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Spot Forex Trading - The Forex Heatmap

The Forex Heatmap � is now available to all spot forex traders. The Forex Heatmap � gives any spot forex trader an easy to in interpret data visualization tool that organizes the data from 25 currency pairs into a visual map of the spot forex for fast and accurate spot forex trade entry decisions.

The vast majority of forex traders don�t know the condition of the forex market when they enter a spot forex trade.

There are two reasons for this. The first reason is ignorance. Most forex traders trade one pair like the EUR/USD and are looking at standard forex technical indicators on one timeframe. They continuously force trades into the EUR/USD when there is no trade there at all and they all wind up being forex scalpers. In the meantime other pairs are moving hundreds of pips, almost daily, and these forex traders simply cannot see the larger picture of the forex market.

The second reason is that once a spot forex trader has decided that they to want to know the condition of the entire forex market when they prepare to enter a trade, or that they want to trade the best currency pair available with the most pip potential, they see that it is not possible because up to now there were no good quality forex market visual maps available to them. When a forex trader searches for such a visual map of the spot forex that gives them a real time picture of the forex market they find that a tool like this may not exist.

This is where The Forex Heatmap � enters the picture. The Forex Heatmap � quickly and conveniently verifies your spot forex trade entry decisions across 25 currency pairs. Forex trading accuracy will improve dramatically for any spot forex trader and you will also know when to NOT enter a spot forex trade.

Typically at the point of entry the spot forex trader must worry about placing the trade in their forex broker platform and make sure that the correct pair and direction are entered on the trading execution platform while watching a forex price chart. There simply is not time to click on the charts from 5 to 10 currency pairs to verify the entry decision or the overall forex market condition. Forex traders must focus on the trade entry and have tools that work quickly and are easy to interpret. This is where forex traders make mistakes and emotion takes over. Traders need a quick entry verification visual map of the spot forex that streamlines the forex trade entry decision process.

The Forex Heatmap � solves all of these problems. The Forex Heatmap � is a dynamic visual tool that consolidates the data from 25 currency pairs using real time forex datafeeds and translates the forex data into a visual map of the spot forex. When you combine The Forex Heatmap � with a simple trading plan and very simple forex trend indicators, basic knowledge of forex support and resistance, parallel and inverse analysis, and the direction of the primary trend you now have a powerful combination of high quality analytical and decision making tools for forex trading. Emotional forex trading gives way to logical forex trading. The full potential of 25 currency pairs is now yours not just some scalping of one or two currency pairs that most forex traders have focused on in the past.

The majority of forex traders scalp, use forex technical indicators, or use forex robots, and the failure rate is incredibly high. Heatmaps are becoming more common in business, financial, internet and technology applications, and The Forex Heatmap � is leading the way to create successful spot forex traders.

Spot Forex Trading - Multiple Timeframe Analysis for the Spot Forex

Multiple time frame analysis is the inspection of forex trend indicators, starting with the largest trends and timeframes, and working backwards down through successively smaller timeframes to see how the smaller timeframes and trends feed the larger ones. When the smaller timeframes are in agreement with the larger forex trends you can enter a spot forex trade. If no forex trends exist the smaller timeframes and trends will, at some point, build a larger trend.

Multiple timeframe analysis has been around for nearly 25 years. The MTFA method is applicable to stock and commodities trading, equity options and the spot forex trading. The method is applicable to any currency pair. We are respectful of the strong technical work of Kathy Lien and Brian Shannon outlining MTFA and their technical papers are available on the Forexearlywarning.com website.

MTFA works, it is that simple. Pips can be made from the forex daily and the method is effective, especially when larger timeframes and forex trends are traded for larger pip totals. Money management ratio for your forex trading also improves when you are entering a larger trend.

By applying MTFA to many currency pairs your odds increase again, this is because you can choose to trade the best and largest trend available in the spot forex and ride the trends longer.

In order to conduct and accomplish a multiple timeframe analysis of the spot forex you need the proper forex charting platform and a set of trend analysis tools and indicators to facilitate the process. Some forex tools and indicators are very expensive some are free. You must be able to analyze 7 to 15 timeframes per currency pair to conduct a complete MTFA on onecurrency pair. You also must analyze the top 15-20 traded currency pairs to seek out the best opportunity and understand todays forex trends..

