Best Forex Plan Ebook

8/14/2019 Best Forex Plan Ebook

1/48

Welcome!


2/48

Best Forex Plan

Right now there is not another financial market in the world

more active than Forex. On average it trades more than

$1.5 trillion US dollars per day. Traders on the Forex

market are afforded the opportunity to trade on a market

thats open 24 hours a day and to leverage up to 200 times

your money.

Each day, inexperienced and veteran stock traders come to

the Forex market to capitalize on its many opportunities.

In Best Forex Plan youll discover how you can trade Forex

to supplement your income or to turn it into full-time

career.

The trading strategies in this manual will teach how to

create your own trading strategy and begin using Forex to

your benefit.

Enjoy the journey.

Table Of Contents

2

Copyrights 2009 BestForexPlan.com. All rights reserved.


3/48

Best Forex Plan

i.Welcome 2

ii.Table Of Contents 3

I. A Little About The Forex Market 4

II. How To Trade Forex Successfully 6

II.1 Day Trading Vs Swing Trading 7

II.2 Choose Your Time Zone 8

II.3 Choosing Your Currency Pair 9

III. Types Of Orders 10

IV. Indicators You Need To Use 12

IV.1 MACD 12

IV.2 Moving Average 19

V. Day Trading System 22

V.1 Trading Examples 24

VI. Swing Trading System 30

VI.1 Trading Examples 31

VII. How To Avoid Excessive Risks And To Protect

Yourself

34

VII.1 Money Management 34

VII.2 Brokers 35

VII.3 Having A Trading Diary 36

VII.4 Have A Solid System 39

VIII. Economic Indicators 41

IX. How To Keep Track Of The Most Important

Indicators

44

3



4/48

Best Forex Plan

VII. Disclaimer 47

VIII. Copyrights 48

A Little About The Forex Market

No other trading market affords you the opportunity to

make money like the Forex market.

There are several feature of Forex that make it superior to

other markets, such as:

Leverage There are great leverage possibilities with

Forex as you can trade up to 200 times the available

funds in your account.

24 hours market From Monday through Friday the

Forex market is open all day every to give you the

opportunity to make trades.

Worldwide market Forex allows you to trade from

any place in the world. All you need is an Internet

connection.

Advanced Technology The technology available toforex traders is extremely sophisticated and in many

4



5/48

Best Forex Plan

cases, its available free of charge. Professional trading

platforms and demo accounts are offered free by

many brokers. Demo accounts are especially helpful

because they allow you to learn about what its like to

trade on Forex without risking any of your money.

Profit in Bull and Bear Markets You can make

money whether the market is trending up or down.

Cost There are no commission charges from brokers

on the Forex market. Your broker only charges you

the spread, which is the difference between the bidand the ask.

Many newcomers to Forex find all these things to be

advantageous as they get started as a trader. Many of

them have found success trading in their free time or as a

new career.

5



6/48

Best Forex Plan

How To Trade Forex Successfully

In order to trade Forex successfully, you need to:

1. Decide whether youll be a day trader or swing trader.

2. Decide which time zone you need to trade in.

3. Decide which currency pairs youll trade.

6



7/48

Best Forex Plan

1. Day Trading Vs. Swing Trading

The difference between day trading and swing trading is

pretty simple. A day trader is a trader who trades

throughout the day, while a swing trader is a trader who

only commits a short period of time per day to trading on

Forex.

As you might expect, day trading requires more of a

commitment than swing trading. Day traders need to be attheir computers for three to four hours a day so they can

seize on opportunities to make money.

On the other hand swing traders prefer to use charts which

they check on once per day and make their trading

decisions based off of that. Good swing traders can earn a

decent income.

Typically, day traders make a small profit on each trade but

they make a lot of them throughout the course of the day.

Swing traders make trades less frequently, but theirs tend

to be more profitable.

The best times to trade on Forex are during the overlap

between the European session and the US session which is

between 800 GMT and 1700 GMT

If youre not in GMT you can visit:

7



8/48

Best Forex Plan

http://www.timezoneconverter.com/cgi-bin/tzc.tzc

and just convert to the time zone youre in.

If youre interested in swing trading, you might want to try

the 4 hours chart or the daily chart. With those charts, all

you have to do is review your charts to determine if there

any possibilities for you to make trades.

