Scalping With MA And MACD

Scalping With MA And MACD  

The combined method of moving average (MA) and MACD indicators is often practiced by scalpers and daily traders. Time frames for entry can be 1 hour (1-hour) or lower (30 minutes or 15 minutes), while the time frame for the trend direction is usually 1-hour, 4-hour (4-hour) or daily. This method is often used because MACD can run well at all time frame trading.

Determining Trend Directions

For the scalper, the time frame of 1 hour and 4 hours is often used to determine the direction of the current trend before determining the entry position at a lower time frame. The popular and frequently used trend indicator is the Average Directional Index (ADX), but because at low time frames the response of this indicator tends to be slow (lagging), the scalper often uses the moving average.

To increase the sensitivity of moving averages that are also lagging, an exponential moving average (EMA) type is calculated by weighting at the final price. In practice, EMA is accurate enough to show the direction of the current trend.

 In the following GBP / USD 4-hour example, the period EMA 55 is used as a trend detector tool. Rules:

• When the price moves above the EMA-55 indicator curve, the price is considered uptrend move and the trader will only look for a buy opportunity.

• Conversely, when the price is under the EMA-55 curve, it is considered downtrend and the trader will only look for sell opportunities.

 Determining the Momentum Entry

After knowing the position of the desired entry, traders can determine the entry (timing) by looking at the MACD indicator and OSMA histogram. Entry does not have to be on 4-hour time frame, but can be at lower time frame according to trader's habit.

Buy if the MACD curve has crossed the signal line from the bottom up and at the same time the OSMA histogram is moving above the 0.00 level. Under these circumstances, uptrend momentum is strong, and the wider the distance between the MACD curve and the signal line the stronger the trend.

Exit when the MACD curve has cut the signal line from top to bottom and at the same time the OSMA histogram is moving below the 0.00 level. Under these conditions, uptrend momentum is weakening and possibly the price will reverse direction.

For entry sell apply otherwise. Sell when MACD cuts the signal line from top to bottom and OSMA moves below the 0.00 level. Then, exit if MACD cuts the signal line from bottom to top and OSMA above level 0.00.

With this method the stop level can be determined rather tightly, and no matter how much risk / reward ratio is planned, the trader must exit when the trend's momentum has started to weaken.

List Of Forex Terms

Forex Terms 

Below is terms used in Forex Trading:

A

Aggregate Risk

When a bank or financial body is exposed to forex contracts from a single customer.

Ask

The price at which a trader accepts to buy a security.

Asset

An item/resource of value.

B

Bank Rate

The rate at which a country's central bank lends money to its domestic banks.

Base Currency

In a currency pair, the first currency in the pair is called the base currency. For example, in the USD/JPY pair, USD is the base currency.

Bear Market

When the prices of certain securities, assets, or markets are in decline.

Bid

The price at which a trader is prepared to sell a security.

Bull Market

When the prices of certain securities, assets, or markets are rising.

Buy Limit Order

An order to carry out a transaction at, or lower than, a specified price, the word 'limit' referring to the specified price.

C

Carry Trade

When an investor borrows at low interest rates so they can buy assets that are likely to produce higher interest rates.

Closed Position

When a position is closed, the transaction has been completed – whether the position was long or short or whether it was profitable or incurred losses.

Closing Market Rate

Otherwise known as closing price, this is the final rate that a security is traded at on a specific day, candle or timeframe.

Currency Appreciation

When a currency increases in value against another.

Currency Futures

A contract that specifies the price that a currency can be bought or sold at on a set future date. Future contracts are often used by investors to hedge against risk.

Currency Pair

The pair formed by two different currencies which are traded in a forex transaction. For example: EUR/USD.

D

Daily Chart

A graph that illustrates the intraday movements of a security.

Day Trade

A trade opened and closed within one day.

Demo Account

A trading account which is funded with virtual money, giving the trader a chance to explore the markets and test the trading platform they're using before investing real money in a live trading account.

Depth of Market

The number of open buy and sell orders placed for a security at varying prices.