The first step when conducting a MTFA on a currency pair is to inspect the largest 3 or 4 trends. See what currency pairs have established larger trends, whether the trending currency pairs are at the beginning, middle or deep into the trend. Also determine which pairs are not trending (oscillating) and which currency pairs could be developing a brand new trend. If there is a currency pair that interests you check the next support and resistance area and set a price alarm to monitor that pair. When the price alarm hits check the smaller timeframes to see if they are in agreement with the larger timeframes and forex trends, and if so enter a spot forex trade.

A forex trader can use off the shelf trend indicators to conduct a multiple timeframe analysis of any currency pair. Simple forex indicators like exponential moving averages work fine. Just apply them across multiple timeframes.

Is it possible to make forex multiple time frame analysis better?? I believe the answer is yes. Incorporating parallel and inverse analysis into the market analysis as well as support and resistance to set price alarms for notification of momentum or a possible forex trade entry point can all help.

Forex scalpers may find the method to be to their liking because you will never trade against the larger trends and potentially hang onto your forex trades much longer. One of the biggest reasons people scalp the forex is that they have no idea which direction the trend is on the pair they want to trade. Or they only look at one timeframe. Traders scalp the foreign exchange but statistics show that people who hang on longer and ride longer trends make the most pips.

Why do traders not use multiple timeframe analysis? Mostly because analyzing alot of pairs and timeframes takes time and people basically are lazy. Most forex scalpers only look at one timeframe and could possibly be trading against a larger trend, or a scalper may be at the beginning of a very large move and exit way too early. If you are near the end of a trend you may also enter a trade after a long move and be entering near the end of the trend. This is bad forex money management under any scenario. Scalpers need MTFA but forex traders who would like to stay in their trades longer would, by nature require knowledge of MTFA.

Multiple timeframe analysis of the spot forex is here to stay. Forex traders worldwide are accepting and learning to understand the method. MTFA is a rigorous method of analyzing the forex. But it is not difficult to learn. When combined with parallel and inverse analysis of the spot forex it is quite powerful. It can be applied to any currency pair using free forex trading tools and forex charting systems available on the internet from many spot forex brokers.

Spot Forex Trading - Parallel and Inverse Analysis

Very few spot forex traders conduct any form of parallel and inverse analysis of the major currency pairs and exotic currency pairs to determine the best way to trade the forex market on a day-to-day basis. Forex traders do this in spite of the fact that it would be nearly impossible to trade the forex successfully not knowing where the overall strength and weakness was in the spot forex across multiple pairs or the entire forex market.

Lets look at some examples. Many forex traders like to trade the GBP/USD and they spend countless hours losing sleep waiting to trade this currency pair even when no trends or parallel/inverse currency pair confirmation is available. Losses occur and lifestyles change. Forex traders could increase their odds of success dramatically by setting up some forex trade entry rules and examples like the ones shown below.

Example 1 - Only buy the GBP/USD if the GBP/CHF and GBP/JPY are strengthening as well. This would be parallel confirmation that the GBP strengthening across the board. A simple but effective rule. A forex trader could enhance the rules further by examining the EUR/GBP for weakness. This is inverse currency pair entry confirmation.

Example 2 - Only buy the GBP/USD if the EUR/USD is strengthening and the USD/CHF is weakening. This would be confirming the trade entry with two other currency pairs and verification with across the board weakness in the USD. In either situation you have confirmed the forex trade entry with at least two other currency pairs. Both of these entry management rules would include a stop order.

But this is not what forex traders do. They want to trade the GBP/USD so badly that they �manufacture� a trade, or they want to use � forex technical indicators� that all conflict with each other, or trade the forex news. This is a mistake and is equivalent to betting or gambling and driven by greed. There is no logic to support the trade entry. This is not necessary because the forex works in a logical way.

Lets look at some other forex trade entry verification examples. Lets say a forex trader prefers to trade the GBP/JPY, you could set up rules for entry as follows: Only buy the GBP/JPY if the GBP is strong across the board based on parallel and inverse pairs, or only enter the GBP/JPY if the GBP/USD and USD/JPY are both strengthening somewhat or alot. In the second scenario the GBP/JPY will slingshot upward at a very fast pace due to the GBP strength combined with JPY weakness.

Or another scenario is for a forex trader only to buy the GBP/JPY if the EUR/JPY, CHF/JPY and AUD/JPY are all strengthening as well, in this case the USD is not in the picture because of across the board weakness in the JPY. Either way you have confirmed the spot forex trade entry with other currency pairs in the same parallel group..

