Month: June 2011

Source: ForexYard

Traders this week are bouncing back and forth between an interest rate differential approach, which favors the EUR, and a debt concern approach which favors the USD. Both carry an ominous overtone for the global economy. Whichever of these approaches wins out will depend on data being released over the next several weeks of summer.

Economic News

USD – USD Up as Traders Caught between Debt and Differentials

Commentators are beginning to view the potential of a rebound in US dollar values this week after last week’s underwhelming rate statement by the European Central Bank (ECB). So far, the US dollar appears to be gaining from this sentiment.

The Fed’s record low interest rates will likely persist for the foreseeable future, and the ECB may end up lifting rates again this year, but so far investors are paying closer attention to the potential for a meltdown in Greece due to ravaging debt concerns.

The EUR/USD rose to a monthly high last week, reaching towards 1.4750 before settling below 1.4350 Friday. Soft data out of the American economy continues to fuel a slight run-up in the safe-haven Japanese yen and Swiss franc, but the USD has only gained moderately from the shifts in investment.

Traders are bouncing back and forth between an interest rate differential approach, which favors the EUR, and a debt concern approach which favors the USD. Whichever of these approaches wins out will depend on data being released over the next several weeks of summer.

Today, with most of Europe on holiday for Whit Day, the day which follows Pentecost, and with the US posting no news, most traders are withholding their trades until later in the week when these economic giants come back online.

EUR – EUR Mixed as Investors Consider ECB Rate Statement

The euro has been experiencing mixed results following last week’s rate statement by the European Central Bank (ECB). Despite a semi-hawkish statement that garnered support for an impending rate hike, traders appeared more concerned with the potential Greece implosion as its economy struggles to make steps to secure another installment of its financial bailout.

While debt concerns loom in the euro zone, and industrial production still appears to be faltering globally, the higher yielding assets like the GBP and EUR appear positioned to lose value despite hints at growth policies being undertaken shortly by both.

The EUR/USD rose to a monthly high last week, reaching towards 1.4750 before settling moderately lower. Soft data out of the American economy continues to fuel a slight run-up in the safe-haven Japanese yen and Swiss franc, but the USD has only gained moderately from the shifts in investment and the EUR is slowly benefiting less and less from the shifts back into risk.

As for Monday, the euro looks to be anticipating mixed results against the other major currencies as traders are largely absent from the region due to several bank holidays. In observance of Whit Day, Switzerland, France and Germany will be closing, but Italy will still be publishing its industrial production figures at 9:00 GMT. The resulting limited trading volume will likely give cause for a slow opening day.

JPY – Japanese Yen Moving Upward as Data Supports Growth

The USD/JPY has been trading lower recently as investors move sporadically in and out of the greenback. After reaching upwards of 81.00 on Friday, the pair quickly dropped to 80.20 as of this morning. Japan’s economy has published several positive figures over the last week, much of which has helped establish the yen’s recent bullishness. Whether it will be enough to reverse much of the negative sentiment surrounding Japan is yet to be determined.

The yen suffers from its own economic concerns, while shifts in consumer sentiment have helped lift yen values against a number of its rivals. Last week’s data, however, provided a ray of light which caused a secondary shift towards the yen for reasons other than safety. The USD/JPY looks to be continuing this movement for the foreseeable future as a result, especially given the massive shift away from the US dollar which is helping to lift the island currency.

Oil – Crude Oil Prices Steady Near $102 a Barrel

Oil prices held steady this morning with the $102 price level acting as a firm footing for this commodity. US oil stockpiles sunk sharply last week, falling well below expectations and helping to hold the value of Light, Sweet Crude steady near its current mark. The price of black gold has been trading within a consolidation pattern these past several days and traders are beginning to anticipate a breach sometime this week.

The value of the US dollar versus the euro in recent trading has also dropped towards a six-day low of 1.4330, which has helped prevent oil prices from taking off after last week’s surprisingly unhinged OPEC meeting. With today’s steady sideways movement, traders appear likely to see oil reaching a decision point this week. Whether oil traders decide to lift oil prices from a buy-in on physical assets, or pull away from oil out of a perceived glut, is something traders will bear witness to this week.

