Technical Analysis – How to Use it for Big Profits:

Technical Analysis is the most effective way to make money

in online FOREX trading

, or any other market – Here we will show you why it is so effective and how to and avoid common errors.

So firstly, why does technical analysis work?

Let’s look at how investors determine price and the equation for predicting market movement:

Fundamentals + Investor Psychology = Price

The important advantage for traders using technical analysis is that it assumes all fundamentals are quickly discounted in the price.

You can ignore all the news and simply assume in today’s world of instant communications that all fundamentals show up instantly.

Technical analysis however does something more important:

It shows you how investors view the fundamentals and takes into account the emotions of the participants.

Think about it:

The price of anything is determined by people – We all see the fundamentals, but we all draw our own conclusions of what the value of anything is.

By looking at charts we can see both the supply and demand fundamentals and the way they are viewed.

The critical advantage of technical analysis is that it allows you to study both of the above at a glance.

Human nature is constant and the emotions of greed and fear cause repetitive price spikes, that can be traded for profit.

All short term price spikes tend to be caused by human emotion and can be traded for profit.

So what do you need to be careful of?

While human nature is constant and technical analysis works, it cannot be reduced to a science:

It still remains an art and although charts can give you reliable patterns they do not:

Always allow you to win.

They will however put the odds in your favor and allow you to trade with the odds on your side.

Technical Analysis is an odds game

Just as the penalty kicker in football does not score every goal, you won’t win every trade.

But, just like the skilled penalty kicker you will score (win) more times than you lose if you practice your art.

Technical analysis is simply, an art that you can use to put the odds in your favor.

ForexGen | Mortgage Rates Dip For Fourth Straight Week

Mortgage rates dip for fourth week; falling below 6 percent for first time since early October


Rates on 30-year mortgages sank for a fourth straight week, falling below 6 percent for the first time since early October, and are heading lower due to the government's massive new effort to aid the U.S. housing market.

Further drops are likely, analysts said, reflecting the market's positive response to the programs the Federal Reserve and the Treasury unveiled this week to fight the financial crisis.

The Fed's move to spend up to $600 billion buying mortgage-backed securities owned or guaranteed by big mortgage financing titans Freddie Mac and Fannie Mae caused rates to immediately drop by a half-point. Economists say the new Fed program should help keep rates low as the government increases efforts to battle the credit crisis.

"The sharp decline in mortgage rates that occurred after the new program was announced Tuesday was encouraging," said Mark Zandi, chief economist at Moody's Economy.com.

Freddie Mac reported Wednesday that rates on 30-year fixed-rate mortgages dropped to 5.97 percent this week. That was down from 6.04 percent last week. It was the first time rates have been below 6 percent since they were at 5.94 percent the week of Oct. 9.

Freddie Mac's survey is normally collected from Monday through Wednesday and released on Thursdays. This week, it was put out one day early due to the Thanksgiving holiday. Since some lenders reported their rates Monday, this week's rates don't reflect the full impact of the Fed's dramatic action.

Rates on the 30-year mortgage hit a high for this year of 6.63 percent in late July. Analysts believe rates will continue dropping as signs mount that the country is sliding into a recession and the government steps up efforts to make mortgage financing more available.

"Signs the overall economy is flagging lowered most interest rates market-wide," said Frank Nothaft, chief economist at Freddie Mac.

Rates on other types of mortgages were mixed this week.

For 15-year, fixed-rate mortgages, which are popular with people who are refinancing, rates averaged 5.74 percent, up slightly from 5.73 percent last week.

Rates on five-year, adjustable-rate mortgages dipped to 5.86 percent, compared with 5.87 percent last week. Rates on one-year, adjustable-rate mortgages dropped to 5.18 percent, from 5.29 percent last week.

The rates do not include add-on fees known as points. The nationwide fee for 30-year and 15-year mortgages averaged 0.7 point last week. The fee on five-year, adjustable-rate mortgages averaged 0.6 point while the fee on one-year adjustable-rate mortgages averaged 0.5 point.

A year ago, the nationwide average rate on 30-year mortgages stood at 6.10 percent, 15-year mortgage rates averaged 5.73 percent, five-year adjustable-rate mortgages were at 5.86 percent and one-year adjustable-rate mortgages stood at 5.43 percent.

The credit markets, while not as crunched as they were last week ahead of the rescue of Citigroup Inc., are still in rough shape because financial institutions and other investors remain wary about lending. Short-term Treasury rates remain just above zero -- suggesting a high level of fear among investors.

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How to Get Started?

People are introduced to the exciting world of foreign exchange in many ways: friends, current events, newspapers, television, and many others. For those of you who are new to forex, the following guidelines cover the basics of currency trading.

Step 1: "Practice makes perfect"
Demo trade. The demo account was designed to help traders gain familiarity with the speed and movements of the market. When you are demo trading, you should learn how to: 1) place market orders to enter a trade, 2) place stop-loss orders to protect your positions, and limit orders to take profits, 3) place OCO orders and If Done Orders to execute more advanced strategies.

Step 2: "Study, Study, Study".
Forex traders use fundamental analysis, technical analysis, quantitative analysis and sometimes a combination of all three to make their trading decisions. Fundamental analysis involves the use of economic, financial and political news to determine trading decisions. Technical analysis involves the study of Charts to predict future price movements based on past price patterns and trends. Quantitative analysis consists of the use of preset statistical models and properties in quantifying price formations such as averages, ret cements as well as identifying oversold and undersold situations.

Step 3: Manage your money wisely.
You should always be aware of the amount of money in your account before placing a trade. If you think a long-term trend is developing, then you should consider whether you have enough funds to maintain your margin and withstand any movements against your position(s) that may occur.

Step 4: Open a Live Account.
If you feel ready to trade this market, fill out our application forms and submit them today. Since the emotional factor may be higher than it was when you were demo-trading (as you are now committing real money), it is essential that you develop an effective strategy while demo-trading and plan to abide by it when trading your live account.