time to buy USD?

[gengxin]

Hey guys

Is time to buy USD? I saw today USD/CHF, EUD/USD, USD/JPY show USD going up.

Now I think we have a long USD/JPY chance, since 1day chart SAR, BB, MACD, RSI show the chart start turing into uptrend.

I need you guys help. I just started trading a month ago, and got burn. I have to trade carefully.

thanks
happy new year

[nico3725]

The 8 most important trading recommendations

1. The Trend is your friend

2. In up-trends, buy the dips; in downtrends, sell bounces

3. Let profits run, cut losses short. Always use protective stops to limit losses and move them only to reduce potential losses or protect newly achieved profits

4. Set up your plan before entering the market; don't trade impulsively

5. Employ at least a 3 to 1 reward-to-risk ratio

6. When pyramiding, follow these guidelines:
a) Each successive layer should be smaller than the preceding one
b) Add only to winning positions
c) Never add to a losing position
d) Adjust protective stops to the break-even point (or better)

7 Learn to be comfortable being in the minority, if you are right on the market, most people will disagree with you

8. Keep it simple; more complicated isn't always better

[nico3725]

Psychology of Trading

- Expectation and Sentiment
Fundamental and technical factors are undeniably essential in determining foreign exchange dynamics. There are, however, two additional factors that are paramount to understanding short-term movements in the market. These are expectations and sentiment. They may sound similar, but remain distinct.
Expectations are formed ahead of the release of economic statistics and financial data. Solely paying attention to the figures released does not suffice in grasping the future course of a currency.
If, for example, US GDP came out at 7.0% from 5% in the previous quarter, then the dollar may not necessarily move as you would expect it to. If market forecasts had expected an 8% growth, then the 7.0% reading might come as a disappointment, thus causing a very different market reaction from the one you were expecting had you not been aware of the forecast.
Nonetheless, expectations could be superseded by market sentiment. This is the prevailing market attitude vis-à-vis an exchange rate; which could be a result of the overall economic assessment towards the country in question, general market emphasis, or other exogenous factors. Using the above example on US GDP; even if the resulting figure of 7.0% undershot forecasts by a full percentage point, markets may show no reaction. A possible reason is that sentiment could be dollar positive regardless of the actual and forecasted figures. This might be due to solid US asset markets, or poor fundamentals in the counter currency (euro, yen or sterling).
A term that is commonly interchanged with "sentiment" is "psychology". During the first two months of 2000, the euro underwent fierce selling pressure against the dollar despite persistently improving fundamentals in the Eurozone. That is because market psychology had decidedly favoured US dollar assets due to continuous signs of non-inflationary growth, and sentiment that further increases in US interest rates will work in the advantage of US yield differentials, without derailing the economic expansion.

[gengxin]

nico3725
Thank you for your posting and good advice and sorry for no response.
My PC was broken. I just got it back toady.
I knew those rules. But can not use well and cannot understand some. I think I need more experience. Now I am doing game trade.

Thanks again and hope can have more advice

[nico3725]

What sort of technical indicator are you using ???

[gengxin]

nico3725
Thank you for asking.

I am using RSI, MACD, Bollband, SAR and trade line. Those indicators were copied from Forums( someone else). So I cannot use those together and well.

I follow the TC's recommand, and start to understand your No1, No2.
But still no sure about others.

[nico3725]

RSI – Relative Strength Index

Developed by J. Welles Wilder and introduced in his book New Concepts in Technical Trading Systems.
RSI calculates the difference in values between the closes over the Observation Period. These values are averaged, with an up-average being calculated for periods with higher closes and a down-average being calculated for periods with lower closes. The up average is divided by the down average to create the Relative Strength. Finally, the Relative Strength is put into the Relative Strength Index formula to produce an oscillator that fluctuates between 0 and 100.

By calculating the RSI in this way Wilder was able to overcome two problems he had encountered with other momentum oscillators. Firstly, the RSI should avoid some of the erratic movements common to other momentum oscillators by smoothing the points used to calculate the oscillator. Secondly, the Y Axis scale for all instruments should be the same, 0 to 100. This would enable comparison between instruments and for objective levels to be used for overbought and oversold readings.

The most common uses of RSI are to:

- Indicate overbought and oversold conditions

An overbought or oversold market is one where prices have risen or fallen too far and are therefore likely to retrace.
If the RSI is above 70 then the market is considered to be overbought, and an RSI value below 30 indicates that the market is oversold. 80 and 20 can also be used to indicate overbought and oversold levels.
Overbought and oversold signals are most reliable in a non-trending market where prices are making a series of equal highs and lows. If the market is trending, then signals in the direction of the trend are likely to be more reliable. For example if prices are in an uptrend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again.

- Generate buy and sell signals

If the RSI is above 70 and you are looking for the market to form a top, then the RSI crossing back below 70 can be used as a sell signal. The same is true for market bottoms, buying after the RSI has moved back above 30. These signals are best used in non-trending markets.
In trending markets, the most reliable signals will be in the direction of the trend. For example if the market is trending up, taking only buy signals after the RSI has moved back above 30 after dipping below it. The reason for taking signals only in the direction of the trend, is that when the market is trending any counter-trend signal is likely to indicate a small retracement against the underlying trend rather than true reversal.

- Indicate Bullish and Bearish Divergence

Divergence between the RSI and the price indicates that an up or down move is weakening.
Bearish Divergence occurs when prices are making higher highs but the RSI is making lower highs. This is a sign that the upmove is weakening.
Bullish Divergence occurs when prices are making lower lows but the RSI is making higher lows. This is a sign that the downmove is weakening.
It is important to note that although Divergences indicate a weakening trend they do not in themselves indicate that the trend has reversed. The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.

Parameters

Observation Period : (default 14)

Lower Bound percentage (default 30); this provides the lower boundary expressed as a percentage of the instrument's value. The number must be less than the Upper Bound.
Upper Bound percentage (default 70); This provides the upper boundary expressed as a percentage of the instrument's value.

Wilder used 14 as an Observation Period although periods of 9 and 7 are also popular. Decreasing the observation period increases the sensitivity of the RSI to changes in price, resulting in a more responsive RSI. Note that a shorter observation period may also result in an increase in the number of false signals. A longer period results in a smoother RSI that will generate less signals.

[nico3725]

Indicate Bullish and Bearish Divergence

Divergence between the RSI and the price indicates that an up or down move is weakening.

Bearish Divergence occurs when prices are making higher highs but the RSI is making lower highs. This is a sign that the upmove is weakening.

Bullish Divergence occurs when prices are making lower lows but the RSI is making higher lows. This is a sign that the downmove is weakening.

It is important to note that although Divergences indicate a weakening trend they do not in themselves indicate that the trend has reversed. The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.