Technical News

EUR/USD

A three week rally was met with a failure of the pair to breach 1.4700, a level not far from the previous trend line which opened the door for a significant pullback that retraced 50% of the late May to early June gains. The week’s declines ended at the 20-day moving average at 1.4330 and will serve as initial support. Falling daily stochastics suggest the move lower may have scope to continue where the pair may find resistance at 1.4250, a level that coincides with the 61% retracement and the rising trend line from the May low. A breach here and the pair will test the 100-day moving average followed by the May low at 1.3970. To the upside, resistance will likely come in 1.4570 followed by 1.4700.

GBP/USD

The weekly candlestick suggests further declines may be in store as last week’s candlestick ended on a shaven bottom, indicating momentum is moving to the downside. A confirmation will be needed from this week’s trade to confirm the bearish pattern. In the meanwhile the move lower finished at the 38% retracement level of the December to April move and is quickly approaching the trend line off the May 2010 low at 1.6180. The pair could receive a bounce from this level, as was the case in late May. Resistance is located at 1.6400 and 1.6460, and 1.6550. Should the pair not receive a bounce at the trend line declines could mount to 1.6060 and the April low at 1.5935.

USD/JPY

The yen was relatively unchanged from the previous week after an attempt to breach below the 80 yen level was only briefly successful before the pair was bid higher. While most oscillators remain in neutral territory, the pair continues to trade lower with resistance at the falling trend line from late May high which comes in near the 20-day moving average at 81.00. This level may offer traders a better price to enter short. Further resistance is located at 81.75 from the May 31st high followed by 82.25 of the May 19th high. Support comes in at the May low of 79.50 followed by the all-time low at 76.11.

USD/CHF

The pair is testing a short term resistance level at 0.8450 and a breach here would expose the resistance at 0.8855 which lies just below the 20-day moving average. A rise to this price may offer traders better levels at which to enter short. Above these levels rests the falling trend line from the mid-February high which comes in at 0.8720. Support is found at the all-time low at 0.8325.

The Wild Card

S&P 500

After six weeks of declines the S&P 500 appears to have confirmed a break below the 1290 support level. Forex traders may target the next major support at 1250 from the mid-March low. This area has further significance as the 200-day moving average comes in at 1252.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By David Adams

The success statistics in e-mini are just plain startling. The vast majority of e-mini traders are not consistently successful, and the ratio is not even close to positive. The question has to be asked “Why is there a wide disparity in the number of consistently successful traders and traders who are inconsistent and just plain fail?”

The numbers on success/failure vary widely from author to author, but some round figures that I feel confident in quoting are:

• 15% of active traders are successful and profitable
• 35% of active survive in a “boom and bust” cycle, alternating between very profitable, and then losing their profits.
• 50% of trading enter the business and exit within three months, usually without a balance in their futures account trading balance.

I learned a trade the “old school” way; I started with a Wall Street institution and 50 other traders. We received several weeks of instruction and then all 50 of us were sent to a bullpen for a few weeks of trading, and they kept the five traders they thought had the best potential. Incidentally, as they announced the traders they were going to keep, mine was the last name called. There were no online traders in those days, but the odds of making it as a trading room trader were considered slim. I was either too stupid or too stubborn to quit, and eventually I made it. That’s enough about me.

Now we have online traders, and very few institutionally trained educators. The methods I see being taught are sometimes quite sound and often times bizarre. In my mind, I often wonder about the quality of training many new traders are receiving, but I can only speak for my room and the quality exhibited there. What bothers me most is the fact that only 15% of new traders seem to be able to learn to trade consistently; something is terribly wrong either in the method we teach new traders to trade or the quality of traders we are attracting. I have no empirical evidence to support either supposition, nor do I have an opinion which option is true. But there is a reason that 15% of the active traders can consistently make enough money to earn a great living.

Gambling is a game of chance and probability. Some gamblers understand probability better than others and gamble in games and venues that probability gives them an even or better than even chance of winning. Still, if the gambler is too good, or has a memory that allows him to remember all the cards that are thrown, is generally banned from that particular casino and finally from all casinos. We have no such restrictions in e-mini trading. The very best trader’s job is to take money out of the pockets of the very worst traders.

With proper training and flawless technique, learning to trade consistently it really isn’t such a difficult feat. It’s not gambling when the probability weighs heavily in your favor. This is the same principle casinos use to ban superior gamblers, these gamblers have superior abilities and the probability favors the gambler not the casino.

Yet so many people losing money on such a consistent basis, it stands to reason that the 15% of active traders are, by and large, the recipients of that lost money. I think this is, to a certain degree, a true statement.

