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As a trader, you should know the trading volume. Trading volume of a security tells you how heavily that security is being traded. A high trading volume is an indication that there are many buyers and sellers of that security and the current trend will continue. However, you have to combine volume analysis with technical indicators to figure out the meaning of the price action.

Volume figures are very important for traders. Volume data is not possible for currency markets as the market is unregulated and over the counter due to which this data is unavailable. Stock and futures markets have volume data that helps the traders and investors in knowing how heavy a certain stock or futures contract is being traded. In case of futures market, volume figures are delayed by one trading day.

Higher trading volume steadily moves towards the closest month to delivery in the futures market. Delivery month in the futures market is the month when the contract is settled and the physical delivery of the asset takes place. Higher trading volume is good for traders as it can mean a better price.

A Limit Up Day is a sign of strength however, a limit down day is usually followed by trading collars. You should know the Limit Days in futures market. Limit days are those days when a futures contract makes a big move in a very short period of time with heavy volume.

Volume data alone can be confusing. So as a trader, you need to use volume data in conjunction with technical indicators. This way, you can understand the signficance of trading volume change and the trend change. You should also understand how volume data is reported in the stock and the futures market. Open interest is the number of open contracts of a security in the market during a given trading period. Open interest is particularly an important tool for futures traders.

Open interest only applies to futures and options contracts and not to stocks. Open interest is the number of contracts entered into during a specific period of time but have not been liquidated or settled.

Open interest is the total number of contracts of a particular security that is long or short. Open interest rises by one when a new buyer or a new seller enters the market and takes a position in a security. Charting open interest alongwith the price charts can be an important means of tracking a contract.

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Short selling is a way to make money when a security price starts falling. When you expect a stock to fall in price, you borrow it from your broker and sell it. After sometimes buy it back in order to return it to your broker. The difference between the selling price and the buying price in this case is your capital gain.

Now for short selling to work, the stock price should go down otherwize, you will make a hefty loss in case the stock price starts to go up. Since, you are trading with a borrowed stock, you have to return that stock to your broker. In case the stock price goes up, you will have to buy it back at a much higher price with a loss. Now, when you go short and the market suddenly turns against you in the sense that it goes in the wrong direction, you are in trouble. You want to buy back the stock but the price is continously going up. The harder it becomes to buy back the required number of shares, the more desperate you will become and the higher the prices can go before you are able to buy back the required number of shares and return them to your broker. So in a way, short selling is tricky and must only be practiced by the experienced traders.

In case of futures or options, you don’t need to borrow the security; you simply agree to sell the contract when you go short. Why do investors take a short position? The most obvious reason is that they are expecting the price to go down further. Short selling is also used for hedging purposes.

In the case of stocks, you need to monitor the rate of short selling in order to gauge investor expectation as well as the future market direction. Now, NYSE and NASDAQ report the short interest in stocks listed with them. Now this data is released on monthly basis as the brokerage firms may need a while to report how many shares have been shorted and then report that data to the exchange.

Now this number is known as the Short Interest Ratio. Short Interest Ratio is a very important number for short sellers as it can give important clues about the investor expectation to the short sellers.

So what is the Short Interest Ratio? Short Interest Ratio is the number of shares of a particular stock that has been shorted in the market. Plus the average daily volume for that stock in the same month and also the number of days of trading at the average volume that it would require the market to cover the short positions in that stock. It also reports the percentage change in the short positions from the previous month.

A high short interest ratio should make you nervous if you have taken a short position in that stock as most of the investors who are short will soon become desperate to dump that stock in the market and cover their short positions. The problem with Short Interest Ratio is that it is not calculated frequently. It is calculated on monthly basis. So, the trader cannot use it to gauge the short positions in the market on a daily or weekly basis. However, it can give you the general trend in the market.

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The act of acquiring a dual currency account is surely one of the most beneficial decisions you might want to consider as you begin expanding your market base. But there are some things that you need to take note of when getting a dual currency account such as:

1. Shifting amongst accounts - It is a must that you find a platform that can conveniently switch from one account to another. And it would even be better if you can get one that operates in real-time for all of the currencies you use in the said account. This way it would be really easier for you to track the value changes as they happen. Make sure that there are no lags in between the switching because you might end up missing very important opportunities in case glitches should happen.

