.35 = 8.24 USD.

Read more in SigmaForex

Hedging | SigmaForex

What Is Hedging ?

Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.

Why Hedging is A Bad Idea for Retail Traders ?

This method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be some what muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!

Read more in SigmaForex