The challenge of new traders is to approach the e-mini trading business as a business, not a roll of the dice. Successful traders have a rigid emotional standards they hold themselves to, and a tried and true trading system that, day after day, puts money in their pockets. Gamblers can’t do that. Traders do that. Find an e-mini trading system that works, one that is based on price action chart reading, one that is based on support and resistance, and you’ll find yourself a profitable trader. On the other hand, if you’re taking trades based on an indicator-based system, or your gut feeling, you are little better than a gambler. Gamblers don’t stay in business long; the cards are stacked against you.

In summary, I have tried to make a distinction between gambling and trading. In doing so, I have also pointed out some similarities in these two professions. But trading is an unrestricted marketplace and those who are willing to learn the proper emotional considerations and trading technique can become consistent money earners. I know; I watch well-trained traders come and go for my room on a consistent basis, because they can read charts and understand price action. They aren’t gambling, they’re playing a game of probability. And when the odds are in your favor on a consistent basis you will make money consistently.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

By James Woolley

Many people, including myself, have discovered that the forex niche is one of the most profitable ones to be in from an affiliate marketing point of view. So with that in mind, I want to discuss 5 steps to becoming a successful forex affiliate.

1. Learn about forex trading.

As incredible as it may seem, there are lots of affiliate marketers who enter this niche expecting to make vast profits promoting various different products, whilst only having a very limited knowledge of forex trading. The reality is that most people are not stupid. If you are trying to sell a certain product or service, people will soon realize that you don’t really know what you are talking about. So you should first of all learn as much as you can about how the currency markets actually work.

2. Create a website or blog.

If you are looking to make lots of sales, then you need to have a presence online and ideally come across as some kind of authority (which follows on from my last point). If people respect you and your opinions, then they will be more inclined to buy the products you recommend, and you will therefore be able to generate more sales.

3. Drive traffic and build an email list.

You could have the best website in the world, but it will all be in vain if it is not getting any traffic. So you need to be utilizing every avenue to get as much traffic as you can, whether it’s from articles, press releases, search engine optimization, blog commenting or social bookmarking, for instance. Then you need to capitalize on this traffic by building an email list because email marketing is generally where the big money is made.

4. Join affiliate programs.

Once you have a website that’s getting traffic and an accompanying email list, you can then start finding good quality forex products and services to promote. It’s easy to be tempted by the big ticket items, but you can make equally good profits from some of the cheaper products on the market if they are good quality.

5. Write product reviews and promote products.

Once you have signed up to one or two affiliate programs you can then start actively promoting them. Ideally you want to check out the product beforehand because then you can write an honest review, which will help you generate even more sales.

The point is that it is not that difficult to start making decent profits as an affiliate in the forex trading niche. As long as you follow these basic steps, you should be generating sales in no time at all.

About the Author

James Woolley is a full time trader and an active affiliate marketer. Click here to read his forex affiliate program reviews and to learn more about forex trading.

EUR/USD

A three week rally was met with a failure of the pair to breach 1.4700, a level not far from the previous trend line which opened the door for a significant pullback that retraced 50% of the late May to early June gains. The week’s declines ended at the 20-day moving average at 1.4330 and will serve as initial support. Falling daily stochastics suggest the move lower may have scope to continue where the pair may find resistance at 1.4250, a level that coincides with the 61% retracement and the rising trend line from the May low. A breach here and the pair will test the 100-day moving average followed by the May low at 1.3970. To the upside, resistance will likely come in 1.4570 followed by 1.4700.

GBP/USD

The weekly candlestick suggests further declines may be in store as last week’s candlestick ended on a shaven bottom, indicating momentum is moving to the downside. A confirmation will be needed from this week’s trade to confirm the bearish pattern. In the meanwhile the move lower finished at the 38% retracement level of the December to April move and is quickly approaching the trend line off the May 2010 low at 1.6180. The pair could receive a bounce from this level, as was the case in late May. Resistance is located at 1.6400 and 1.6460, and 1.6550. Should the pair not receive a bounce at the trend line declines could mount to 1.6060 and the April low at 1.5935.