2. Different individual to take on the transactions - Although a dual currency account is helpful in terms of letting you maximize your trading time, it is possible that you get too overwhelmed with all of the responsibilities you would suddenly have to incur. If you feel you would have a hard time focusing on everything, it would be good to consider getting an assistant to help you out. At least you can be sure that another person’s eyes are seeing your business trading game.

3. Your Capacity for payment - Be prepared to anticipate that a dual currency account will turn out to be an investment. Prepare yourself for the inevitable price you literally have to pay because of this tool. So be extra careful when it comes to evaluating costs so you can be sure that you are really getting your money’s worth from the total which you ended up paying for. You might want to take a look at all the possible options first before zeroing in on just one choice.

4. The System’s technical preparedness - To add to the concern for price, be ready to anticipate and prepare for the fact that you might need a high-profile type of system in order to run the account successfully. Check the specs of the account before you sign up for it and make sure you get all the technicalities assessed. If you are not that tech-savvy when it comes to these things, ask someone who can understand the technical stuff and let him also identify your current personal computer or laptop to find out if both things would be a good fit for each other. You can also try asking the account owners to do the checking for you if they should offer that too.

5. Take advantage of the trial version - If the dual account has a trial version, it would be a good idea to try this out first before you end up buying the whole thing. At least in the fifteen days or so that you will get to use the dual currency account you can already identify how it works and does not work for you. This is also a smart way to get a better feel of the entire account without having to risk your financial investment.

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Many traders of the stock market are turning to trading the forex market these days. The reason for this is because the forex market holds many new opportunities that the stock market never has. It is also debated that it is easier to learn how to profit in the forex market. The mainstream media still does not keep updates on the forex market like they do with the stock market, but I feel that it will change very soon.

There’s a lot of different advantages to trading the forex market, and these are what attract the stock market traders. One of the biggest advantages is that the forex market is open 24 hours a day. This is much more than the stock market is open, because it is only open for about 8 hours per day.

The currency trading market being open 24 hours a day can be a big advantage to traders who have day jobs. It allows them trade the market at any time of the day that they please. This also means that traders can find more opportunities for entry and exit points in the currency trading market.

Another advantage to currency trading is that there is high leverage involved if you choose to use it. What this means is that you can put only $100 into an account but trade with $10,000 worth of money. This allows traders to have much quicker gains, but it can equally lead to very quick losses.

One of the other advantages to the Forex market is that you don’t have to worry about keeping up with hundreds of different companies. You only worry about keeping up with certain major currency pairs and knowing how the overall economy of certain countries is doing.

If you trade stocks right now and have not given a thourough look at the forex market then I would suggest that you do so. The forex market offers a vast amount of opportunities, and the least you can do is to give it a good investigation before you shrug it off.

Also go to forex robots for more info.

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Interest rates play a pivotal role in all financial markets. No matter what market you trade whether it is stocks, forex, futures, options, ETFs, commodities, bonds etc, you need to keep an eye on the interest rates. A yield curve is a representation on the graph that compares the entire spectrum on interest rates available to investors.

Now as said before there are two types of interest rates in the economy; short term and long term. The return offered on the Treasury Bills is the short term interest rate while the return offered on the Treasury Notes and Bonds are long term interest rates. When you look at a Yield Curve these interest rates are plotted on the vertical axis with the time to maturity of these financial instruments on the horizontal axis. There can be three different shapes of a Yield Curve. The Normal Curve, The Flat Curve and the Inverted Curve. Let’s discuss these three different shapes now. On the Normal Curve, the short term interest rates are lower than the longer term interest rates as investors need a premium to invest long term. A Normal Curve represents normal economic activity where investors get rewarded for investing long term in the form of a higher long term interest rate on these financial instruments in the shape of a premium over the short term interest rates.

When you find the Yield Curve to be Flat, it means that all the interest rates in the economy are equal. What this indicates is that economic activity is slowing down. Now, most of the time you will come accross the Normal Yield Curve. But sometimes, you will find the Yield Curve to be Flat.

