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Blogs about basic information in forex trading, forex participants and how to earn big in forex trading.As a follow up to my original interview and due to overwhelming viewer response, Abe Cofnas has provided the answers to your questions.  You can view that interview here.  In addition and going forward, Abe has graciously agreed  to provide forex trading blog with a weekly feature,


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As a follow up to my original interview and due to overwhelming viewer response, Abe Cofnas has provided the answers to your questions.  You can view that interview here.  In addition and going forward, Abe has graciously agreed  to provide forex trading blog with a weekly feature, giving us insight into his unique perspective accumulated through years of forex trading.

 

So I’d like to extend a warm welcome to Abe and look forward to his weekly feature.

 

QUESTION:  HOW DO YOU SUGGEST TRADERS SCAN THE MARKET AS THEY START THEIR TRADING DAY?

The best approach is first to have a mind-set that realizes that there is a lot of volatility in forex and therefore it is important to get a top-down viewpoint of what is happening.  So one of the first things to do is to use multiple time frames.  

 

When you are looking at a currency pair, look at three time frames at once.  I suggest a 4 hour, 15 minute, and 5 minute time frame.  The example below shows this for the EURUSD.

 



(click chart to enlarge)

 You can see that the EURUSD on the 4 hour time frame had a big bullish candle but right before it was a nice Doji.  Even before that the EURUSD had a 4 hour uptrend. So this allows us to clearly see a bullish sentiment for the EURUSD. 

 

Now follow that and the 15 minute chart offers a lot more granularity. Of course we have swings down, but the prevailing sentiment from the 4 hour was up and this means that the trader should only look for buy situations.

 

 

QUESTION: WHAT ROLE DOES THE 5 MINUTE CHART PLAY?

 

The 5 minute chart acts like the local traffic guard. If you want to go long, then you need confirmation on the 5 minute chart.

 

 

QUESTION:  ARE THESE THE ONLY TIME FRAMES ONE SHOULD USE?

 

The concept is 3 time frames.  One can use a 2 hour, a 15 minute, and a 3 minute chart. The essential feature is to never only look at one time frame.

 

 

QUESTION:  WHEN DO YOU GO COUNTER-TREND?

 

Counter-trend moves can make you money, but a starting trader should not go against the trend.  It’s a numbers game and the trend is your friend because it can provide you with more winning trades if you go with it.

 

Having said that, if the 4 hour breaks down support- or, I will be flexible - the 2 hour breaks support, you can look to the 15 and 5 to confirm it.   The 2 hour chart below shows support at 1.255.  So if the EURUSD broke through this- even though the 4 hour chart is still not broken looking for a sell is legitimate.

 

 



 (click chart to enlarge)


 

QUESTION: WHAT ELSE IS GOOD TO LOOK AT ?

 

Definitely look at the Dollar Index (DXY). It provides a quick look at global sentiment. So make sure you’re trading WITH the sentiment

 



 (click chart to enlarge)

 

QUESTION: ARE THERE ANY OTHER GOOD INDICATORS YOU LOOK AT?

 

Let’s deal with that on the next blog.

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