2. Decide which time zone you need to trade in

After youve determined whether youll be a trader or a

swing trader the next thing you need to do is to determine

the time zone you want to trade in.

The best times to trade Forex are:

8 GMT 11:30 GMT

13 GMT 17 GMT

1 GMT 6 GMT (For Japanese Yen pairs)

If youve made the decision to be a swing trader, then you

need to review your charts at 22GMT because this is the

close of the day for most Forex brokers.

8

http://www.timezoneconverter.com/cgi-bin/tzc.tzchttp://www.timezoneconverter.com/cgi-bin/tzc.tzc


9/48

Best Forex Plan

1. Decide which currency pairs youll trade

Every currency pair has strengths and weaknesses. Some

traders prefer the euro (EUR) and the US dollar (USD) pair.

Others like the British pound (GBP) and the USD pair. Still

others choose the USD and the Japanese Yen (JPY) pair.

There are many pairs available so you will have to decide

on which pairs you will do most of your business.

Its important to remember that each currency has its owncharacteristics and when its paired with another currency

their relationship can seem unpredictable. Youll learn

quickly that systems you develop for one pair wont

necessarily work for another pair.

9



10/48

Best Forex Plan

Types Of Orders

There are several different types of orders to choose fromin the Forex Market. You should choose your order typebased on your trading habits and the system that you planon trading in.

Here are the four most important types of orders:

Market Order Is an order to buy or sell at the

current market price. You can perform a market

order whether you are buying or selling a currency

pair.

Market orders should be used with care because in

fast-moving markets its important to remember that

in a fast-paced market it is common for slippage to

occur during a Slippage is the amount the market

moves from the time an order is made and the actual

price of a transaction. The price can be difference fromthe one you placed even if only a few seconds elapse

between the actual price and the price you chose to

buy or sell at. Slippage works both ways. It could

make you money or it could cost you money. Market

Orders almost always guarantee that you can

buy or sell a currency pair, but they dont

guarantee the price that you execute your order.

10



11/48

Best Forex Plan

Limit Order Its an order to buy or sell at acertain limit price. Limit orders are preferred whenyou wish to buy a currency below the market price orsell a currency above the market price.

You set the price at which you would like to make theorder and its executed when the currency hits thatprice, whether the price is trending upward ordownward. While there is no slippage with limitorders, theres also no guarantee that your orderwill be filled as soon its made.

Stop Order A stop order is an order to buy abovethe market or to sell below the market. It is mostfrequently used when a trader is trying to limit lossesthat were unexpected. It is also used when a trader istrying to buy a currency at a price lower than thecurrent market price. A stop order can be used toeither cut your losses or to increase your gains. It isgood type of order to guard against predictability.

One Cancels the Other (OCO) This order is usedwhen you are placing a limit order and a stop-loss order at the same time. The One Cancels theOther order is very helpful in times of a volatilemarket. Its fairly simple. When you place one type oforder, say, a Stop Order at the same time as sway, aLimit Order, one order is cancelled as soon as theother one is executed. This is a good method to helpprevent you from losing a large amount on one trade,but it can limit your profits on some trades as well.

11



12/48

Best Forex Plan

Indicators You Need To Use

There are two types of indicators you can use to help yourtrading, MACD and Moving Average. First, lets talk about

the MACD.

MACD:

The MACD can tell you not only what the current trend is

but whether or not it is strong.

The MACD lets you know if the currency pair youre

interested in is trending up or down and if that trend is

strong or weak. In other words its very useful.

If you decide to use the MACD heres what the chart will

look like:

12



13/48

Best Forex Plan

The area where the chart is above the zero line is

when the MACD is trending upwards. When MACD is

giving this reading for a currency pair its a good

indicator of a strong buying period.

Conversely, when the chart is below the zero line, as it

is in the first part of the graph above, this is an

indicator of a strong selling period.

The bigger the MACD-Histogram bars, the stronger the

trend. When the MACD-Histogram bars are rising, this

means the trend is gaining strength. If the MACD-Histogram bars are decreasing, this means the trend is

losing strength.

Lets look at some examples:

Example #1:

This first chart is a great example of what Bull Trend and

Bear Trends look like in an MACD. When the bars are

gathered above the zero line as they are here its an

indicator that a currency pair is trending upward and is

being bought. When the bars are gathered below the zero

line as they are on the left hand side of the above graph

13



14/48

Best Forex Plan

that means a currency pair is trending downward and is

being sold.

