Tuesday, June 25, 2019

Which pairs

How do you figure out which are the best currency pairs to trade in Forex at any given time? Watch our latest video and find out which are the most volatile currency pairs in 2019.

Best currency pairs to trade in Forex – beginner’s guide

Knowing which currency pairs to trade. How do you figure out which currencies to trade at any given time? Well, the answer is by knowing your fundamental analysis. Now, fundamental analysis is the underlying reasons for why a currency is being either bought or sold. Now, I recently purchased a car for my family. Now, I didn’t just go out and buy the very first car that I saw for sale. No, I did my research, I wanted to get the car that met my criteria. I wanted a car that had a good safety record, for my family, was suitable for long journeys, etc. So, after my research, I then looked at getting a good car at a good price.

Now, buying and selling currencies is done by exactly the same principles. You need to focus on the reasons for why people are buying or selling currencies. And fundamental analysis is the way that the vast majority of professional firms trade. In fact, many firms invest thousands and thousands of dollars in getting up to date market news, straight into their trading desks. Every day, I myself, will look at Bloomberg and Reuters feeds, in order to help me to decide which currencies to trade. Fundamental analysis is the reasons why a currency is moving the way it does, and you want to be buying the currencies that have fundamental reasons to be bought and selling the currencies that have fundamental reasons to be sold. And the very best trades are when you pair up a strong currency with a weak currency. It’s common sense, really.

So, for example, if one Central Bank surprises a market by raising interest rates, that currency will likely appreciate and if at the same time, another Central Bank surprised markets by cutting interest rates, that currency will likely depreciate. You would them pair these currencies with opposing outlooks against each other, as your tradeable currency pair, and you would almost certainly make a very healthy profit in that extreme example. Obviously, that is an extreme example, but the principle is important. Pair up weak currencies against strong currencies and vice versa, to get the best trades. And the fundamental price of each currency is based upon the expectations of the market. What’s going to happen next? What’s the mood of the market, on any given individual day? And all market expectations and move revolves around what the Central Bank is going to be doing next. So, the Central Bank should be your focus.

Let me give an example, recently, which happened just on Friday. Gone. It was the Nonfarm Payroll day and president Trump tweeted, in a not very subtle move, he said, “I’m really looking forward to the job numbers today” and canny traders were eyeing the job report and canny traders were actually thinking, “Hang on! If president Trump is saying I’m looking forward to the jobs reports today, he’s obviously already seen the data, so we can expect the US dollar to appreciate into the jobs report.” And sure enough, from the morning, as soon as president Trump issued his decree, the Dollar/Yen was appreciating all through the London and New York session, as traders awaited the Nonfarm Payroll. So there’s a good example of knowing what to trade, knowing what the market is thinking and trying to preempt the next move by the Central Banks.

So, each day look, what’s the latest news out for each currency? Has there been any top tier data released? What does that mean? What’s the Central Bank focusing on? Is it important data, that’s been released? And if it is, look to trade that currency pair, against an opposite pair that should go in the opposite direction. By doing this, and then only applying your technical strategy to these currencies, you are rapidly and increasing your odds and chances of trading successfully every single day.

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How can Volume Profile Trading strategy maximize your profits?

If you are an intra-day trader, you can benefit from this Volume Profile trading strategy. Watch our latest video and learn how to trade with Volume Profile

Volume Profile trading strategy – what happens with a timeframe?

