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.
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
Check these points about fifteen minutes to half an hour before the London market opens:
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!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
What is the overall trend on the 4 hour chart?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Is the market approaching a key fundamental announcement?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
If, shortly after London opens, you see a number of these signs drawn from the analysis questions given above, take note and decide whether there is a good trading opportunity. Either:
trade
wait for clearer signals or a better entry point
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
Forex trading education does not depend on a magical formula. What it does entail is years of work, study, practice and experience, often hard earned through watching many trades go bad.
Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 23196
Around the time of the London open there is much market activity and you can be presented with good trading opportunities.
As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.
The following questionnaire and checklist will help.
London Open Preparation
Check these points about fifteen minutes to half an hour before the London market opens:
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!
Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.
What is the overall trend on the 4 hour chart?
Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.
Using the 200 EMA (Exponential Moving Average) on three time frames, the 4 hour, 1 hour, and 15 minute, see if price is bucking the trend. In other words, if it is above the 200 EMA on the 15 minute chart but well below it on the 1 hour and 4 hour, there is a high possibility price will fall in the near future. The opposite of course is true if the position is revered, ie. price is below the 200 EMA on the 15 minute chart but above it on the 1 and 4 hour charts.
Is the market approaching a key fundamental announcement?
Taking note of the candle that closes the first 15 minutes after London open, is it part of a distinctive candle pattern or is the candle itself a hammer, doji, or other shape which indicates price may be about to go in the other direction?
What would my risk be and where would I place my stop if I entered a trade right now in a particular direction?
If, shortly after London opens, you see a number of these signs drawn from the analysis questions given above, take note and decide whether there is a good trading opportunity. Either:
trade
wait for clearer signals or a better entry point
This kind of analysis carried out at the time the London market opens will certainly increase your Forex education and possibly provide you with a number of excellent trading opportunities.
You will become much more aware of what is happening in the Forex market and it will help you be more decisive, either to trade or not to trade.
Forex trading education does not depend on a magical formula. What it does entail is years of work, study, practice and experience, often hard earned through watching many trades go bad.
Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.
Practising a set procedure like the one above, while laborious to start with, will help the newer trader make fast progress toward the day when consistent profits are made on a regular basis. - 23196
About the Author:
For a free candle & chart pattern recognition reference tool click here: Candle Trading See how to use trendlines to get an optimum trade entry point: Trendline Trader
posted by X - Men @ 2:12 AM
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