GDP is considered the broadest measure of a country’s economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures:…
Economic indicators are reports released by a government or private organization that detail a country’s economic performance. These reports directly measure different aspects of a country’s economic health, but remember that many factors and policies will affect a nation’s economic performance. Economic reports are released at scheduled times, providing the market with an indication of…
Traders in the foreign exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: the price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies,…
Backtesting involves testing a trading strategy on historical data to see how it would have performed in the past. This allows traders to evaluate the effectiveness of the strategy and make any necessary adjustments before risking real money in the markets. Backtesting helps traders to identify the strengths and weaknesses of their strategy, as well as to…
The key steps involved in trend trading include: Identifying trends: The first step in trend trading is to find out the direction of the trend. This can be done by analysing price charts and looking for higher highs and higher lows in an uptrend or lower lows and lower highs in a downtrend. Technical indicators…
The Turtle trading experiment in the 1980s is often credited with popularising the trend-trading system. The experiment was conducted by the legendary commodities trader Richard Dennis, who believed that trading skills could be taught and that anyone could learn to become a successful trader. Dennis selected a group of inexperienced traders, known as the “Turtles,” and taught…
The following Alibaba Group chart shows several examples of how trends can be analyzed, as well as some examples of potential trades using chart patterns and the trend. The price starts out in a downtrend, before rising through the descending trendline and above the moving average. This doesn’t mean the trend is up, though. Trend…
A trendline is a line drawn along swing lows in an uptrend or along swing highs in a downtrend. It shows a possible area where the price may pull back in the future. Some traders also opt to buy during an uptrend when the price pulls back and then bounces higher off of a rising trendline, a strategy of buying…