However, when the economy starts to go into a recession, you will suddenly find an Inverted Yield Curve. On an Inverted Yield Curve, the longer term interest rates are lower than the short term interest rates.What this mean is that the economy is slowing down and investors are reluctant to invest long term thinking it to be risky. An Inverted Yield Curve is a leading indicator of an economy doing down into a recession. When there is a financial crisis like that happened in the early part of 2008, you will find the Yield Curve to be Inverted. Investors are shying away from investing in long term projects in the economy.

If you want to trade interest rates short term than Eurodollars are the best instruments that you can trade. Eurodollars are well suited for small traders because of the low margin requirements. Eurodollars also tend to be less volatile and have a highly liquid market due to the large number of market participants. However, like any other futures contracts, Eurodollars position needs to be carefully monitored. Ten Year T Notes and T Bonds can be highly volatile. You can also trade options on these interest rates futures.

Trading interest rate futures is no different than trading anyother futures contract. If you haven’t traded futures before, a good idea would be to first paper trade these contracts for at least two months so that you get a feel of how these futures contracts gets traded and how the market behaves! Now, when you trade these interest rate futures contracts, you need to keep an eye on the market constantly. Futures trading can be risky and in a matter of few minutes you might get wiped out in the market and get a margin call from your broker.

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Following a trend is great. But if the trend is moving quickly, you want to know that so that you can get ahead of it. If the rate of change of the trend is going up, rising prices are going to follow quickly.

Now first what is a momentum? You must have read about the momentum in high school physics.Momentum was the velocity multiplied by the mass of the object. Velocity was the rate of change. So when we talk of momentum in trading, we are talking of the rate of change of any security prices. Now. a simple way to calculate the momentum of any security price is to divide the closing price today by the closing price ten days back and then multiply it by 100!

This is your shockingly simple momentum indicator that you can use profitably in your trading. Now, if the price did not change, the momentum indicator will obviously will be 100. If the price went down, the momentum indicator will be less than 100 and if the price went up, the momentum indicator will be more than 100. Now, when the momentum indicator is greater than 100, the trend is expected to continue in the future.

This momentum indicator tells you what is most likely to happen in the future not what happened in the past. So it is a leading indicator. You must have heard about momentum investing or you can even call it momentum trading. In momentum investing , you buy a security at a high price and sell it even at a more higher price unlike ordinary investing where you buy low and sell high. The trick is to know that the price will continue to rise when you do momentum investing. How do you know that the security prices will continue to rise in the future? By looking at the business fundamentals like the sales or profits, if you find them to be rising and accelerating at the same time the security price is rising,there is momentum behind this move!

However, in momentum investing, you search for stocks that have rising prices that are expected to continue for sometime. So you buy high and sell even higher within a few weeks making a decent profit. You can use that profit to do more investing. As said before, instead of investing in a security or a stock you can do momentum investing. When you are doing ordinary investing, you are waiting for its price to appreciate to give you a capital gain. This price appreciation might take from a few months to even years tying down your capital in that investing.

So when you are doing momentum investing, you are looking for a security or a stock that has a potential to move big. How long this big move might take to materialize? Well, the expectation is for the big move to happen in a few weeks to a few months. Just like in ordinary physics, when a ball is set in motion, it will continue moving unless stopped. This is what the Newton’s First Law says. You can expect a security price to keep on rising as long as something drastic doesn’t happen to stop that rise. So what can be that something drastic? It can be a sudden breaking news about the misdoings of the management that have not been known to the public before. I am just giving you one example. There can be more. So before you do your momentum investing, it is always better to do some fundamental research on the company. Remember the Dot Com Bubble that burst and hurt many people a decade back. Lot of people were doing momentum investing without doing fundamental research on the stocks that they were investing in. So you need to do some fundamental research as well to ascertain that the rise in prices of a stock are sustainable over the long haul or not.

There are many way to do momentum investing. One is the price momentum that we have talked above. The other can be Earning Momentum. If you are a long haul investor who keeps an eye on the financial statements of different companies and you find that the quaterly earnings are going up steadily from one quater to another. What this means is that the stock price will also accelerate and follow suit.

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The most bullish of the candlestick pattern is the long white candle. It represents that day when bulls have been in total control of the market throughout the trading day pushing prices higher from the opening to the closing.