Drawdown

When the value of an investment drops, the length between its peak and its low is called the drawdown.

E

ECN Broker

A broker which uses Electronic Communications Networks (ECNs) to provide its clients with direct access to liquidity providers.

Exchange Rate

The rate at which one currency can be exchanged for another.

Execution

When a trade is carried out and completed.

Exposure

This refers to the amount invested in a security and exposed to market risk.

F

Fill

The completion of an order.

Fill or Kill

When an investor has a very specific price they want to carry out a transaction at, they place a Fill or Kill order – this means that if the order is not filled at the desired price, it is terminated, or killed.

Fill Price

The price at which an order has been completed.

Floating Exchange Rate

When an exchange rate is not fixed, but adjusts depending on the supply and demand for a particular currency relative to other currencies.

Forex Chart

A digital chart that plots the price movements of currency pairs to help investors make informed trading decisions.

Forex Scalping

A trading strategy based on the notion that if you buy and sell (or sell and buy) a currency within a very short time frame, you are more likely to make a profit than you would with large price movements.

Forex Signal System

A system which gives out signals to traders to help them decide whether a specific time is suitable to buy or sell a currency pair.

Forex Signal System - Currency Basket

A specific group of currencies which form a weighted average that can act as a measure to value an obligation.

Forex Spot Rate

The current exchange rate that a currency pair can be bought or sold at.

Forex Trading Robot

This refers to automated trading software which is designed to help determine whether to buy or sell a currency pair at a given time.

Fundamental Analysis

The impact economic and political events have on prices in financial markets (interest rate announcements, unemployment rate, etc.)

H

Hedge

Investors use hedging to protect themselves by reducing the risk that may be caused by adverse market movements. Hedging means making two counterbalancing investments, in this way minimizing the losses which could be incurred by price fluctuations.

I

Interbank Rate

The interest rate charged on short-term loans between banks.

L

Leverage

Leverage is offered by brokers to maximize traders' buying power by giving them the ability to deposit a small amount of funds and trade larger volumes. Leverage is expressed in ratio form, so if it is 1:100 for example, a trader's buying power is magnified 100 times.

Limit Order

An order to execute a trade at a specific price or a better one.

Limit Price

The specific price referred to in limit order.

Liquidity

The volume available in the market for a specific currency pair.

Long Position

Taking a long position on a currency means that you buy it. In a currency pair, you buy the first of the two currencies – the base currency.

Lots

A lot is a standardized quantity of the instrument you are trading. In forex, one lot is 100,000 units of a particular currency.

M

Margin

This refers to the amount of money needed in your account to maintain an open position.

Margin Call

This is a notification which alerts you that you need to deposit more money in your trading account so there can be sufficient margin to keep existing positions open.

Mark-to-Market

The value an open position would be if it were closed at the current market rate.

Market Order

An order for a trade to be executed instantly at the best available price.

Market Rate

The current quote for a currency pair.

Micro Lot

A micro lot is equal to 1,000 units of the base currency in a currency pair.

Middle Rate

The price exactly in-between the bid and ask prices.

N

No Dealing Desk

When traders have direct access to the interbank market and there is no dealing desk involved in their transactions.

O

Open Position

A position taken on a currency pair/security that is subject to profits or losses.

Over the Counter

The traditional way of trading forex was ‘over the counter’, meaning traders made forex transactions over the telephone or on electronic devices.

Overnight Position

When a trader’s position is kept open and carried over to the next trading day.

P

Pip

Pip stands for Percentage in Point and it is the smallest price change that can be seen in an exchange rate. In most cases currency pairs are priced to four decimal points and the smallest change can be seen in the last decimal.

Profit Taking

Closing a position to make a profit.

Q

Quote Currency

The second currency of a currency pair is called the Quote currency. In EUR/USD for example, USD is the quote currency.

R

Regulated Market

A market governed by legislative rules and regulations which are in place to protect investors.

Resistance

The price level which a stock or currency finds difficult to break above and as a result may begin declining instead.