Example #2:

The chart above is a good depiction of how to interpret the

data on MACD chart.

At point A, the size of the histogram bars are getting

bigger, meaning that the downtrend is picking up

momentum. But then it bottoms out. Then, as illustrated by

point B, the histogram bars start getting smaller and closer

to the zero line, meaning that the downtrend is losing

momentum.

Example #3:

14



15/48

Best Forex Plan

Example number three is an example of how a trend can

gain and lose momentum above the zero line. At point A,

the histogram bars are getting larger, indicating an

uptrend. Once they reach their peak they begin a descent

as the histogram bars get smaller, indicating the uptrend is

coming to a close.

As you can see, the MACD is very helpful in making tends

easy to follow and understand, making them easier for you

to make a good decision. And the key to Forex trading is

making good decisions.

Another key feature of MACD is its ability to compare the

present trend of a currency pair with its previous

movements. In doing this the MACD confirms the strength

(or weakness) of trend. MACD allows you to see how strong

a trend is whether its upward or downward.

In a strong trend, whether its upward or downward, the

MACD goes in the same direction as the currency pair price.

The graph below depicts this.

15



16/48

Best Forex Plan

The MACD chart shows you that at points A, B and C, the

EUR/USD currency pair was hitting new lows, as was the

histogram for MACD. This is a clear indicator that the trend

is a strong one and you should react accordingly.

But the MACD can give you a clue to when a trend is

coming to an end. It does this when it reveals a divergence

between a currency pair price and the MACD histogram.

The chart below is great example of this.

16



17/48

Best Forex Plan

Where the EUR/USD hit a new low price at 9:10 on 29

September the MACD histogram had actually hit a low

around 6:30 and was actually losing strength as a trend.

When theres a divergence like this, its a good indicator

that the trend is about to reverse its course.

We can find out whether this was correct or not by looking

at the next chart.

17



18/48

Best Forex Plan

In the previous chart, the EUR/USD was trending downward

while the MACD was not. This type of divergence is known

as Bullish Divergence (which is defined below). The

divergence by the MACD was an indicator that the EUR/USD

downward trend was about to reverse itself. As you can see

thats exactly what happened, as the MACD gave us a hint

that the EUR/USD would begin an upward trend.

If you want to be profitable at Forex its important

for you to identify divergences between the price andthe MACD:

The chart above depicts a Bullish divergence which

is when a price reaches a new low, while the MACD

does not. Forex traders can use the MACD to see that

this downward trend is fading and could possibly

reverse to an upward trend.

18



19/48

Best Forex Plan

Alternately, a Bearish divergence occurs when a

currency pair price reaches a new high but the MACD

does not. This is an indicator the upward trend is

losing strength and theres a good possibility for it to

become a downward trend.

Now lets talk about the Moving Average indicator.

Moving Average:

The Moving Average is exactly what it says it is; its the

average price of a currency pair over a set period of time.

It allows you to see how much the price has been moving

over that time. As an example, a Simple Moving Average

20 is total of the last 20 closing prices of a particular

currency pair, divided by 20.

While its possible to calculate the average high or averagelow price for a currency pair, the Moving Average is most

often measured by the closing price.

The Moving Average gives traders an idea of whether the

price of currency pair has been on an upward trend or a

downward trend, or no strong trend in either direction.

19



20/48

Best Forex Plan

The chart above shows when EUE/USD price was having an

uptrend, a downtrend and no trend at all.

In addition to depicting price trends the Moving Average is

also extremely important to identify what are known as

resistance and support points. The Moving Average can act

as a strong support (when the price is above the current

line), or a strong resistance (when the price is below the

current line).

This chart shows how the Moving Average supports a price.

On three different occasions the EUR/USD touched the

Moving Average, but it never fell below it. This information

is very helpful when considering a stop loss order.

So, to summarize on Moving Averages, it can be used to:

Spot the trend When the price of currency pair is

above the Moving Average, even though the Moving

Average is increasing, thats a sign of an upward

trend. When the price of a currency pair is below the

Moving Average, even though the Moving Average isdecreasing, thats a sign of a downward trend. When

20



21/48

Best Forex Plan

the Moving Average is nearly horizontal, that a sign

that there is no significant trend at all.