There were some sellers also in the market. Buyers were just buying from them and pushing the prices still further throughout the trading day! So when a bullish long candle is formed, it indicates that buyers have been buying throughout the day.

This is an indication that the buyers are not done with their buying. The following day the bulls will still be in control and pushing the prices further higher. This is an indication of the fact that there are not enough stocks or securities in the market to satisfy the buying appetite of the investors. With high demand and low supply, the prices will continue to rise! Now, what this means is that prices have been constantly rising throughout the trading day. The closing price was equal to the high of the day or very near the high of the day.

A White Marubozu may not be formed quite frequently on the chart. Most of the time, you are going to find the white long candle with a wick on either side of the candle body. These wicks will be small offcourse. What this indicates is that the closing price was close to the high of the day but not equal to it. In the same way, the opening price was close or near to the low of the day but not equal to it!Now, a true White Marubozu is a special variation of the long white candle with the closing price equal to the high of the day and the opening price equal to the low of the day.

How do you know that this is indeed the white long candle? When you find that 90% of the area between the low and high of the day is covered by the candle body, you know that this is indeed a long white candle. You wil find many bullish white candles on the chart. Off course, everyone will not be the white long candle.

Now always remember, price action doesn’t move in one direction always. It retraces a little bit and then again starts moving in the previous direction. So when this retracement in price action takes place, you get the chance to trade the signal! When a long white candle is formed, it means that the price action had been intense throughout the day. This price action was covered in a very short period of time.

How to trade the long white candle? Now when you trade the bullish long white candle, you can take the low price as the support. This is the price level where the buyers step in thinking that the price is good now and start pushing it higher. What this means is that place your stop loss close to that level!

There are some variations to the bullish long white candle. Three are very important. The first is the Long White Marubozu that has no wick. It is all candlebody. This is the most bullish of the candlestick patterns. The other variation is the Closing White Marubozu. In this case, the closing price is equal to the high of the day. What this means is that there is no wick on the top of the candlebody.The third important variation is the Opening White Marubozu. In this case, the open price is equal to the low of the day. What this means is that the there is no wick below the candle body.

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Trend trading is one of the most profitable trading strategies. You must have heard the oft repeated quote that Trend is your friend. But trend can only be your friend if you know how it is going to behave in the future. If you don’t know that the trend is going to reverse soon, you are going to end up with a heavy loss. Candlestick charting is one of the ways to predict the future of a trend whether it is going to reverse itself in the near future or continue for sometime. Bullish Necklines is a candlestick pattern that can help you know whether the trend is continuing or not. It is a trend confirmation pattern. There are types of Necklines Patterns; one is the In Neck and the other is the Out Neck Pattern.

On the first day, there will be a long bullish candle indicating that heavy buying took place during the day. On the second day or what you call the signal day, there will be a bearish candle that can be long or short with a closing price almost close to the first day. Necklines pattern is a two stick pattern. What this means is that it takes two days on the daily chart for this pattern to form.

Now,there can be two types of Neckline Patterns depending on the closing prices on the signal and the setup days. If the closing price on the signal day is almost near the closing price on the setup day, it is an On Neck Pattern. In case, if the closing price on the first day is little lower than the closing price on the signal day, it is a In Neck Pattern.

You might be thinking that this is not much of a difference. Well, this is true but nevertheless, you should be aware of this slight difference between the In Neck and the On Neck Patterns. Both these patterns are telling the same thing that the uptrend is going to continue in the near future. So even if you are not able to differentiate between the In Neck and the On Neck, don’t worry much. You must at least be able to identify that a Neckline Pattern has been formed.

In case of the bearish meeting line candlestick pattern, you see a strong up day on the setup day with a long bullish candle. On the signal day, you find a gap opening which entices the sellers to step in the market. The selling continues throughout the day. As a result a long bearish candle is formed with the close of the day very near its low plus the close of the day very near to the close of the setup day. Now this a trend reversal pattern.

Another trend reversal pattern is the Bearish Piercing Ling Pattern. This candlestick pattern is formed when on the first or the setup day, a bullish long candle is formed meaning that the bulls have been in control of the market throughout the day. The second day or what you call the signal day, there will be a bearish candle formed. This bearish candle should have an opening higher than the first day’s high. This means that on the second day or what you call the signal day, the sellers started selling pushing the price action down past the opening price to the midpoint of the first day candle.