Risk Management

Tools and strategies traders use to limit financial risk as much as possible.

Rollover Rate

In forex, the rollover rate is the interest rate that traders pay or earn when they hold (rollover) a position open overnight.

Round Trip

Refers to the total amount of funds involved in opening and closing a position.

S

Slippage

This is when a trader executes an order at a price which is very different to the price they expected the trade to be executed at. This usually happens during periods of high volatility, when traders use market orders and stop loss orders.

Soft Currency

A currency that is sensitive to political and economic events and thus fluctuates greatly and is generally unstable.

Speculator

A trader who takes big risks when trading, choosing to trade instruments with a higher risk in the hope that they will return higher profits.

Spike

A sudden upward or downward movement in price that happens in a short time period.

Spread

The difference between the Ask and Bid price of a currency pair.

Stop Loss Order

An order placed to buy or sell a security/currency when a certain price is reached. These orders are placed to limit loss on a position.

T

Take Profit Order (T/P)

An order placed to close a position once it hits a specific price.

Technical Analysis

Traders use technical analysis to forecast prices by examining market/historical data through the use of charts and trading indicators.

V

Volatility

This refers to the level of uncertainty surrounding the price fluctuations of a certain security/currency pair.

Y

Yield

Yield is the return on an investment and is usually expressed as a percentage.

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Foreign Exchange (Forex)

Calculating Profit And  Loss Using Pips In Forex Trading

  Pip is the smallest point to calculate price changes in forex trading. Therefore, the accumulated gains and losses during the current position following the price movement in forex are calculated in Pip units. One pip tip value varies depending on the currency pair being traded as well as the current exchange rate. Thus, one pip point on EUR / USD will be different from the value of one pip in USD / JPY.

Before calculating the pip, we must first know the size of the contract in trading. Forex trading can not be done per one Dollar, but based on the size of a particular contract. Generally, there are three types of contracts:

Standard contract: 1 lot = 100,000 units (one hundred thousand units, if we trade with US Dollar base currency, it can be called one hundred thousand USD).

Mini contract: 1 lot = 10,000 units (ten thousand units; if we trade with US Dollar base currency, it can be called ten thousand USD).

Micro contract: 1 lot = 1,000 units (one thousand units; if we trade with US Dollar base currency, it can be called a thousand USD).

When opening an account at a broker, the trader will determine the amount of the contract for his trade. After that, if you want to trade, then use lot count, whether to buy or sell 1 standard lot, 1 mini lot (0.1 standard lot), or 1 micro lot (0.01 standard lot), or more.

For example, when we will open a buy position in EUR / USD pair, then we will buy one lot of base currency for the exchange rate shown by the current price. For example, currently EUR / USD shows exchange rate (exchange rate / price) 1.05000, that means every 1.05 US Dollars can be redeemed for 1 Euro. In practice, if you buy one standard lot of EUR / USD, then it is actually worth 100,000 base currency, multiplied by the exchange rate. Similarly if 2 micro lots, then that means 2,000 times the exchange rate .

Candlestick chart/pips

However, despite its capital in foreign currency, the price movement of each currency pair is calculated in units of Pips. If so, then how to calculate forex profit? Here's how.

Calculating Profit Forex For Major Pair

Pair Major is the name for the currency pair with the highest liquidity and trading volume in forex. The Major Pair always includes the US Dollar as its base currency or quote currency. Here are some examples of calculating forex profit in Pair Major:

a. Direct Pair

Direct Pair is the major pair with USD as its quote currency, such as GBP / USD, EUR / USD, AUD / USD, and NZD / USD. Here's how to calculate forex profit in its pip:

Pip = lot size * tick size

Next, to calculate the profit and loss we need to know the difference between the exchange rate when the position opened and closed.