Spot resistance and support areas -When youre

debating to make a stop loss order its a good idea to

try to find any resistance or supports areas, regardless

of whether youre in a long trade or trying to sell

short. Resistance areas can serve as buy points in the

case of an uptrend or sell points in the case of a

downtrend.

A final reminder. You can use both the MACD and Moving

Average in the event you are a day trader or a swing

trader.

21



22/48

Best Forex Plan

Day Trading System

Many day traders use five minute MACD charts (like theone below) or a Moving Average 20. Each histogram bar

represents a five minute increment. So, in an MACD for an

entire day there will be 288 bars or 12 bars for every hour

of the day.

22



23/48

Best Forex Plan

Here are some rules that many day successful traders

follow:

When the MACD is rising and above the Moving

Average 20 while it is rising, this is a strong indicator

of a bullish market or a buy signal.

When the MACD is falling and below the Moving

Average 20 while it is falling, this is a strong indicator

of a bearish market or a short sell signal.

As a general rule you should set your buy target at

40-50 pips, and your stop loss at 30 pips below the

price.

Lets take a look at some examples and how you can

respond to them.

23



24/48

Best Forex Plan

Trading Examples:

Example #1:

The chart, specifically in the spot where the arrow points

to, shows the EUR/USD above the Moving Average. This is

a great buy point as MACD is above zero and is moving up

at the same time as the price.

These are things to look for when youre trying to identify a

good buy point. But we can get even more detailed. Heres

how.

Find the most recent high point for a currency and draw a

red horizontal line across the top. When a currencys price

rises above that red line, thats a great time to buy it.

24



25/48

Best Forex Plan

In this chart youll see an example of when the currency

pair price did notrise above the previous high price.

This means that a buy point wasnt put into effect. The

currency pair price (EUR/USD) fell back to the Moving

Average before it began climbing up again. But, we still

need to pay attention to the chart in case the EUR/USD

currency pair makes a surge.

Looking at the chart above youll see that all the conditions

for a buy are in place. The Moving Average 20, the Moving

Average and the MACD all are moving up. We just need to

see if the price gets past its previous high point (as noted

by the horizontal red line).

25



26/48


27/48

Best Forex Plan

Example #2:

Lets have a look at this chart. We can see the EUR/USD

price is rising, and the MACD is above 0 and rising. But the

price hasnt hit its previous high yet, as indicated by the

solid horizontal line between 1.4245 and 1.4270.

27



28/48

Best Forex Plan

This next chart is heavily detailed, with lots of helpful

information. In the middle of the day the buy point was

triggered, but then the price soared past the previous high

price, thanks to a surge of nearly 200 pips (from 1.4255 to

over 1.4425. The fact that the MACD stayed strong

throughout the surge tells you that this was a currency pair

you should probably keep for a while. The dotted blue lines

indicate this trend.

If you look at the MACD youll see there was as a bearish

divergence, an indicator that the trend could potentially

change. This shows the value of MACD, where it is

predicting a reversal of the current price.

28



29/48

Best Forex Plan

Example #3:

Our third and final example depicts an instance of a Short

Sell Signal. The GBP/USD was under the Moving Average

20. The Moving Average 20 was trending down while the

MACD was below 0 and trending down as well. Much as you

did when noting the previous high price with a horizontal

red line, you can note the previous low price in the sameway. When the price drops below that horizontal red line

this means its time to sell.

Once the short sell signal was triggered, GBP/USD began a

trend that dropped started a 300 pips slide from the 1.4740

range to the 1.4425 range. Just think of how much you

would have lost had you not sold at the sell signal. And you

never would have known about this trend without using theMACD chart to identify a sell signal.

29



30/48

Best Forex Plan

Swing Trading System

The only difference between the swing trading system andthe day trading system is the swing trading system

functions on 4 hour, daily and weekly charts. Day trading

uses 5 minute and 15 minute charts.

Here are some basic rules of swing trading:

When the MACD is gaining strength, and the currency

pair price is rising (while staying above the MA 20)

this should be interpreted as a buy signal.

A short sell signal occurs when the MACD is losing

strength and the currency pair price is also losing

strength, particularly if its falling below the MA 20.

You should target your buy signal at 200-250 pips

and your short sell signal at 100 pips.