This is a trend reversal pattern that usually occurs in the last stages of an uptrend. The price is still rising but it has lost its momentum. Now as a trader, when you combine these candlestick patterns with technical indicators, you get a powerful tool in your arsenal.

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Economics is the most important subject in the lives of individual, companies and countries. A ton of economic reports get released daily for the consumption of the markets. Some of these economic reports have the potential of moving the markets in a big way. For some forex, futures and options traders, trading these economic reports is a way of life. Each market has got its own favorite reports. But some reports have the potential of moving almost all the markets.

Now when these economic reports are released, market compares the expected with the unexpected. The more these reports have the element of the unexpected, the more the markets become nervous. So, if you are a news trader or an economic report trader, you need to watch CNBC and Bloomberg constantly to know what the market is expecting. The most market moving reports are the Federal Reserve’s Beige Book, The Consumer and the Producer Price Index, The Gross Domestic Product (GDP). the monthly Employment Reports or what you call the NFP Report, the Institute for Supply Management (ISM). Now as said before if these reports have no surprise for the markets, nothing will happen. But in case if there is a surprise, markets can turn upside down in matter of minutes!

As a trader, your world is highly dependent on the economic calendar. Economic calendar is the listing of dates when these important reports are released each month. Each month, these reports are released by different government agencies and the private sector. These reports are a major influence on how the financial markets move in general plus a source of the repetitiveness in the markets.

Not all reports are created equal. Some economic reports have more influence on the market than others. The most important reports that tend to move the markets a lot are the employment report, the Producer Price Index (PPI), the Consumer Price Index (CPI) and the Federal Open Market Committee Meeting Minutes.

Now, Non Farm Payroll Report or what you call the NFP Report is the most market moving report in the recent times. This report is released by the US DOL (Department of Labor) and it gives the state of employment in the economy during the last month period. It is released on the first Friday of each month exactly at 8:30 AM EST. There are NFP Report Traders who easily make 150-200 pips at this time within minutes.

Now as said before, the market reaction is dependent on how muc surprise there is in the report. If there is no element of unexpected in the report, the market may react mildly. But if there is a big surprise in the report that the market did not anticipate, markets can be volatile for hours or even days before the importance of the surprise is digested by the market. These types of reports can also start a news trend in the market that might last for quite sometime!

The NFP Report becomes very important when the economy is shifting gears like the present when the US economy is coming out of recession. Market tends to develop an expectation about the employment figures and if the NFP report does not confirm with that expectation, it can make the market jittery for sometime before the importance of the release is digested by the market. Trader use the NFP report as one of the several important clues to predict the future of the interest rates.

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With the economy going into a downward spiral, hundreds of people have loss their jobs as brought about by the recession. This has forced them to look for alternative means of earning a living.

And a number of them have chosen the foreign exchange market. This is because day traders have earned a reputation of being quite well-off.

Certainly, there are a number of advantages associated with day trading. One is that the currencies in foreign exchange markets go through fluctuations throughout the day which mean that there is a lot of room to make considerable profits.

Second, day trading does not require one to have a huge start-up capital before one can start trading. Lastly, help in the form of trading bots are available almost anywhere.

Going into the foreign exchange market especially if you do not know a lot about it requires help from an efficient trading robot.

There are plenty of these programs available in the market but you have to filter the underperforming ones out.

One thing that you will notice about these trading robots is the outrageous claims that they do. An example is that of Forex Autopilot which claims in its sales page that it can make anyone filthy rich just by doing a few clicks throughout the day.

This can be a very tempting offer, but you have to understand that there is more to the product than that.

What Forex Autopilot really is, is an automated trading bot so it is true that it can start betting just by getting access to your funds in your behalf.

But before you can have the Forex Autopilot run on its own, you will have to set up a few parameters first. These parameters require fundamental knowledge on the foreign exchange market but then these can be configured quite easily.

Forex Autopilot is also significantly accurate when it comes to making bets but unlike what it claims, you have to be wiser when it comes to trading. Losses rarely happen but when they do, you can lose quite a lot.

To remedy this, never bet more than 50% of your capital. This may translate into smaller gains but you also get manageable losses.

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