Another example would be to buy the USD/CAD only if the EUR/CAD and AUD/CAD are also rising. Similar rules can be applied to any major pair or exotic currency pair and easily monitored upon entry. In the case of the three CAD pairs, if you also do a careful analysis of forex support and resistance, and you can trade the currency pair with the most pip potential rather than just trading the USD/CAD.

But this is not what traders do, they get stuck trading the same pairs like the EUR/USD repeatedly and wind up justifying a trade when a trade is not there. These forex trade entries are not based on logic they are based on emotional needs. This leads to losses. The spot forex works in a very logical process and you must let the logic work for you. Stop looking at forex technical indicators and start looking at other pairs in the same parallel and inverse groups to support your entries, these are the best indicators available.

Across the board strength and weakness in the 8 major parallel and inverse groups of currency pairs occurs weekly in the forex. But if you search the internet far and wide you will see that parallel and inverse analysis of the spot forex is rarely and in fact never discussed by forex traders, forex analysts, and forex trade planning services charging hefty monthly fees. People are too busy looking at forex technical indicators and absolutely no discussion of the market forces governing the spot forex ever occurs. This has to stop or the forex industry and traders will suffer.

It is very rare if nearly non-existent for one forex currency pair to move strong without other currency pairs to confirm the move. This is true for any major or exotic currency pair. If you are �stuck� trading the same currency pairs while the other pairs and exotic pairs are making strong moves its time to look at all of the currency pairs every night for your forex market analysis then pick the best opportunities to trade based on parallel and inverse analysis.

In order to trade the spot forex daily and weekly, you must analyze 15-20 pairs every day to determine the current market forces within each parallel or inverse group of pairs. This forex analysis will lead to less forex trade entries, but more logical forex trade entries, and better methods of confirmation of forex trade entries when the movement starts. Parallel and inverse analysis is the logic behind the spot forex.

Spot Forex Trading - Effective Use of Price Alarms

The spot forex is a support and resistance market. Whatever forex tools and forex indicators you are using to trade the spot forex market, the experience can be greatly enhanced by understanding near term forex support and resistance along with longer term forex support and resistance numbers for the currency pairs of interest.

Every spot forex trader and the major forex trading institutions are watching critical areas of support and resistance on the various currency pairs. If any major currency pair breaks through a critical support or resistance number it makes news everywhere on the forex news and on national and global news shows.

Support and resistance numbers on the forex are somewhat repetitive, the major support and resistance numbers on the forex tend to repeat themselves over time as the currency pairs range or trend up and down.

Monitoring the critical areas of short term or long term support and resistance on the spot forex is easy using price alarms. You can use desktop alarms, alarms to wireless devices, or email alerts when prices are breached. Make sure your forex broker gives you the ability to set price alarms and alerts. They should also provide free forex price alarms or alerts on their forex trading platforms.

Forex price alarms can be used for the various needs of a forex trader.

If a currency pair is currently trending price alarms can be used to notify a forex trader when the trend is resuming so you can intercept the price movement. Another use of forex price alarms is to set price alarms at specific support or resistance prices where the indicators can be reevaluated for profit taking. This assists with forex money management and on exiting forex trades.

Another use of forex price alarms is for setting price alarms where double tops and double bottoms can occur, the double tops and double bottoms occur frequently on the spot forex and can represent entry points into complete currency pair reversals after large sell-offs or up cycles.

Price alarms can also be set to alert a trader when a currency pair going in your favor so you can reset your stops up or down to improve your forex money management or entry management. Price alarms can also be set at the same price (execution price) of your partial limit orders or entry orders to notify the forex trader that an order was executed.

Also if a currency pair is not trending but trading in a narrow range a forex straddle alarm can be used to assist in to determining a breakout of the current price range.

In conclusion the spot forex market knows where these critical short term and long term support and resistance numbers are, the other forex traders know where these numbers are, and the institutions also know, this means you should know too, don�t waste time staring at the forex all night. Monitor the market with forex price alarms and go on about your business, get a lot more sleep and still be in the know as to when your favorite currency pairs are moving.

Spot Forex Trading - Trading with the Trend

If anyone attempts to trade the spot forex the very first task at hand is to determine if they currency pair they are considering buying or selling is in a trend. The next step would be to wait for an entry point into the existing trend and ride the trends of the forex as far as possible.