30



31/48

Best Forex Plan

Trading Examples:

Example #1:

This chart reflects a buying opportunity. The GBP/USD is

above the Moving Average 20 and the MACD is above 0 and

trending upward. Once the price goes above the most

recent top, as indicated by the red horizontal line, there isan excellent buying opportunity.

31



32/48

Best Forex Plan

It turned out that this turned out to be a huge rally (1000

pips) that only faded when the MACD began losing

momentum.

Example #2:

32



33/48

Best Forex Plan

Here we see a good example of a short sell signal. The

Australian Dollar/US Dollar 4 hour chart and the MACD

(which is already below 0) are trending downward, as the

arrows indicate. So, the point where the price falls below

the recent high (as indicated by the red horizontal line) iswhen this becomes a short sell signal.

33



34/48

Best Forex Plan

This turned out to be a strong downtrend. At the .7080

price there was another short sell signal as the conditions

for it were replicated.

Once again, as it had when the price was rising, the trend

lasted until it began to diverge from the MACD.

How To Avoid Excessive Risks And To Protect

Yourself

Money Management:

Protecting your account is the first priority of any money

management system so you should always follow their

rules closely.

Generally speaking you should never risk more than 5%

of the total value your trading account on a single

trade. So, if theres an unexpected down trend you wont

suffer much because you didnt expose yourself

unnecessarily.

34



35/48

Best Forex Plan

Lets say you have $1000 in your account. That would

mean you would never risk more than $50 in any one

trade. You should think in terms of small trades. This is the

key to managing your account. If you only risk a small

amount of your account, such as 5%, you would have to

take losses on 20 consecutive trades before you finally lost

your account. This is the kind of statistic you need to be

thinking about when youre developing a money

management system. You should always protect yourself

from unpredictable events.

Brokers:

One of the hardest things for new Forex traders to do is to

find a good broker. The reason why its so hard to find a

good broker is because they are unregulated. In other

markets, when brokers do well their clients often do well

too. Thats not the case with the Forex market as brokers

can chase stop loss orders or end their relationship with

you if theyre not making enough money from you.

Youll have to do some research to find a good broker. One

thing that is absolutely required is a broker who can

guarantee the safety of your funds.

Two good websites for you to begin your research for a

broker are:

www.forextopten.com and www.forexpeacearmy.com.

35

http://www.forextopten.com/http://www.forexpeacearmy.com/http://www.forextopten.com/http://www.forexpeacearmy.com/


36/48

Best Forex Plan

They contain ratings and you can read what customers say

about their brokers. Youre sure to find helpful information

at each site.

Having a Trading Diary:

Although it is important to have a good broker, it might not

be as important as keeping a trading diary. A trading diary

is what you use to manually keep track of all the trades you

make, what statistical factors went into making the trade

and what your emotions were in the moments before you

executed a trade.

The more elaborate your trading diary is the more helpful it

will be for you. It will help you avoid making the same

mistakes twice.

Lets give a scenario where keeping a trading diary would

help you if you were a day trader.

Imagine youre waiting for a currency pair to surpass its

previous high and youre following along in your charts soyou know when to make your next move. That time while

36



37/48

Best Forex Plan

your waiting is when you should make an entry into your

trading diary. What currency pair are you trading? What are

the statistics that led you to this decision? How do you feel

now that youve made the trade is about to happen? Once

you enter the trade you should write down what youre

feeling in the moments after it happens. Occasionally, youll

need to close a trade earlier than you expected. Sometimes

youll hold onto a trade longer than you thought you would

because you just have a sneaking suspicion that something

will change. When you finally do exit the trade you should

do exactly what you did in your diary when you entered the

trade. Write down all the factors, statistics and emotionsthat went into your decision.

This may seem silly at first but it will definitely help you

become a better trader in both the short term and long

term.

Keeping a trading diary is also a good way for you to re-evaluate the systems that you use. Imagine a scenario

where you left a trade before the price reached the buy

signal or it reached the sell short signal. This would be an

example of you going against your system rules. You can

then see if going against your rules actually worked to your

benefit. You can ask yourself what prompted you to go

against your rules. This may also make you reconsider your

rules. If you write all these factors down in your trading

diary you wont need to wonder what to do when such a

situation comes up again.

But the trading diary isnt only helpful when it comes to

individual trades or individual situations.

