Difference between buy limit and buy stop order

When you are entering a trade there are 2 methods to do it

• By entering at market price:  You will be buying or selling at the current market price.
• Using pending orders: If you want to buy/sell at a particular price (which you analyse as important) and that price has not yet reached, you can use pending orders.

When to use pending orders?

If you are buying:

Pending orders for a buy can be put as buy limit or buy order.

• Buy limit: If you want to buy at price below the current price use this tool.

Japanese candlestick pattern: DOJI

What is a doji?

Doji is a type of candle in which the opening and close price are same. This is one of the most important reversal patterns in Japanese candlestick chart.

How to identify a doji?

See the above picture, the second arrow shows a perfect doji. The opening and close price are same.

Even when the opening and closing prices are a few pips apart, it is considered a doji candle. See the first arrow in the picture

Why doji candlestick is important?

Getting nowhere in trading? Try to change your trading session

If you are not getting consistent results in trading even by having a very good forex trading strategy, try to change the time you take trades. 

Yes the time at which you take trades play a very important role in winning or losing.

Volume and profit:

 The flow chart below shows you relation between volume and profit in any forex trading strategy.

When more people are trading a particular currency pair there will be an increase in its volume. Increased volume will always result in strong movements in price of that pair and strong movements surely means more pips. If you can identify to which direction the price is havingstrong movement you can ensure more profit.

For each and every currency pair the volume is different at different times of a financial day.

Are you Trading Breakout?

The most commonly used forex trading strategy is breakout trading. A large number of traders use this method as their entry mechanism. With proper money management and risk control breakout trading can be profitable.

What is a breakout?

 A breakout is a movement/Break of price from a major level. The level can be a major support or resistance (line or zone) or a trend line etc.

How to identify a Breakout?

• Breakout can be a reversal or continuation of trend:

We can see a breakout from a major support line which usually indicates a reversal of the current trend. But in some cases if the current trend is really strong, the breakout will be in the direction of the trend.

Breakout from Range

 See the above chart. Price has been ranging from January 2012 till may 2012. On May 2012 the support line was penetrated and the candle closed below support level. This is  called breakout ( see the yellow encircled portion).

Common chart patterns--Double top

Double top patterns are most commonly seen chart patterns in bar, line and candlestick charts. As the name suggest double tops will have two peaks at almost same price levels. 

Features:

• Bearish reversal signals:

Double tops are indication that the uptrend is going to change its direction.

• Formed during an uptrend:

 Double tops can be seen in an uptrend.

• Easy recognition:

Double tops also called as ‘M’ patterns can be easily identified by the M shape formed by the pattern.

Formation:

Double tops are formed when in following steps: