technical analysis for FOREX

Since I am still developing and testing my forex systems, I have nothing to post about them. I will post more detailed news when I have a proven track record in these systems. Until that time, I have decided to post another kind of information which will be also helpful: This is the first post of the series which will be related with technical analysis,indicators and trading systems. I will try to explain the best points of technical indicators and systems based upon them.

Let's start with the header, technical analysis:
Technical analysis is only interested in the price movements in the market.Technical analysts seek to identify price patterns and trends in financial markets and attempt to exploit those patterns. While we have several tools and methods in technical analysis, the primary tool is the price charts.

The principles of technical analysis derive from the observation of financial markets over hundreds of years. The oldest known example of technical analysis was a method used by Japanese traders as early as the 18th century,which evolved into the use of candlestick techniques, and is today a main charting tool.

Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis from the end of the 19th century. Modern technical analysis considers Dow Theory its cornerstone.

Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques.Neural Networks and Rule Based systems are the most popular methods used in technical analysis since 1990s.

There are some main principles which are technical analysis based upon:
-Market action discounts everything
-Prices move in trends
-History tends to repeat itself


In this blog, I will try to explain some basic terms, definitions and indicators which are primary and/or popular topics in technical analysis:
-Trend
-Support and Resistance
-Chart Patterns
-Elliot Wave principle
-Moving Averages and other indicators:

Accumulation/distribution index—based on the close within the day's range
Average true range - averaged daily trading range
Bollinger bands - a range of price volatility
Commodity Channel Index - identifies cyclical trends
MACD - moving average convergence/divergence
Momentum - the rate of price change
Parabolic SAR - Wilder's trailing stop based on prices tending to stay within a parabolic curve during a strong trend
Relative Strength Index (RSI) - oscillator showing price strength
Stochastic oscillator, close position within recent trading range

I will also show some basic trading systems based upon these indicators.

a trial for a new system

hi all,

I am an amateur forex trader and have been trading for 3 years with some breaks (military duty and my main job requirements).

Now, as always recommended to traders, i will try to put my trading logs to check them later, to remember what I have done in past, what should I do in future.

As a beginning, I will post my experimental trading logs in demo accounts. These trades are ordered by a trading system which has been in development phase for some months. I have built 3-4 trading systems but none of them was as solid as expected.

My last system is mainly based on MACD indicator (with some assistance of course) and working on daily data. This system produces 3 kinds of trade order. I haven't given any name for them but for now lets say, entrepreneur, slow mover, top billing.

Each one has different attributes; triggers in different cases, ends in different cases.
According to my statistical works, in most of currency pairs, entrepreneur and top billing have lower risk/reward ratio. So as a beginning I will use them heavily, rather than slow mover.

I am trying this system for lots of pairs, but I see their reaction are very different for same parameters. Some of them are moving in one direction but with large pullbacks, some of them prefer to simply move in one direction generally. Furthermore, some of them is not even trend-friendly. (I am sure most of you know these very well, but I like to write my thoughts to see them later and say "do I really think in this way?, ouch!..")

So I treat them seperately, using (slightly or heavily) different approaches for every pair.
As a result, I use different kind of trade orders for different kind of pairs to get a good risk/reward ratio.

I will post them their current condition and will see what will happen..

Stay tuned..