Think of a day where you had trouble focusing. Maybe

there was something on your mind from another part ofyour life that was clouding your decision. When you write

37



38/48

Best Forex Plan

down whats going on, you allow yourself to be more

thoughtful and force yourself to slow down the decision-

making process. Even if youre not writing down whats

happening with your trading day, your trading diary is a

great tool to help you clear your mind and ultimately make

more effective trader. Its amazing how many traders have

learned this once they started keeping a trading diary.

One other thing that you should write in your trading diary

is the time youre willing to invest in Forex trading. If you

write down the hours you plan on trading, say, between 14

and 16 GMT, youll begin to think of this time as a

commitment. Its almost like an appointment you made

with yourself, which is an appointment that you probably

wont be eager to break.

There are many traders who are very precise when it

comes to their diaries. They write down every detail they

can think of. From the time they wake up, to the first trade

of the day, to the time they shot off their computer, theres

no such thing as a detail thats too small. These types of

traders tend to be very successful. But there are also many

successful traders who only write down the details around

their trades and ignore everything else. Once you start

using your trading diary, youll see for yourself which

technique works best for you.

Weve spent a lot of time discussing in this section

discussing what to write in your trading diary. The most

important thing to do with your trading diary is to read it.

What good are all the notes and reminders and details if

you never read them? This is, after all, how you learn.

38



39/48

Best Forex Plan

Have A Solid System:

What does it mean to have a solid system? It sounds easier

than it is. A solid system is one that has, time and again,

helped you make money.

You may not realize this, but not all Forex traders have the

same data. Furthermore, when they are looking at the

same data they may see different things. What one broker

sees a buy signal might be a Bullish divergence. The reasonfor this is that they have different systems.

One of the first things to do when planning a system for

yourself is check the time frames you want to do your

trading. Its very important to find a trading time that you

can stick with day after day. Consistency is one of the keys

to developing a system and you want to create a system

that you can repeat, day after day.

39



40/48

Best Forex Plan

Once youve selected the trading time you should open a

demo account. A demo account will be provided to you free

of charge by most brokers. You can use the demo account

to test your systems and your ideas without fear of losing

any money. This allows you the benefit of being able to

adapt or change your system stress-free.

It may take some time for you to find a system youre truly

comfortable with. But you should not open an account with

a broker until youve found such a system. Once you do

have a system and a broker you begin trading in a

confident, informed manner.

Economic Indicators

One of the keys to developing a system is to know how to

interpret the many economic indicators. To start with, you

need to know when the important indicators relating to

Forex will be released. You need to be able to plan your

trading accordingly. If you are unprepared for the release

of an important indicator, its possible that you could get

caught off guard. Getting surprised by information is one of

the main reasons traders lose money.

Another thing youll realize is that there is a lot of trading

activity near the announcement of an economic indicator.

All the other traders are basing their trades off the

economic indicators, too. If you are using a market order

(see the chapter on Types of Orders) youll learn quickly

that a lot of slippage happens on the day economic

40



41/48

Best Forex Plan

indicators are released. The price can change very quickly

which could end up costing you money.

Should you be the type of trader that uses limit orders its

possible that there a broker might actually make the orderdifferent from your limit price during very busy times.

Therefore, you should avoid setting up limit orders around

the time of announcements of economic indicators.

The most important Economic releases are:

GDP (Gross Domestic Product)

CPI (Consumer price index)

PPI (Producer Price Index)

Nonfarm Payrolls

Interest Rate Decision Retail Sales Index Durable Goods orders Consumer Confidence

PMI (Purchasing Managers Index)

Housing StartsTheir definitions follow.

Gross Domestic Product (GDP)

The Gross Domestic Product indicator is the total value ofgoods and services that have been produced within theborders of a country by either local or foreignmanufacturers. The GDP is considered the best indicator of

a country's economic state because it reflects the pace theeconomy of a particular country is growing.

41



42/48

Best Forex Plan

Consumer Price Index (CPI)The Consumer Price Index is the change in price of a

defined set of consumer goods and services. The CPI is theway to measure the level of inflation in a country from onemonth to the next. This is an important indicator for Forextraders when considering the currency rate of the countryreleasing its CPI.

Producer Price Index (PPI)Where the CPI reflects the costs of the goods to consumers,the Producer Price Index shows the price thatmanufacturers are getting for their goods. The agriculture,manufacturing, utility and mining industries are the keysectors that contribute to the PPI. In conjunction with theCPI, the PPI is a good measurement of inflation.