USD/JPY

The yen was relatively unchanged from the previous week after an attempt to breach below the 80 yen level was only briefly successful before the pair was bid higher. While most oscillators remain in neutral territory, the pair continues to trade lower with resistance at the falling trend line from April high which comes in near the 20-day moving average at 81.00. This level may offer traders a better price to enter short. Further resistance is located at 81.75 from the May 31st high followed by 82.25 of the May 19th high. Support comes in at the May low of 79.50 followed by the all-time low at 76.11.

USD/CHF

The pair is testing a short term resistance level at 0.8450 and a breach here would expose the resistance at 0.8855 which lies just below the 20-day moving average. A rise to this price may offer traders better levels at which to enter short. Above these levels rests the falling trend line from the mid-February high which comes in at 0.8720. Support is found at the all-time low at 0.8325.

Read more forex trading news on our forex blog.

By James McKee

Once you understand what currency trading is it is important to consider your own personality and ability. While some traders might be able to make split decisions all day long, others might want to do intraday trades that last more than 24 hours on on the online forex exchange. Those who trade on a certain time frame will use the corresponding chart with “candles” that correspond to that period. For a 1 hour time frame each candle displayed will represent one hour’s worth of market activity. If you cannot monitor the market on at least a semi-regular basis than the one-hour or less time frame will not be ideal for you.

Choosing the right time frame to accommodate not only your trading style, but also your lifestyle can be a difficult balance to find. For most people it is a matter of trying out a variety of time frames prior to settling on one that works for them. Trying out everything from the 15-minute chart to the 8-hour chart can help new traders to understand how different strategies must be applied to different time tables. For instance, most of the time trends that occur are usually going to be found in the 15-minute time period, and they should be traded accordingly.

Those have a more responsive and extremely fast paced personality would probably be better suited for scalping. Scalping is a type of trading that revolves around targeting the shorter time tables (15 min, 1 hour) in order to make and take fast profits. While smaller in scope scalping also exposes the trader to less risk, and there are more trade possibilities during the course of a week. There has to be a balance determined by the trader with regard to which time frame is best for them, and this can be done easily by trying them all out in a practice account.

Testing out any new trading system or technique in a practice account prior to going live is very important. Figuring out what you stand to gain or lose by playing it out in theory prior to wagering real money on a decision is a good way to see not only whether or not it will be effective, but also whether or not it suits your own needs. If you are absolutely miserable on one time frame then go ahead and try another, and another until you have found something that works for you.ves.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.

By David Adams

There are a wide variety of methods to trade e-mini contracts currently taught by trading educators. Some are good, some are not very effective. From time to time I get some very talented traders visiting my trading room and they all have one common characteristic; they understand e-mini charts and price action, and don’t rely upon oscillators, moving averages, and indicators.

This article is not a condemnation of using oscillators and indicators in the trading process, but I do want to point out that using oscillator and indicator methodologies as your primary trading tools generally leads to mediocre or unprofitable trading results. All oscillators and indicators are tools that lag the market, despite claims by some that they have developed leading indicators. Indicators and oscillators use information from the previous time periods to develop, through a specific algorithm, their output. By definition, using historical information creates lagging results.

While many schools of thought deny any level of randomness present in equity markets, the empirical evidence disproving this line of thought is overwhelming. There can be no doubt that 60% to 70% of the market movement is created by normal backing and filling operations that are the heart of equity markets. These backing and filling operations create periods of consolidation and range bound channels that are, at best, difficult to trade. During these periods of consolidation, or slightly wider periods of range bound trading, indicators and oscillators can give wildly false trading indications and, especially for new traders, present setups that are faulty and unprofitable. Of course, oscillators and indicators work well during trending markets, but I don’t need any indicators to trade a trending market, no one does; trade with the trend and you will generally profit.

Price is everything.

This statement leads me to my thesis in this article; learn to read charts and understand price action and you will be well on your way to success. The very best e-mini traders I have known were masters of support and resistance, trend lines, volume analysis, and identifying unprofitable trading channels. In my trading I use 2 indicators. I use these indicators to reinforce the ideas that I have developed about trading from the chart action, and they are never the primary source for potential e-mini trading setups. I would be remiss if I did not point out that it takes time, experience, and specific type education to master chart reading. On the other hand, these skills are really not so difficult to master with proper diligence. I highly recommend that e-mini traders learn to read charts and understand price action, as I have watched many of my students increase their profitability and trading confidence through understanding these types of skills.

In summary, we have discussed some of the inherent deficiencies that are problematic with oscillator and indicator based trading. We have identified the lagging tendencies of these indicators. I have suggested that learning price action and chart reading are the keys to success in e-mini trading. Time and experience with struggling new traders (and watching their improvement) has proven that the key to e-mini trading lies in understanding price action in the information contained on your trading chart.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

After touching the trend line from 0.9513 to 0.9655, USDCAD rebounded from 0.9712, suggesting that a cycle bottom is being formed on 4-hour chart. Further rise towards 0.9851 is expected later today, a break above this level will confirm that the uptrend from 0.9444 has resumed, then next target would be at 0.9900 zone. Only break below 0.9712 could indicate that lengthier consolidation of uptrend is underway, then the pair will find support at 0.9650 area.

Daily Forex Forecast

By James Woolley

When you become an affiliate in the forex trading niche, you will notice that there are a lot of big product launches taking place throughout the year. A lot of these will be relatively low cost, poor quality products, but some will be premium high end courses costing several thousand dollars. Anyway the point is that these product launches can be really beneficial if you are an affiliate marketer.

The fact is that these product launches can help you to make some truly massive commissions. The biggest companies in the currency trading niche generate millions of dollars worth of sales every time they launch a new product, and they do this by doing lots of testing to ensure that the sales funnel is perfectly optimized, and everything is set up to get maximum sales.

This is good news for you because all you have to do is to get your readers or subscribers into this sales funnel. Then you can simply sit back and watch the sales roll in when the product launches.

The way it works is quite simple. Whenever you get the big product launches, you will usually find that they follow the same pattern. There is often lots of free content available prior to the launch, and there may also be videos showing the upcoming product in action.

This content is accessible by leaving your name and email address. So your job is simply to tell your website readers and email subscribers about this free content, and send people to this content via your affiliate link. When a visitor opts in, they are then fully cookied and any subsequent sales will be credited to you if they decide to buy the forex product after it goes on sale.

The beauty of all this is that you never have to actually do any selling yourself. All you have to do is send people to the free content. The pre-selling will be done by the company selling the product using a combination of email messages, online videos and possibly webinars as well.

So the point is that it is well worth promoting some of the premium forex products because the product launches are perfectly set up for you to generate lots of sales. With many of these products paying upwards of $700 per sale, you can generate some huge commissions in a very short space of time. All you need to do is to get as many people into the sales funnel as possible (by promoting the free content), and then sit back and watch the sales roll in.

About the Author

For more information about forex affiliate programs, and to discover which affiliate programs James Woolley has found to be the most profitable, simply click on the following link:

http://theforexarticles.com/forex-affiliate-programs/

By James McKee

Now that Yemen’s revolution is more or less underway it is important to consider the widespread implications of this country’s decision. The country of Yemen is a known haven to some terrorist organizations and as a result many Western countries warn that Yemen could become a bastion of hate. Such concerns have already been aired by the United States who has already attempted to facilitate peaceful talks between Yemen’s rebels and the politicians in place. While much of Yemen’s rebels want a complete ouster of all politicians others are willing to work with some elements of the current government. Much like the Libyan coup the one in Yemen involves a family that rules the entire government. Yemen’s current leader has a son and nephews in control of much of Yemen’s military.

The effect of Yemen’s revolution on the USD on the online forex exchange will not be positive, indeed an unstable country on the border of Saudi Arabia could spell out serious trouble. Saudi Arabia is the world’s number one oil producer and supplier if that oil supply is interrupted then the world’s economy is in serious trouble. The continued violence in Yemen has resulted in numerous deaths and exponential property damage since it began nearly a month ago. There are no signs of direct intervention on behalf of the US or Saudi Arabia; however, it is only a matter of time before this becomes necessary. If the wrong people are allowed to gain power in Yemen there will be a large degree of trouble for the oil supply, and for the world’s economy.

As of late there has been no sign of the revolution in Yemen slowing any time soon, with the evacuation of Yemen’s president for so-called medical reasons there is concern he will return. If the leader of Yemen does come back to the country there is certain to be a good deal of resistance to his attempts to reassert power. The all-out violent revolution many have foreseen for the country of Yemen will not occur if there is comprehensive negotiation. The chances of this negotiation occurring with any element leftover from the former leader’s regime is highly unlikely. There must be a period of relative calm where the nation of Yemen is concerned if there is to be any peace in the nation. What occurs in Yemen may set the precedent for even more revolutions to occur in the Arab world.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the online forex trading regularly.