Hello and welcome to this video from Diary of a Trader. Today, we’re going to be going over Volume at Price Analysis, or some people like to call it, The Volume Profile. Now, Volume and Price Analysis differs from regular volume, because instead of looking at the volume down here, where it’s telling us how much of something was traded over a period of time and then it usually shades it red or green, to say there were more buyers or sellers, so where I’m looking at now, there were 1631 contracts, or stocks, or coins, or units of currency, that were traded over this hour, and that most of the volume was from people selling. So, that gives us a good idea of what is happening with a timeframe, but it doesn’t tell us what is happening with price, and this is one of the hidden gems and kind of greatest advantages for intra-day trading or day trading. And, sometimes, you can find this for free on some software, but, at least in TradingView, this is a paid software or a paid version of the Volume Profile. we’re going to go to the Session Volume. So, the Session Volume only brings up what is… The Volume Profile appears for just the day that it’s happening. So, the open of Cryptocurrencies on TradingView, as that closes and opens at 7:00 p.m. Central Standard Time. And so, this is the Volume Profile. But I like to get rid of the histogram a little bit, and then create larger value areas, rows rather, and then I like to decrease the value area just a little bit. And then, what we see here is the Volume Profile for each session. And if you can see that, essentially what we have is, we have a horizontal representation of volume versus a vertical. So where vertical volume tells us what has happened and how much has been traded during a certain set of time, this is telling us how much of something has traded at a particular price. And if we were to even zoom in a bit here, and we were to apply the values, very hard to see right now, but we can see that the, for instance, right here, this says that we had 38 at this price level of about 8258 in Bitcoin, there were 38 Bitcoin bought versus 56 sold.

And so, what this does, the Volume Profile, it tells us where most of the activity happens and this red line tells us where our point of control, they call this the VPOC or POC. The point of control is where the most of the volume at a price has been traded. So, price has spent most of the time, trading at this 8232 value area. And what the point of control tells us, is that if prices are trading below the point of control, we are in a bearish and a weak condition, and if we are trading above, we are in a bullish and a strong condition. And you’ll see that, as this forms, as this point of control forms, we can get into conditions where it acts as a natural support and resistance there. So as the price was trading here, fell down, came back up to visit it, this formed a resistance area and it broke down away. That became a lot of selling pressure. Additionally, when we came down to the current price range, we are trading with a point of control down here, 7900, we are trading below that, and we have not reached back up to it, so we are considered to be in a weak and bearish cycle here. But we can look back and see over time, a thing to notice on your charts, is looking at how the point of controls are forming. Are they ascending? Are they descending? And is the gap between them expanding? That can tell us a lot. What we really like to see and identify, are these high volume and low volume nodes. So, a big peak in volume right here, this is called a High Volume Node, And then areas where there’s not a lot of activity, those are called Low Volume Nodes or I like to call them, Volume Deserts. And so, the behavior of these zones is that when price approaches a low volume area, a price area that has not had a lot of volume, it moves through it really fast. And you may not be able to see this so much on this type of chart volume, but we could look at a different way.

So this is great for Intra-day trading and looking at how the price action has been over the last few days to trade, but sometimes we need a broader view so we can do a fixed range. And for fixed range let’s say we want to… Well, let’s go to a daily chart. And then, let’s find the beginning of the month. So, let’s look for, here we are. We’ll start on May, 1st, and we’ll do a fixed range. So, on May 1st, and that will go all the way to where we are now. Now, here’s our Volume Profile for the current month of May, in 2018. And I’m going to do the same thing, where I like to get a few more bars, lower that volume area, and get rid of the shaded background because this is all I really need. So, for the entire month of May, this is what we’ve got so far in the price action. We see that the point of control is down here, is at the 8300 value area, and that we are trading below that line. The point of control, while it acts as kind of a natural support and resistance zone, it also acts as a natural point to return to. So, think of price being attached to the point of control like a rubber band. The further it pulls away, the more it wants to snap back up to it. And, we have a high degree of probability that when price comes from a higher low, and it retraces all the way to the point of control, and then goes above it or below it, whatever the direction it is, we have a high chance of retracing the entire move above here. So, in this scenario, if we were to trade all the way back above to this point of control on this chart here, we have a high probability of actually trading higher and above this.

The point of control is also very, very useful to use with natural areas of support and resistance, or zones of control based off of pivots, if you remember watching a video we did recently together over pivots. We do pivots point standard, if we take a look here, this pivot was at 8400, which is right within the value range of our point of control. So, that is telling us that we have a very strong area of support and resistance, so if price were to return to this area, it would have a very difficult time getting there.