Nonfarm PayrollsThe most important indicator for Forex traders is theNonfarm payrolls. They are released in the first Friday ofevery month, and their announcement almost alwaysresults in the most volatility to the Forex markets. This istrue whether news is good or bad.

Interest Rate DecisionIf the Nonfarm payrolls announcement is the mostimportant indicator for then the Interest Rate decisionmight be the second most important. The Interest Rate isan announcement from the central bank of a country. Sincethe Forex market is tied directly to currency pairs theannouncement of interest rates has a direct bearing onwhether a currency pair while increase or decrease onvalue. The interest rate does not change according to a set

calendar, so when there is a change it results in an extrajolt of volatility in the Forex market.

42



43/48

Best Forex Plan

Retail Sales IndexThe Retail Sales Index measures the goods sold within theretail industry, regardless of the size or type of business.

Durable Goods OrdersThe Durable Goods Orders reflects the amount thatconsumers are spending on long-term purchases. Durablegoods are considered items that are expected to last forthree years or more. The Durable Goods Ordersannouncement is a strong indicator of the performance of

the manufacturing sector.

Consumer Confidence IndexConsumer confidence measures the confidence consumershave in the stability of the economy and their spendingpower. This indicator is useful to measure the health of theeconomy.

Purchasing Managers Index (PMI)The National Association of Purchasing Managers (NAPM)releases a monthly index that gauges the predicted growthin the manufacturing sector. Since its a report from agroup as well-respected as the NAPM, the release of thePurchasing Mangers Index is always met with interest.

Housing Starts

The Housing Starts monthly report provides three

important statistics: housing starts, building permits and

housing completions. There are many experts who relate

these statistics to consumer-based indicators to get a clear

picture of the economy. Forex traders are no different in

coupling this data with other indicators to get a meaningful

prediction.

43



44/48

Best Forex Plan

How To Keep Track Of The Most Important

Indicators

All you really need to keep track of the most important

indicators is a good economic calendar. Many traders prefer

this one: http://www.dailyfx.com/calendar/.

The Daily FX Calendar is great tool because it lets you pick

the currency youre most interested in and then adjust the

economic indicators by their level of importance to you.

Assuming youre only interested in the most important

economic indicators that will be released in US and Europe,

you can then adjust your calendar as follows:

All you have to do is uncheck, the low and medium boxes

and all the non-European and non-American boxes as in the

chart below.

44

http://www.dailyfx.com/calendar/http://www.dailyfx.com/calendar/


45/48

Best Forex Plan

Then you just click the Apply Filter button, youll be set to

receive the most important economic indicators relating to

the EUR, USD and NZD. Your reports will look something

like this:

45



46/48

Best Forex Plan

Then you can just click on the link to read more about the

economic release in question. Reading these is almostalways helpful in anticipating any volatility that may result

in the Forex market from their releases.

46



47/48

Best Forex Plan

Disclaimer

There is a very high degree of risk involved in trading. Inany market where a potential for profit exists, there exists

also a risk of loss.

Forex trading is a risky business. You should never tradewith money you cannot afford to lose. None of theinformation on our website nor any information oreducation provided to the client by any means assures thatthe client will make money in the Forex market.

Although every effort has been made to assure accuracy,

the authors and publishers can assume no responsibility forerrors or omissions. Neither the author nor the publisherwill be responsible for the use or misuse of the informationcontained herein.

Examples are provided for illustrative purposes only andshould not be construed as investment advice or strategy.It is not intended as professional advice or arecommendation to act. Before engaging in any activitymentioned in this ebook, seek the advice and consultationof a competent professional.

Past performance is not indicative of future results.

Copyrights

47



48/48

Best Forex Plan

The material in this manual is property of BestForexPlan.com. This material cannot be copied in partor in whole without the express written permission ofBestForexPlan.com.

Anyone who attempts to alter this material without thepermission of BestForexPlan.com will be prosecuted to thefullest extent of the laws and will be liable for reimbursingBestForexPlan.com for all lawyers and court fees.

Date post:	30-May-2018
Category:	Documents
Upload:	green4sd
View:	223 times
Download:	0 times

Best Forex Plan Ebook

Documents