Fortunately or loss =

Difference in exchange rate * pip

Information:

Lot size: number of base currency units

Tick ​​size: position the pip in a row of numbers behind the decimal

Example of calculating forex profit in Direct Pair:

Currently the pair EUR / USD shows the exchange rate worth 1.08250, then 1 pip in lot trading standard is worth:

Pip: 100,000 (standard lot) * 0,00010 = 10, so every 1 pip in EUR / USD with 1 standard lot is worth USD 10

Pip: 10,000 (mini lot) * 0.0001 = 1, every 1 pip on EURUSD with 1 mini lot worth 1 US Dollar.

Because each pair of direct quote currency is always USD, then the pip value will always be the same on all pairs with US Dollar in the back position. Simple, right?

Next, it is known that the sell position opened at 1.08250 and closed at 1.08100 with standard trading lot. The price difference at that position is 15 pips. Since the price actually goes down, then the sell position is profit, so the profit calculation is: the difference of pip * value per pip = 15 pip * USD 10 = USD 150

b. Indirect Pair

Indirect pair is pair with USD as base currency, such as USD / JPY, USD / CHF, and USD / CAD. How to calculate forex profit in its pip is:

http://www.seputarforex.com/belajar/forex/text_dasar/img/counting-advantages-and-advantages-from-pips-di-forex-4.jpg

Information:

Current rate: current exchange rate

Example # 1:

Currently the pair USD / JPY shows the exchange rate worth 111,500, then 1 pip in the standard lot is worth:

pip = 100,000 * 0.01 / 111.50

pip = USD8.97 or about USD 9

Next, it is known that a buy position opened at 111,500 and then closed at 112,500 on the standard lot. As prices rise, then the buy position is profitable.

Profit calculation = difference of exchange rate * pip

Fortunately = 100 * 8.97 = USD 897

Example # 2:

Currently the pair USD / CAD shows the exchange rate worth 0.75500, then 1 pip in the standard lot is worth:

pip = 100,000 * 0,0001 / 0.75500

pip = USD 7.55

Given the sell position opened at 0.75500 then closed at 0.75450 in the standard lot. Because prices fall, then the position is profitable.

Good thing = 5 * 7.55 = USD38

Calculating Forex Profit In Pip For Pair Cross

Pair Cross is currency pairs that do not match the US Dollar as its base or quote currency. Pair Cross movement in certain situations can be very high, even more drastic than Pair Major.

Example:

Currently EUR / GBP is trading at 0.85500, while EUR / USD is trading at 1.07500. Then the value per pip in the standard trading lot is:

Pip = 100,000 * 0.0001 (1.07500 / 0.85500)

Pip = 10 (1.257) = USD12.57

Known a buy position opened on EUR / GBP 0.85500 then closed at 0.85570 in standard lot. Because prices rise, then the position is profitable. The difference is 7 pips, so fortunately is 7 * 12.57 = USD 87.99

Additional information:

For pair Cross with Quote Currency JPY (JPY position behind like GBP / JPY, NZD / JPY, etc.) calculation of profit and loss in pip following USD / JPY. So if current USD / JPY 1 pip is worth USD 9.1 then all pair cross with Quote Currency JPY follow the pip value.

Lazy Count, Fuss? Quiet, Many Alternatives

The above calculations do require considerable time-consuming calculations. Not to mention the fact that prices are constantly changing in the Forex market. Therefore if you want to reduce your stress level, use the Pip Calculator. Guaranteed simple, fast and do not wear dizziness.

In addition, trading tools provided by forex brokers are usually able to automatically calculate the conversion of Pips to Dollars. You are trading enough, profit pips will be obtained will also appear in the form of Dollars. This you can see for yourself if you open a Demo account, the account in forex brokers that can be used to view market conditions and practice trading without capital and without risk

Margin and Leverage

From this explanation, maybe you feel scared. If once buy must be at least 1 lot, it must have thousands of US Dollars first? Not really.

Forex brokers provide a facility called leverage. Leverage is a proportional loan scheme with a guarantee, so it can increase the purchasing power of funds owned trader. For example a broker offers 1: 100 leverage, meaning trader with 10 USD capital can have purchasing power of 1000 USD (from 10x100). In this case, 10 USD becomes a guarantee fund (Margin) that traders need to hand over to the broker. This is one of the advantages of forex trading that allows us all to transact in the forex market.