By David Adams

If you ask a group of 10 e-mini traders which type of bar they prefer on their trading charts you will find no shortage of strong opinions. Most traders were taught to trade on a specific type of bar, say a candlestick, and adjust to their trading to the art of reading candlestick charts. Generally speaking, once they have learned a specific system it is difficult to dislodge, especially if the e-mini trader has been having success with candlesticks. On the other hand, there are a wide variety of bar charting techniques worthy of consideration, and most people fail to do so.

In this short article we will look at five types of bar charting techniques and give a short analysis of the advantages and disadvantages of each technique. We will be looking at:

• Candlestick charts
• Standard bar charts
• Heiken-Ashi charts
• Renko charts
• Range charts

It is my observation that the most popular charts and use today are candlestick charts. For the sake of convenience, we will be talking about bar charting techniques in relation to e-mini trading; though there are a wide variety of trading disciplines that employ the charting techniques we will discuss.

Candlestick charts

It is assumed by most historians that candlestick charts were developed in the 1500’s in Japan. Japan is considered by many to be the first country to develop a futures market of sorts in the rice trading industry. A candlestick is several components in its composition; a body, upper and lower wicks (though if the price closes at the top or bottom of a candlestick, it will not have a shadow at that point). It is also common to hear the wick formation referred to as a shadow. The body portion of a candlestick chart was traditionally painted black or white indicating the direction the body had moved. On most current charts, you will generally see upward movements in the body painted green and downward movements in the body painted red. There are groups of traders who have used traditional Japanese patterns in candlestick formations to predict movement in the market. The empirical evidence on accuracy of the predictive nature of candlesticks points toward a negative correlation and accuracy, though I would admit that a conclusive decision on this topic is yet to be formalized.

Heiken-Ashi Candlesticks

The Heiken-Ashi version of candlesticks also has its origins in the 1500’s in the Japan rice markets. They differ significantly from traditional candlesticks in that they are weighted in nature and are trend oriented. I have used them with success in my trading, though certain market conditions must exist for them to be used successfully. The formula for calculating Heiken-Ashi bars is as follows:
• Open = (open of previous bar+close of previous bar)/2
• Close = (open+high+low+close)/4
• High = maximum of high, open, or close (whichever is highest)
• Low = minimum of low, open, or close (whichever is lowest)
As you can notice there is a heavy weighting on the latter portion of the bar and the system is especially effective in trend following systems. There are a set of specific guidelines for using Heiken-Ashi charting bars which is reasonably extensive and beyond the scope of this article. However, I recommend any trader investigate this charting system as it has many useful applications.

Standard Bar Charts

While I no longer trade this charting system, when I learned the trade it was the predominant system in use. There are many traders at present who still prefer standard bar charts, especially stock traders, for their charting needs. Standard bar charts are reasonably simple in their construction; there is a vertical line that shows the range of the traders chosen bar time. And a hash mark on the left side of the line to indicate the open, and a hash mark on the right side to indicate the close of that particular bar. This charting system is often referred to as an OHLC chart. While this may be the simplest of charting systems, it’s still important to note that all charting systems are essentially displaying the same data in different formats.

Renko and Range charts

These two charting systems are similar in many ways, though they have some very distinct dissimilarities that should be thoroughly understood before undertaking any serious trading with them. Like candlesticks and Heiken-Ashi charting, Renko bars also have their origin in Japanese trading. Quite literally, Renko means bricks. Renko bars are often referred to as bricks by e-mini traders. When using these bars you set a specific range to be charted. For example, you may set your Range and Renko bars to a setting of four. With a setting of 4, every time the market moves 4 ticks a bar is formed. But there is a fundamental difference between Renko and Range bars. Range bars chart market movement in either direction, while Renko bars chart only in one direction. For example, when using Renko bars the market would have to move 4 ticks upward or downward before a new brick is displayed. On the other hand, a range bar will chart the complete range, up or down, and form a bar indicative of this movement.

In summary, we have taken a close look at 5 different charting tools. While an in-depth discussion of the advantages and disadvantages of each system would entail a very lengthy discussion, I have tried to point out some basic advantages and disadvantages of each system. Each type of bar charting system provides a definite purpose for the e-mini trader, and I recommend serious e-mini traders investigate the advantages and disadvantages of each of these charting systems.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here