Let us consider the main question of Forex and any other trading – how
to earn money?
The point is that prices tend to move, we can often observe in everyday life that the price for any product is rising, falling or keeping up at the same level, making insignificant fluctuations. Such features of prices are called trends.
Obviously, if prices are rising then it is ascending trend, if they are falling, then it is descending trend and if they are keeping up, then it is a sideways trend. Just these very characteristics of price movement allow getting profit.
What should we do to earn money when prices are moving up? – Probably buy this product or, like financier says, asset, and sell it when the price goes up, and get profit. And if does the price move down? – Then sell for a higher price and buy when the price will fall down.
The question “How can we sell the thing you do not have” is peculiar and we will talk about it during the next lections. Now let’s study the processes described above. Buying of asset and their further selling is called “Bull speculation”, and selling with further buying of asset is called “Bear speculation”.
Usage of
“bull” and “bear” in describing markets comes from the way each animal
attacks its opponent. That is, a bull thrusts its horns up into the air, and a
bear swipes its paws down. These actions are metaphors for the movement of a
market: if the trend is up, it is considered a bull market. And if the trend is
down, it is considered a bear market.
I hope that after you had downloaded the trading terminal InstaTrader, you read and examined it manually for trading terminal MetaTrader. We will use this program starting with this lection for more efficient study of teaching material and improving the practical skills.
So download the program and open the window with a chart of any currency pair.
In the first chart, you can see a gradually rising line.
This movement is not unidirectional, it alternate with highs and lows, but
directed upwards. This case chart reflects a price change of
Though the price of
The absolute value of these figures does not impress, but if we suppose
that dealing was executed with
There is another situation in the second chart. The line which reflects a price change of
In the third picture, we can see that the chart line changing the direction, fluctuates in one range bounded with price levels 118.10 and 116.70. Such movement is called ”Flat”. In this case, there is the possibility to change the tactic from “Bear” to “Bull”.
Moving at the time price
marks different characteristics of its movement in a certain period of time. Such a period can be from one minute to a month or even one year. The most important characteristics are opening price,
high, low, closing price.
Opening price – the first price of the asset at the given period (for instance, hour,
day, week).
High – maximum price of the asset at the given period
Closing price – the last price of the asset at the given moment. Running ahead, I want to
note that this price is more often used for analysis and considered as more
significant.
There are many methods
of price fluctuation plot on the chart and we will consider three the most
popular ways.
The line chart is the simplest one displaying the chart as a broken line that can be constructed by one of the parameters – by opening price, closing price, highest price, lowest price and by middle price which is counted by bipartition of a discrepancy between the highest and the lowest prices.
 |
| Pic. 4. Line chart |
The bar is a vertical line segment. Opening and closing prices are market from the left and right side of this line. Scratch from the left side is the opening price, a scratch from the right side is the closing price, the highest point is the maximum and the lowest point of the bar is the minimum prices.
The candlesticks chart resembles a sequence of candlesticks with wicks from both sides. Candlestick consists of the vertical rectangle which is called a candlestick body and two lines placed above and under the candlestick body. These lines are called shadows.
If the closing price is higher than the opening one, then the candlestick is white (hollow). If the closing price is lower than the opening one, then the candlestick is black (filled). The end of the upper shadow shows the highest price of the given period and the end of the lower shadow – minimum price.
 |
| Pic. 6. Candlesticks |
The classic image of the candlesticks is presented in the given above schemes
and charts. Such image is used in the educational materials of these lectures.
It is supposed that the candlestick is against the white background. If the colour of the candlestick and
background is the same then the candlestick is hollow if the colour of the
candlestick and background is different (background is white, the candlestick is
black or vice versa), then candlestick is filled.
So hollow candlestick
represents the rising market and filled one – falling.
Useful information for users of InstaTrader terminal InstaForex.
For the terminal: (background is black on default), is the closing price is higher than opening one then candlestick is hollow; if the closing price is lower, then candlestick is filled (white). We take into consideration this peculiarity and describe not only the colour of candlesticks but also their content, hollow or filled.
 |
| Pic. 7. Candlesticks |
- Operations With Trader Platform On The Basis Of Meta Trader 4
- Types of trends, types of charts and formation rules. Bull and bear speculations