Candlesticks were originally developed by Japanese traders who used it to analyze the price-movements only in RICE commodity and find the weakening trends and the potential trend reversals. Those days, candlesticks came in many colors including Blue, yellow, Green and the red but over a period of time, candlesticks have lost their colors. Now they come only in Green and Red but that doesn’t mean that they have lost the respect they command. The application of Candlesticks has got even finer now with multiple applications, chart reading patterns and trading opportunities coming out of these and thus the reason why candlesticks still continue to enjoy the patronage of the best of the traders, financial institutions and also the Banks. Let’s take a closer look to what candlesticks are and how they project some very-good tradable opportunities.

A typical candlestick is like a cylindrical bar that shows Open, High, low and Close-price of the product under consideration, over a specified period of time. The trader or the analyst gets to change the Candlestick to any time-period of his own choice suiting his own trading- style, so a candlestick can represent the OHLC data for any time- frame starting from as less as one-minute to even one complete year. However, the standard thing that you will always notice in any Candlestick is that it turns green if the close-price of the time-period was higher than the open-price and turns Red if lower. The following picture and the explanation will make it easier to understand…

EACH CANDLESTICK HERE REPRESENTS FIVE-MINUTES DATA

This is how a candlestick chart may look within a trading platform:

As you may notice, the Green and the Red-color figures in this chart look like a candle and thus are always called “the candlesticks”. The two extreme ends on each candlestick represent High- price and the Low-price of the period with a cylindrical figure in-between the two. The two ends of the cylinder in the middle represent the open and the close-price of the same time-frame as chosen. As we learnt before, the figure turns green when the close-price is higher than the Open-price and Red if opposite and thus the reason why you see all these candlesticks in different colors. It precisely is this color pattern and the changes in these colors that lay the foundation of candlestick-trading. Let’s explore.

The candlestick traders have their own styles of reading the charts with the use of candlesticks as an aid to their chart analysis. While the most practiced style of trading pertains to identifying consecutive candlesticks with the same color to suggest a trend, the innovators, over a period of time, have developed their own styles where they look for higher- high and higher-lows for similar colors and then go with the trend. There is also the crossover- technique where they draw moving lines over these candlesticks to find deviations or emerging changing-patterns and then form anticipations to their future movements. Of course, there is no standalone theory to find a definite trade but candlesticks do offer clarity on reading the trend with the help of their colors and then the trader can choose his own strategy to follow i.e. trend-continuation or the trend-reversals. While the same color consecutive candlesticks are symbolic of a likely trend-continuation, the changing color denotes the likelihood of a sudden reversal. With deeper studies and also with the time, came the Maruboju-candlesticks, Doji- candlesticks and Dragonfly-candlesticks along with numerous similar extension to read these charts even better and project even stronger bearish and bullish signals but even the basic study of the candlesticks by even a beginner-trader itself can offer such tremendous scope for improvement, innovations and profit-making that you will never need to go any further than these.

Images taken from FX Accucharts and Citi Forex Platform.

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If you’ve recently entered the exciting world of forex trading, you’ll know that the global market is open 24 hours a day, meaning you have a great deal of flexibility when trading – but which forex trading times are the most active worldwide, and which hours of the day will trading prove the most lucrative?

Because the forex market is so dynamic and volatile, traders find there are several time frames over the course of a day where they can make a substantial profit. For best results, it is essential to have a clear understanding of international forex market trading times, and identify which time frames include the highest volumes of forex transactions.

If you’re keen to put your Metatrader 4 account to use, there are several factors you will need to bear in mind to identify the best forex trading time frames:

• The forex market opens at 5pm Eastern Standard Time (10pm Greenwich Mean Time) on Sunday, and closes at 4pm EST (9pm GMT) on Friday.

• Forex trading time starts in New Zealand first, and this is followed by Australia, then the Middle East, Europe and finally the US.

• The UK and US forex markets are typically the most active, accounting for over 50% of forex transactions worldwide.

• The major markets are those of London, New York and Tokyo – most trading activity in New York takes place in the morning when European forex trading is also active.

Naturally, traders will find that forex trading volumes are at their highest during times when the major market business hours overlap. There are three major trading sessions in the market every day, determined by the three major forex markets. The daily time frames of each session will also determine which currencies are most active.

These three major daily forex market trading times run as follows:

• The London session begins at approximately 8am GMT and will be active until 4pm GMT. The most active forex currencies during this time are the Pound, the Euro and the US Dollar.

• The US forex session runs from around 1pm to 10pm GMT, and the most active currencies during the US time frame will be the US Dollar, the Australian Dollar, the Yen, the Pound and the Euro.

• The Asian session will run from midnight to 9am GMT, and while this is a major forex market trading session, it is not regarded as the best time frame for trading as typically the only notably active currency during this time is the Yen.

The majority of foreign exchange brokers will advise you that the best time for forex trading is during the period when the US session and the London session overlap – 1pm to 4pm GMT. This time frame presents traders with many opportunities to make a profit while key players are active and major financial news is breaking worldwide. With these forex trading times in mind, traders can make their major decisions while activity among the major markets is strongest.