Now, we should also look at the prior month’s trading period because that is also going to give us an idea of, well, if price is falling down below this point of control, where could it go? And so, we’re going to get the fixed range. So, we’re going to go to April 1st, and we’re going to trade that entire range here, and do the same thing we did for the others. And what do we see here? We see that the point of control, in April, was down here, where we spent the majority of the time trading down at the 6800 value area. Now, what is interesting to take a look at is… So we’re basically looking at a monthly Volume Profile, and we see that price traded pretty rapidly above through this area. You see where we have this lot of volume here acting as a support zone as we moved up? It was easier to move up because there was not a lot of volume traded in here. And then, we start to form another kind of base we saw, a High Volume Node form, and that was very easy to trade through it. And so, the past Volume Profiles can tell us a lot. And if we really want to get a broad view, this is kind of a more a dynamic style of view. We can look at it through the visible range, which will just tell us everything on the chart that is currently visible, it will form that Volume Profile.

Sometimes this is a little easier to see the kind of a larger picture view. We’ll go to 50 rows actually, probably on this one, 100 rows, same volume area. And if we want to go just from the all-time high here, we just trade our screen over until we are about right there. And so, this is the Volume Profile of the all-time high set on December 15th to now. And so, what we’re looking at is, we’re actually trading just slightly below the most traded volume area, and we’re right below the point of control, which is 8178. So, that is the point of control on this large swing, from this swing high to where we currently are. This is telling us that we are slightly below the point of control and so, that is a bearish condition, so we should observe over the next few days and watch to see what price does at these levels, because the behavior and the theory behind this says that this is a High Volume Node we’re in, and we’re technically trading below it, so price has a much easier time moving down, than it does, moving up. If we ever saw price trading back up to 9356 or that 9300 zone, if we look above us, all of this price activity, very, very, very open. Not a lot there. If we even want to scroll out and go all the way to, let’s go to the beginning of 2017, and this is our Volume Profile for 2017 to now. So, we can see that the Volume Profile is actually telling us the point of control is way down here at 1185, And that we’re kind of in the middle of a big trading zone right here.

So, this is a pretty interesting way to look at it. If we go to our weekly, we can see the whole price history and we can see that over the entire price history of Bitcoin’s chart on TradingView, the point of control is down at $212, which seems like a kind of a silly value, but it’s really not in the long run, it’s just telling us where most of the participation has happened. And again, if we were to go from a recent swing low to that all-time swing high, and we look at where we’re at, we’re still sitting right below that Volume point of control zone of 8100, or at 8280, and that is what price is trading at currently, and if we see below us that the volume profile starts to decline the lower we go. So, it is going to be much easier for price to move lower than it is to move higher. That was just a little intro, and look at Volume Profile and how it can be used in your trading. I hope you found this video very informative and useful and look forward to talking with you in our next videos. Bye-bye.

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USDX – Learn how to use dollar index to trade Forex

Discover how to use dollar index to trade Forex and have profitable results

The US dollar index chart is just a basket of currencies and their Dollar pairs. Watch our latest video and learn how to use dollar index to trade Forex

How to use dollar index to trade Forex – basics explained

Hello and welcome to Diary of a Trader. Today’s video we’re going to go over how to implement the Dollar Index into your trading if you’re a Forex trader. The Dollar Index is just a basket of currencies and their Dollar pairs and it shows you how was the Dollar performing against that basket of currencies. Now, most of the Dollar Index has the Euro/Dollar pair in it. It also has the Pound/Dollar the Dollar/Yen and it has the Swedish Krona in there as well. There’s a lot of discussion about them, you know, redoing the Dollar Index because it should probably have the Peso in there, the Canadian Dollar the Renminbi Chinese currency and balance it all a bit because it has not changed for a long time, but regardless, when we see the Dollar Index, it’s giving us an idea of where the Dollar is performing against other currencies, other Dollar pairs.

And how do we implement this into our trading? Well, we want to, let’s say we trade the Euro/Dollar and I want to do a side by side comparison. So, here’s the Euro and then I’ll put the Dollar Index over here. And if you don’t know where to find the Dollar Index, we just go to DXY and click on CFD. That means Contract for Difference, and it’ll give you this and then just click on it, it’ll put it in your watch list and then you can get the Dollar Index right here. So, what we’ll notice is that, one great example, and I think something that we will all be able to notice is that as the Dollar Index rises, the Euro falls. If we look at the current price action right now, if we were to highlight that zone, we can see that we’ve had, these are both hourly charts, we can see that we’ve had three hours of a downtrend in those candlesticks, and currently, now it looks like we’re having somewhat of a bounce. We look over here, we see really, just the exact opposite of that move. We have three hours of a rise in the Euro, followed by a little bit of a top here forming with some selling. And this is pretty normal to see because, you know, again, most of the Dollar Index is weighted with the Euro. I think it’s 50 to 56% of it is weighted with the Euro.