How far is as far as possible? Well, the stronger the trend and the trends on the larger timeframes the longer you ride it. Short term trends are fine too but the length of the move will not be as far and your trade entries will be more frequent. If you trade larger trends and timeframes of the spot forex you will trade less frequently and ride each trade much longer. The larger trends of the spot forex have a higher reward of pips for each given entry and you tend to trade less frequently

Forex trend indicators and forex trend tools are available in commercial charting packages, trading platforms and software packages. Many of them are good but not well understood.

If you always trade with the trends of the spot forex you will always enjoy some level of success. I can equate trading with the trends of the spot forex to sailing with the wind instead of against it.

On the other hand ignorance of the forex market trends will cause an insurmountable obstacle to profitable forex trading. If you don�t know what the trend is for the currency pair you are trading you will never consistently make money trading the spot forex.

What is worse is that if you make a trade on the spot forex and have a profitable trade or losing trade you wont be able to pinpoint why if you don�t know the primary trend of the currency pair you are trading.

Always know the trends of the spot forex market and always trade in the direction of the trend.

Being a trend trader on the spot forex is NOT scalping, and it is NOT trading the news. If you choose to scalp the spot forex knowing the trend is still extremely beneficial. Most forex scalpers eventually quit scalping because it is too tiresome, mentally exhausting and eventually they all become forex trend traders anyway, so why not start out where you are going to wind up??

Also if you trade the forex news you can also do this in the direction of the trend and it is amazing how often the forex trends are right about an expected news event, so why risk ever trading against the trend at all?

Trading with the trends of the spot forex is also common sense. Trading against the trend or when there is no established trend will only cause grief and losses.

If no trend is present on a currency pair it is usually range bound or oscillating up and down. This means that the pair is trading in a small or large pip range and appears to be bouncing up and down or cycling up and down within the range. The currency pair cannot move higher or lower because it is stuck in the range.

When the currency pair moves up and down within the range two things are possible. One possibility is that the pair is bouncing up and down in a ragged fashion that is difficult to trade. The second possibility is that the pair is oscillating in clear smooth cycles up and down within the range. When a currency pair is oscillating it can be traded fairly easily. Just wait until it reaches the top or bottom of a cycle and trade it when it starts going the other direction. This occurs very frequently in the spot forex. When a currency pair is in a smooth oscillation even a beginner trader can trade these oscillating pairs very safely.

There are a lot of books available on trading the markets in general. Many of the books focus on always trading with the trends of the market. The book by Michael Covel titled �Trend Following� is excellent and I strongly recommend reading it.

So now we have our foundation for trading the spot forex. We must always trade with the trend. Traders who trade with the trends of the forex market will always have some level of success. Consistently trading against the trend or ignorance of the trend will result in consistent losing trades.

Live Forex Training In Toronto March 27th, 2010

Forexearlywarning will conduct a live all day forex seminar in Toronto, Ontario on Saturday March 27th, 2010.

http://theforexheatmap.blogspot.com/2009/12/toronto.html

Click on this link for more information or registration.

Regards
Mark Mc Donnell
http://www.forexearlywarning.com/

Why Standards in Forex Matter

It appears that major changes are in store for the U.S. Forex industry. The recent CFTC proposal to limit margin to 10:1 has led to speculation as to what will happen with the U.S. Forex brokerage industry. The latest rumors are that several of these brokers may establish themselves as banks and not fall under the jurisdiction of the CFTC. While this may provide exemption from the proposed leverage reduction, these brokers would now be subject to federal banking regulations. This could prove to be very challenging since Congress is looking to implement laws in a financial regulatory bill which would oversee the banks, the products they trade and how they make money.

Forex traders have already begun to seek out non-US brokers that do not limit their ability to trade. While many traders appreciate the security of dealing with a regulated broker, most do not like to be told how they can trade. The first instance of this occurred in the US when the NFA banned trader's ability to hold both a long and short position on the same currency pair simultaneously. Commonly referred to as "hedging", the NFA determined that allowing this type of trade was not in the best interest of retail traders and that the broker benefited by making extra "commissions" entering an opposite trade. What the NFA falied to recognize is that many traders use automated trading systems that employ this type of trading to limit exposure and capture incremental gains. This is akin to entering a "long straddle" in the options universe where a trader buys calls and puts on the same underlying instrument with the goal of profiting when a significant move occurs by closing the losing side and allowing the winning side to out gain the losses of the other trade.

The most recent CFTC proposal concerning leverage has the potential to all but eliminate competition in the US Forex industry as only the large 3 or 4 firms have multiple registrations around the globe that will allow them to operate in other jurisdictions. From a client's perspective, a mandatory reduction in leverage will be much more restrictive than the FIFO (non-hedging) rule as clients will be required to deposit 10 times additional capital in order to maintain their same level and/or style of trading. This in turn will drive U.S. clients offshore, significantly reducing revenues of the remaining 8-10 U.S. brokers resulting in further consolidation that had 30+ participants just three years ago. How is reducing competition and forcing U.S. clients to open accounts outside the U.S. a positive for the U.S. Forex industry?

One thing that has been overlooked in the past has been the standardization of pricing and execution. In the past, traders have always focused on the location of the broker and the respective regulatory body. It is now more important than ever for traders to be using a DMA (Direct Market Access) provider. Brokers that offer such pricing and execution help to alleviate many of the concerns in the Forex industry. If more and more brokers can move to a DMA standard and use a system like Currenex they may find they won"t be always be at odds with those that write the rules.

Low Latency Your Forex Trading Edge

Latency is defined as the delay in the time it takes for data to travel from point A to point B. In the case of Forex trading, this equates to the distance between your broker and their respective liquidity sources.

Latency tends to be one of the most overlooked aspects of Forex trading. From a trader�s perspective the focus has always been on the front end trading software. However, reductions in latency should be one of the most important considerations in selecting a Forex broker. It is essential that an STP broker that connects to various liquidity sources lessen the time that trade messages takes to reach those sources of liquidity.

The Case for Colocation

As is the case with many businesses, a major key to success is �location, location, location�. Numerous studies have shown that the most effective way to limit latency is to make sure the physical location of the broker�s servers are in close physical proximity to the data source. DivisaFX accomplishes this by locating their servers within the same facility where Currenex hosts their servers. This means that trade messages travel the shortest distance possible and offer clients precious milliseconds advantage over other brokers.

Many algorithmic and high frequency traders take advantage of the improved execution times by hosting their trading system in a collocation with their broker. Through a partnership with TradeSpotFX, traders can now use the VPS (Virtual Private Server) service to reduce latency and maximize the effectiveness of their expert advisor or other automated trading system they might use.

Another benefit of server collocation is security. Financial institutions are required by law to adhere to the strictest levels of security and data integrity. They must also maintain server uptime of 99.99% so numerous backups are implemented to insure uninterrupted trading for clients of DivisaFX.

Currenex MetaTrader4 Bridge

SAN DIEGO, CA FEBRUARY 11, 2009: Divisa Capital Group announces the release of the Currenex MetaTrader4 Bridge providing connectivity between the popular MetaTrader4 (�MT4�) trading platform and the market leading Currenex trading system.

The Currenex MT4 Bridge facilitates the seamless integration of Currenex liquidity into MT4 and provides real-time hedging and execution through Currenex. You benefit from the superior liquidity and low latency execution that Currenex provides as well as the ability to specifically tailor your price feed using the Currenex Backoffice.

Benefits of the Currenex MT4 Bridge:

� Access to aggregated liquidity- With Currenex you can aggregate liquidity from multiple providers to continuously provide the best bid/offer into MT4.
� Real-time hedging of client flow on the award winning Currenex platform � MT4 trades are hedged in real-time as they occur, reducing risk from aggressive Expert Advisors.

� Fastest Execution � The award winning Currenex platform provides the fastest execution in the industry today. Combined with the extremely low latency Currenex bridge this provides the fastest execution from MT4 to your liquidity providers.

� Handling of partial fills � The Currenex MT4 bridge seamlessly handles partial fills for better execution, faster fills and less slippage.

Features

� Full control and customization of price feed into MT4.
� Full control of how and when trades are hedged, on a per client basis.
� Seamlessly handles ALL MT4 order types.
� Full logs of all bridge transactions and activity.
� Real time links into your back-office systems.
� 24 x 7 support.
� Support for MT5 when available.

Increase Your Trading Profits By Using Professional Forex Expert Advisor Softwar

Software development companies that produce MT4 software applications for the Forex trading community have become really important to any prosperous business and the sector of business application development services providing groundbreaking products such as the MT4 robot or the expert advisor, is gaining ground on its more known counterparts, such as the entertainment software development services sectors, and others. The field of business application development now offers a truly indispensable leverage which helps the business sector aim better towards business success and prosperity. The process of extracting precious data with the help of specially designed software applications, such as the MT4 robot, Dukascopy robot, or expert advisor, provides businesses with a great advantage over the traditional channels and ways of extracting data, by considerably reducing operational costs both in time and funds.