Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. I would like to draw your attention to the indicator, which remains a powerful instrument ever since, even when there was no computer for quantitative assessment of price action. This powerful tool is the analysis of the schedule "tic-tac-toe."
To better explain the use of this tool in the FOREX market, we turned to the trader Tom Dorsi, which is very successfully used this tool for trading in the FOREX market. (general idea, see the "Tic-tac-toe once again in vogue in the number 15)
Eyb Kofnas: Forex market is a rapidly growing market with the development of new lines - retailers with direct access - now in fact anyone in the world can trade in this market. The reason why we invited you to talk, due to the fact that the analysis of the schedule "tic-tac-toe" may be a useful analytical tool for trading in the foreign exchange market, and wrote a book on the diagrams tic-tac-toe, and called - "charting crosses -tack-toe, you could tell us about sveem look at the use of this tool in the foreign exchange market.
To get started, let's look at an example of graphics tic-tac-toe for the currency pair USDJPY:
Short position should be open in the first three-yacheechnom broadside with a protective stop-orderom a new peak - 132.58
Tom Dorsi: The trend is still ascending, but the last line "X" is more than 20 cells. In this case, we have opened a short position at the first broadside in the three cells with a stop on a new peak. This figure also signaled the sale and may be open short position in the deployment of an appropriate stop-order and a new peak.
The only problem is that the currency pair is still above trend line, and this, in general, can impede the opening short position. However, traders can sometimes deviate from the general rules and in this case, enter the short side.
Kofnas: Trader would open a short position, but must have been to place a stop order at 132.50?
Dorsi: Yes, which indicated a red arrow.
Kofnas: Now, let's be clear that the overall concept is to go in a short aside when the price is below the trend line, not above it. In the above graph, the market is so extended, that may well be wise to open a short position with a close stop order, but in fact it contradicts the basic rule for opening a short position. Therefore, the construction of trend lines is absolutely necessary.
Dorsi: Absolutely. Trend lines are very useful and necessary. The line on the graph tic-tac-toe should always be at an angle of 45 degrees for the bovine market and one for Bear.
Kofnas: What about the other indicators?
Dorsi: We use the index of the momentum created by us, which is just two sliding averages - one short and one long, and we observe that it moves above and below the long lines. However, this method is short, so I use only the schedule for tick-tack-toe in their trade. I am a position trader and will keep the position until you find that the situation has changed.
Kofnas: What kind of tactics you're using when you add positions?
Dorsi: We will normally begin, for example, with one lot. Then, as we get a further signal of purchase, we have to add lots and raise the stop order until the new sales generated signal. We analyze each transaction. Often have to derail a lot of stop-orders, to finally catch the trend. Unlike the stock market, there are only a few currency pairs, so you need to adhere to the program and continue to probe the market for search transactions.
Kofnas: Let's look at the schedule for the Japanese yen.