So, how does that work with other currencies because sometimes it’s not easy to catch a change in the Dollar strength when trading the Euro because they’re too sensitive. One thing that we can look at is the Pound/Dollar. Whatever dollar currency besides the Euro, sometimes we can catch a move that happens in the Dollar Index, before we notice a change in another currency, and we sometimes kind of have to do this on a shorter time frame, like a 15-minute time frame. So this is the Pound/Dollar on the left and then here is the Dollar Index on the right. And what I’m looking for is some type of Candlestick pattern or change that indicates we’ll see some move in price before… In the Dollar Index, that would happen a little bit before we would see a change in another Forex pair. So, if I’m looking here, see this was at 7:45 in the morning, 7:45 in the morning, that one wouldn’t have really tipped anything off. However, with the selling that was going on here, the selling tip is kind of indicating that we had some selling pressure that was a little bit ahead of the game in the Dollar Index that we wouldn’t have caught on the Pound, so we could have capitalized on noticing a drive down in the Dollar Index, by looking at a long trade in the Pound. This is like an arbitrage opportunity if you want to consider it that, but sometimes we can get a view of this, on the daily chart as well, because not every move that we see is going to have an inverse reaction. So, on the Pound/Dollar and then the Dollar Index, what I’m saying is that it is possible to have days where the Dollar Index is trading down and the Pound is trading down, but those instances are far and few between. But when you notice them, those are good signs that you should take the trade that it’s going to be going. So, what I’m what I’m saying is that if you notice that the Dollar Index is rising and on that same daily chart, you see a candlestick or a couple of candlesticks that are also rising when the Dollar is, at the same time that’s a good indication that you’re having a lagging move in the Pound/Dollar and that you could safely entertain a short idea because there’s a bit of a lag in the performance of that pair.

If we look at the 1st of June, right here, here’s the 1st of June, that’s a bullish looking Candlestick, right? Well, rather not… No, it’s bullish Candlestick. But we had a day where there was more buyers than sellers and that is shared with the Pound as well. But, what do we know about this? We know that as we were moving, we had a large sell-off from a top, we’re pretty top heavy here, and then we see the Dollar Index is actually starting to continue a move lower because then we had a shared bearish Candlestick on the 4th. So, both the Dollar Index and the Pound had an up day on the same day and then followed by a down day on the same day. But this is where we use our trader’s intuition, we use some oscillators, so we could use the Stochastic RSI on that chart and on this chart as well, and certainly looking at it on these days, what could we infer from these moves? Well, because the Stochastic RSI was in a downward slope, we would know that the Dollar Index as a whole, because it’s so weighted against other currencies, we knew that the Euro was trending up heavily here, even though the Pound wasn’t, that we had a good idea that the conditions of our oscillators and the relative trend change that we noticed earlier, in the DXY, told us that a long entry on the close of the daily would have been a nice drive up, and that’s exactly what happened.

Now, again, you don’t see a lot of these trade opportunities pop up, but when they do, you should notice them and pay attention to them. Certainly, one of the nice ways to kind of gauge where is the… If you trade a lot of the Dollar pairs, like the Dollar/Yen, the Gold-Dollar, US Dollar/Canadian Dollar, etc., paying attention to the Dollar Index is a very good way to kind of gauge the overall strength of that currency, with the pairs that you’re trading, and that can really help you determine your intra-day trades and your macro weekly trades, by gauging how the Dollar Index is currently operating, because certainly, if we have a day where if we’re up in the Dollar Index and we’re up in another non-Euro pair, like the Pound/Dollar, the Canadian Dollar, Aussie Dollar, New Zealand Dollar, if they’re trading up during the day, the same time as the Dollar Index is, then we need to pay attention to those times, because those can certainly turn into good trading opportunities. Thank you for watching this video and I look forward to talking with you in the future, with our future videos. Bye-bye.

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