Although the profit will also be adjusted in proportion to the leverage used by traders, but obviously the capital required traders to start earning money from forex is very low.

Money World

Money And Financial World

This is a site which you can lean on and trust. The site provide useful information in financial world such as money, investment, commodities, futures, foreign exchange, ETF, Options, Energy and other information plus data related to finance.


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5 low-risk ways to earn higher interest

Invest high & safe

Stop settling for puny rates

Sock away your savings into the average money market account today and you’ll earn a paltry 0.12 percent on your balance, according to Bank rate's latest survey of banks and thrifts.

But with little effort, you can find higher-paying options, even if your balance is small.

Besides money market and savings accounts, there are other low-risk ways to boost your returns, including rewards checking, low-penalty certificates of deposit and bank incentives.

You may have to scout around. Big banks usually don’t offer big rates. You’ll need to consider online banks, community banks and credit unions.

These lesser-known institutions are still safe places to put your savings as long as they are members of the Federal Deposit Insurance Corp. or the National Credit Union Administration — and most are.

Rewards checking can be … rewarding

Racking up rewards on checking accounts can boost your earnings.

Racking up rewards on checking accounts can boost your earnings.

FDIC-insured Northpointe Bank in Grand Rapids, Michigan, for example, offers an almost unheard of 5 percent annual percentage yield on balances up to $10,000.

The trick is meeting the account requirements, which can include monthly minimums on the number and dollar amount of transactions, using online rather than paper statements and having direct deposit.

For any month in which you don’t meet these requirements, you’ll earn a near-worthless 0.05 percent APY at Northpointe, for example. There’s also no guarantee that rates won’t drop after you open the account.

You should check the disclosures on any rewards account to make sure monthly fees and other costs won’t eat up your rewards, but don’t assume that these deals are too good to be true.

Go for bank incentives

But you’ll have to meet requirements, such as maintaining a minimum balance to avoid a monthly fee, using direct deposit and keeping the account open for a certain length of time.

Less commonly, you’ll find banks that offer referral bonuses. But be careful about making a long-term commitment with a bank that offers a bonus. You may find that standard interest rates are puny.

Don’t fear internet banks

Online banks are a good bet for higher yields. With the help of Bankrate.com, you’ll find rates as high as 1.4 percent APY on savings and money market accounts— far better than the near-zero rates at the nation’s biggest banks.

One option is Ally Bank, which pays 1.15 percent APY on any balance with no monthly maintenance fee.
Don’t feel that you’re locked into a bank long term. Open an account to take advantage of a good rate, then do your research again in 12 months. Don’t be scared to jump around.
Your money is perfectly safe in an online bank as long as it’s FDIC-insured. But do your due diligence on any institution you’re unfamiliar with.
“Generally, any money earmarked for the short-term (one year or less) should be in a liquid position,” says Gage DeYoung, a certified financial planner and founder of Prudent Wealthcare in the Denver area. “That being said, it is frustrating to get zero percent on cash.”
And today’s average CD rates are indeed very low. Instead, look for above-average interest rates and low early withdrawal penalties.
If you can withdraw your balance anytime without sacrificing much interest, you can move your balance to higher-paying CDs as rates climb. In the meantime, you’ve locked in a higher interest rate than you could have earned by keeping that money in a savings or money market account. You could also create a short-term CD ladder to increase your returns.

Don’t accept a low rate

If you’re looking to earn high interest, you may have to ignore the big banks.

In fact, the big four banks — Chase, Bank of America, Wells Fargo and Citibank — offer few, if any, competitive rates on any banking product.
The amount of money kept in low-yielding money market funds is staggering. But there is lots of competition for that money, which can be easily moved out of a savings account at an institution that’s paying you well below the rate of inflation.
If you find a great deal on a savings or money market account, you can’t just park your money and forget it. Plan to move it frequently because there’s no certainty that great rate today will be great tomorrow.

(Amy FONTINELLE)