There are simple as well as complex candlestick patterns. There are single stick, two stick as well as three stick candlestick patterns. Harami is a two stick candlestick pattern. Two stick patterns take two days to form on daily charts. A Harami is formed whent the first day candle is longer than the second day candle. Harami can be bullish as well as bearish!

A bullish Harami is formed in a downtrend when the first day candle is very bearish. But on the second day, the bulls come into play and beat the bears out of the market by taking the prices higher. However, the bulls are not completely successful and the second day is still lower than the first day open and the first day high is not crossed. But this is an important signal that bulls are now active and trying to take hold of the market. This means that the downtrend will be soon over and an uptrend is about to start.

On the second day when the Harami is formed, the bears are still slightly ahead of the bulls at the start of trading. The open is higher than the close of the last day. However, the bulls close the day higher than the open.

What this means is that the bulls are still cautious about their success and fear that the bears might return to take the prices lower again. However, when this does not happen, it gives confidence to the bulls encouraging more buying in the market and the reversal of the trend.

Just like with other candlestick patterns, a Harami pattern can fail. So to be on the safe side when trading on the Harami, place the stop loss close to the open of the second day or what you call the signal day.

Harami pattern has got few variations. On of them is the Bullish Harami Cross Pattern. Now,a Bullish Harami Cross is not formed very frequently. But when it does form, it means an sudden trend reversal. So you should act immediatetly when you spot it. The first day in case of a Bullish Harami Cross is a bearish candle. The signal day or the second day is a Bullish Doji with an open higher than the close of the first day and the close lower than the open of the first day.

The bearish Harami is similar to a bullish Harami. It is formed in an uptrend. The first day is a usual bullish candle that forms in an uptrend. The second day candle is a bearish candle. It’s open is lower than the close of the first day. And it’s close is higher than the open of the first day. What this indicates is that bears have taken hold of the market now and are about to push the prices down signalling a downtrend is about to start!

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When it comes to investment, hedging is not a strange word. Though many of you have already heard of the name hedging, not many of you may be able to explain what hedging is. Without the ability to explain the term, I guess you have not yet participated in the hedging world, which actually can be useful to protect yourself. Let us now understand it.

Why do you need a hedge? It is because every investment is linked to certain level of risk, a hedge is your insurance that helps you reduce the risks. The higher the risk, the more likely the investors or the companies will enter into hedging. Different types of hedging are available and the common ones are foreign currency swap, interest rate swap, futures hedging and hedging for stock price.

The core objective for hedging is to reduce the risk instead of earns money. Therefore, what you would do is to invest in two products that are negatively correlated. In simpler term, that is when investment A earns money, investment B will lose money. The gain and the loss offset each other that your risk is minimized.

When the risk is higher, the earning or opportunity is likely to be higher, too. But, by hedging, the risk is reduced, therefore, the highest possible earning is also reduced. That means, when you are gaining on investment A, the gain is reduced by the loss in investment B. On the other hand, if you are making loss on investment A, the loss is reduced by gain in investment B.

Let me give you an example on interest rate swap. If you have a loan from the bank of $100,000 and the bank is charging you a floating interest rate (or market rate). You biggest concern must the increase in interest rate (“interest rate risk”), which than you have to pay more interest. To reduce the interest rate risk, you can enter into an interest rate swap with the bank.

As mentioned, the hedge reduces your risk and at the same time reduces your possible earning. Depending on how much risk that you wish to reduce, you can enter into swap that amounts to exactly $100,000 or you can just enter one that is $50,000. Let us now assume you have entered into a $100,000 interest rate swap that you receive floating interest income.

When the market rate goes up, you have to pay more for the loan, but on the other hand, you receive more from the interest rate swap. On the other hand, if the interest rate goes down, you pay less, but you receive less as your interest income. To note that, hedging may not help you eliminate the risk but only reduce, therefore, you cannot expect that the interest pay out should be exactly the same as interest income.

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Here as a part of the Technical Analysis Explained series where congestion entrance is discussed .

Movements in the market occur from trend to congestion and back again, in a ceaseless, ever-continuing cycle ,repeating itself again and again and again forever . As long as the markets have been around, this has occurred and no doubt it will continue happening as long as markets are around . The only time that the cycle doesn’t go on are in times where there is artificial constraint, regulation, or intervention, such as market suspensions, price-fixing, price limits, market regulation and the like – and even then the disruption is temporary .  However, as long as demand and supply are able to vary, and as long as together in trade humans come together ad they act on opportunity and value as they perceive it, markets will engage in trends and congestions .

We can call it by many different names . Sometimes we have talked about equilibrium and disequilibrium , some speak of vertical moves and horizontal moves describing the way the chart moves across the page , some speak of distribution as a movement upwards and development is referred to as the movement sideways. Really it’s all the same thing .

