Forex Trading Education - The London Open Checklist
Part of your Forex trading education should include a study of the effect market timings can have on trading and volume.
One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, be very careful!
If there is divergence on the 4 hour, 1 hour or 15 minute charts on the MACD indicator, look for other signs that price may go in the direction of the divergence.
What is the overall trend on the 4 hour chart?
Use your Fibonacci tool on the last swing high or low and see if price is approaching a key level, either a retracement or an extension.
Look to see where price is in relation to the 200 Exponential Moving Average (EMA) on the 4 hour, 1 hour and 15 minute charts. If price is above the 200 EMA on the 15 minute chart but below it on the 4 hour and 1 hour charts, then price is bucking the trend and you can expect it to go the other way at some point. (The opposite will be true if price is below the 200 EMA on the 15 minute chart but above it on the higher time frames.)
Is the market approaching a key fundamental announcement?
As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
trade
wait for clearer signals or a better entry point
Increase your Forex education by carrying out this kind of analysis around the time of the London open.
You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
There is no magic surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won't be too long before the trader experiences the satisfaction of consistent profits on a regular basis. - 23226
One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.
Add London open analysis to your Forex trading education and see if you can recognize good setups from the lively market conditions.
The following questionnaire and checklist will help.
London Open Preparation
Browse your charts about 15 to 30 minutes before the London market opens and use these questions as a guide:
Check to see if the MACD indicators on the 4 hour and 1 hour charts are going in the same direction. If not, be very careful!
If there is divergence on the 4 hour, 1 hour or 15 minute charts on the MACD indicator, look for other signs that price may go in the direction of the divergence.
What is the overall trend on the 4 hour chart?
Use your Fibonacci tool on the last swing high or low and see if price is approaching a key level, either a retracement or an extension.
Look to see where price is in relation to the 200 Exponential Moving Average (EMA) on the 4 hour, 1 hour and 15 minute charts. If price is above the 200 EMA on the 15 minute chart but below it on the 4 hour and 1 hour charts, then price is bucking the trend and you can expect it to go the other way at some point. (The opposite will be true if price is below the 200 EMA on the 15 minute chart but above it on the higher time frames.)
Is the market approaching a key fundamental announcement?
As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?
If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?
Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:
trade
wait for clearer signals or a better entry point
Increase your Forex education by carrying out this kind of analysis around the time of the London open.
You will be able to fine tune your analytical skills and be in touch with the underlying feel of the market.
There is no magic surrounding Forex education. It takes years of hard work and practice, study and more practice, and of course, experience which often comes through trades going wrong!
At last, the Forex trader learns the mental and emotional skills necessary to remain disciplined at all times - the hardest and most important aspect of Forex trading education.
A procedure like the one outlined above, practiced day in and day out, will help the newer trader make good progress. It won't be too long before the trader experiences the satisfaction of consistent profits on a regular basis. - 23226
About the Author:
For a free candle & chart pattern recognition reference tool click here: Candlestick Charts See how to use trendlines to get an optimum trade entry point: Trendline Trader
posted by X - Men @ 2:31 AM
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