Dave Tucker is an enthusiastic writer looking to share news, opinions and advice with fellow bloggers.

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Forex or Foreign Exchange Market is an international exchange market where currencies are bought and sold. The idea of Forex trading is very simple. In the Forex market you exchange one currency for another, when the price of this currency is low. You then exchange it back, when the price rises and in this way make money. With the inflow of excess cash you can expect debt reduction.

The buying and selling is done in pairs. Usually for investment purposes, four main currency pairs are used. They are as follows – the Euro against the US dollar, the British pound against the US dollar, the US dollar against the Japanese yen, and the US dollar against the Swiss franc. The Forex market is a 24 hour market and does not close down like a traditional stock market. Thus, it is not regulated or there are no international panels to settle disputes.

However, the market has a lot of advantages; some of them are as follows.

1. Suits small investors: When it comes to the Forex market a small amount of money can be used to invest and make profit from. In most places and companies you need abundant capital to make profits but in the Forex market you can begin with a small amount.

2. 24 hour market: Forex trading market offers a 24 hour trading opportunity. A Forex investor can trade any time of the day as per his convenience. This is a great advantage as the investors can go to the market when they have time. Somewhere in the world there are many buyers and sellers actively trading in Forex.

3. High Leverage: The Forex market offers its traders high amounts of leverage. This means that even if you invest small amounts, you may get huge benefits.

4. No limitations: Usually futures market contains certain constraints. These constraints are there to limit the number of transactions that you can make under certain price conditions. In some cases when the price of a currency rises or falls beyond a certain level then traders are restricted from applying for new transactions. This is done to control daily price volatility. In case of the forex market these trading constraints do not exist. So you as a trader can implement all your trading strategy.

These are a few of the main advantages of the Forex market. You may invest and earn huge profits which will help you in debt reduction. As the market is so flexible you may benefit a lot from it.

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It is very important to have an insight of all the happenings around the world and your industry in particular that has a bearing on the forex.  There are various kinds of news that affect the forex market.

They can be any of the following:

• Financial News: There can be much news regarding the happenings across the globe that may have an impact on the forex and your own industry. As the currencies are normally paired, it is necessary to know the news relevant to both of them. News like recession, US Fed. Rate cuts, US housing slumps etc. are some that affect the forex trading.
• Political News: It is wrongly considered by many that only the financial news has an impact on the forex market. Even the political news bears an effect on the foreign exchange. The political changes of different countries, its effect on others across the globe is also important. Events like the General elections, Presidential elections and Primary elections will also bear an impact on the forex markets.
• Tragic Events: Events like assassination of a famous political leader can also have an effect on the currency futures in that country where the particular event has occurred and also have an impact on the surrounding areas as well.
• Budgets and Policies of the government: The financial budgets of the Country and different government policies also affect the forex trading.
• Natural Disasters: As the natural calamities consume a major portion of the Country’s financial resources, such happenings lay their impact on the foreign exchange market as well.
• Feedback from Analysis: There are several popular Foreign Exchange research sources that provide analysis regarding the forex trends, the current happenings and make certain predictions too. These news stories also affect the forex markets and the currency exchange rates throughout the globe.

Whether you are a starter or an expertise in Forex, you have to keep a track of all these happenings.

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The Eurozone has a problem as the New Year rings in. The few countries that have been demonstrating their economic viability in the 27 nation economic zone have been offset by a handful of smaller, less developed nations that are experiencing aftershocks in the wake of the worst recession in decades.

Countries like the PIIGs (Portugal, Italy, Ireland and Greece) started 2009 by making news as their economies faced disaster; they ended the year in the headlines again as their sovereign credit ratings have been slashed by the major independent agencies.

The problem with the Eurozone is a simple one and fixing it means admitting that the Free Trade and joint economic experiment was fatally flawed.

As nations that are independent economic entities, such as the US and Great Britain, the latitude they have in combating inflation and deflation by altering their monetary policy is evident.

The response that they have to fluctuating valuations is based on their control of their interest rates as well as their ability to effectively “print” more money. The European nations that comprise the Euro (Britain is a EU member but has yet to adopt the single currency) do not have such luxuries.

So, in effect what this means is that when Greece is faced with an internal crisis, in which their debt load is too large for their economy to handle as a result of dwindling tax revenues, the recourse that one has seen in the US and England, which is issuing debt instruments to fund their recovery, is not available (be that a policy in controversy as it may, it still is a policy… ).

As a nation that relies on the Euro, ceding the use of their native Drachma upon joining the EU, they are bound to the whims of the European Central Bank, which is slow or hesitant to act for sake of individual nations.

Had Greece been allowed to float their own bonds, perhaps the situation there would not be as dire as it is today; had the ECB perhaps allowed a specialized bond just for Greece, or any of their needy nations, perhaps the same would have been true.

As we begin a new decade of trading currencies, we look to the solutions for these issues – and while it is not even apparent to those within the ECB that something needs to get done, as the Euro continues its slide in the face of weakness in some of their member states, perhaps they will address the obvious. We can only hope.

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