What is the Elliott Wave Principle?

The Elliott Wave Principle is a detailed description of how groups of people behave. It reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific and measurable patterns.

One of the easiest places to see the Elliott Wave Principle at work is in the financial markets, where changing investor psychology is recorded in the form of price movements. If you can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, you can predict where we are going.

FOREX PIVOT POINTS

Do you feel excitement!  It’s the last year in junior high before you send to high school!
 Pivot points are used by the professional FOREX traders and market makers to identify potential support and resistance levels. Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change.
Do you know why pivot points are so enticing?
It is for their OBJECTIVENESS.

CHART PATTERNS SCHMATTERNS

We hope that you have achieved an arsenal of weapons to use when you battle the market now. In this lesson, you will add yet another weapon: CHART PATTERNS!

Imagine chart patterns as a land mine detector because, once you finish this lesson, you will be able to spot “explosions” on the charts before they even happen, potentially making you a lot of money in the process.

 Before you let a fart explode chart patterns are like that funny feeling which you get in your tummy right

Leading vs. Lagging Indicators

You are provided a lot of tools that can help you analyze potential trending and range bound trade opportunities. Still doing great so far? Awesome! Let’s move on.

We are going to streamline the use of these chart indicators in this lesson.

We desire you to make properly understood the strengths and weaknesses of each tool, so you can determine which ones work for you and which ones don’t.

Come to the some basic concepts first.

 There are two types of indicators:

1.      Leading indicator

2.      Lagging indicator

 Leading indicator

How to Use Bollinger Bands

Congratulations!  You have made it to the 5th grade! Each time you make it to the next grade you continue to add more and more tools to your trader’s toolbox.
“What’s a trader’s toolbox?” you may ask.
 It is simple!
Compare trading with a brick building of home.  Which tools is used to the building? You wouldn’t use a hammer on a screw, right? Nor would you use a buzz saw to drive in nails. There’s a proper tool for each situation.
It is similar to in trading business, some trading tools and indicators are best used in particular environments or situations. So, the more tools you have, the better you can adapt to the ever-changing market environment.
Or if you want to focus on a few specific trading environments or tools, that’s cool too. It’s good to have a specialist when installing your electricity or plumbing in a house, just like it’s cool to be a Bollinger Band or Moving Average expert.
There are billions different ways to grab some pips!
For this lesson, as you learn about these indicators, think of each as a new tool that you can add to that toolbox of yours.
You need not use all of these tools, but it’s always nice to have plenty of options, right? You might even find one that you understand and comfortable enough to master on its own. It is enough discussed.
Now, come to start!

WHAT ARE MOVING AVERAGES?

Moving average indicates a way to smooth out price action over time. By “moving average”, we mean that you are taking the average closing price of a currency pair for the last ‘X’ number of periods. On a chart, it would look like bellow this:

A moving average indicator is used to help us forecast future prices as every indicator does. It is better to determine the potential direction of market prices by looking at the slope of the moving average.

As we said, moving averages smooth out price action.

There are different types of moving averages and each of them has their own level of “smoothness”.

Actually, the smoother the moving average, the slower it is to react to the price movement.

The choppier the moving average, the quicker it is to react to the price movement. To make a moving average smoother, you should get the average closing prices over a longer time period.

Now, you’re probably thinking, “C’mon, let’s get to the good stuff. How can I use this to trade?”

In this lesson, we first explain the two major types of moving averages:

1. Simple moving average
2. Exponential moving average

We’ll also let you know how to calculate them and give the pros and cons of each. Just like in every other lesson in the forexmic.com, School of Pipsology, you have to learn the basics first!