A trend is a movement that can take you in a particular direction ; congestions are market periods where the market oscillates between support and resistance and it’s movement is horizontal .

We saw in earlier articles in our Technical Analysis Explained series that we have a clear definition of what a trend is – it includes on one side of the Pldot, three bars that show up consecutively. Because a congestion is exactly opposite of a trend , the definition is expected to be simple of a congestion, and it really is . Congestion occurs in the market when it does not close on one side of the PLdot for three consecutive periods . How could it be different ? The market has to be in a trend or not in a trend, we already have the definition of a trend , so congestions are everything else . The market is either in trend or congestion .

There are three different lessons that are a part of congestion, as we define congestion in three different forms – congestion exit, entrance, and action . As a little overview, here’s a look at their definitions.

Congestion entrance trading will occur after there is a trend in the market, with three or more closes in a row on the side of the Pldot, and then the next close occurs on the other side of the Pldot . This particular bar, closing on a different side of the Pldot than the other previous three, is the very first congestion bar , and after the trend, it’s the first bar.

Congestion action trading occurs as the market swings back and forth , and closes on one side or another of the Pldot as it goes along bar by bar. We’ll go into more detail on this in the next part of the Technical Analysis Explained series.

Congestion exit trading occurs as a new trend is about to occur and the market is leaving congestion. No doubt this makes sense. If congestion confines are violated by the market , either the dotted line or the most recent block level , the market is showing signs of congestion exit trading. Of course, there’s a lot to be said about it , and the topic is interesting . However, this is for another article and so we will not deal with it more here . Watch for more articles about this .

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When traders embark on their technical analysis training ride , they tend to think the main challenge is going to be learning various technical tools. And they usually seek out who they believe to be an “expert.”

Really the big idea is to look at the market in a way that you develop, to get at ease with the vision , and also with the patterns seen , and to be able to identify and become at ease with them so that you can repeat them over and over again .

The most important part of technical analysis training is learning to study yourself and building up awareness personally.

Whether you actually learn from the vision of another or if you decide to have your own vision you create, you can become comfortable with them to the exclusion of all others , and so you can follow your understanding wherever it leads , without listening to other voices and other inputs .

To become a really good trader you have to learn how to isolate yourself from outside influences . Energy terminations are what the rest of the world reacts to, and there will be extremes within the crowd if you’re going to take action in a direction that is opposite . So you have to have a state of mind such that you are able to do things that most people will not do , since they are too scared to go contrary to the crowd , or they are unable to see the alternate course of action because they are asleep and unaware of the reality of the market action that is unfolding . Monitoring, awareness, and observing is needed for this state of mind, and it’s a talent that can be learned .

Here is a look at probability, its nature, and the relationship it has technical analysis training, the need for research and how to go about doing it , and the value it has for us as traders in terms of our financial outcomes .

The accuracy of technical analysis tools can be such that these tools can be seen as fail safe. Beginners in trading sometimes think that all supports are going to hold , and every trend termination is the time to jump in . Of course life is not that simple . If you were really able to totally predict the market there wouldn’t be any market, and it would all be done by computers . There would be not opinion differences between sellers and buyers, there wouldn’t be losers or winners and all would have the same money . Anything can be done by the complex market.

Many are not aware enough to see the simplicity, because preconceptions and influences often cloud our perception . Patters are out there, and some of these patterns have a high potential for repeating themselves , since there can be the repetition of energy. The main thing is to learn how to know when a pattern is going to keep holding, and how to see if it’s not going to hold up. Also, , when looking at a large sample, to know when a pattern is going to break or hold . The tools are accurate and effective — but this only happens on a percentage basis only. You have the odds , but on no trade is there a guarantee you’ll succeed .

The main point to technical analysis training is to do your personal research carefully so that you understand how the patterns that you see will act when considered in a large sample size .

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Forex trading account is a first thing that one needs to do while entering into the Forex market. Opening an account with the help of a reputed broker will help you to know more about the business. As there are many Forex brokers available, you mustensure that you are selecting the best one. Several people choose the Forex traders to get the best exchange currency rates. Internet is the best way to operate the Forex trading account and there are several online forex brokers available which provide the best guidance to the customers.  You will be ale to find the best Forex brokers by doing proper research on the web.

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If you are interested in this trading method, you also have an option to take the assistance of the websites, which will provide online broking services. Most of these websites include the equipments, which are essential for the online trading. The brokers are available online and they provide the guidance on the request of the customers. Even though it is advisable to open a managed account with the help of an online forex broker, it is very important to consider his experience. Online brokers can be beneficial in managing the account and it is better if they are experienced in this business.

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