Double Bottom Chart Patterns
There are three favorable Chart Patterns to look for as an investor. They include the "Cup and Handle", "Double Bottom" and "Flat Base". This article will concentrate on the "Double Bottom" pattern which looks like the letter "W" as it develops. An example of a stock which had formed a Double Bottom pattern before breaking out to new 52 week highs was NVR in 2002.
NVR peaked in the Spring of 2001 and then sold off before making its 1st bottom in June (point A). From there it rallied into July (point B) but then sold off again and made a 2nd bottom in September (point C). After making the 2nd bottom NVR then rallied strongly again before stalling out near its previous Spring 2001 high and completed its Double Bottom "W" pattern. NVR then traded nearly sideways for 6 weeks and formed a Handle (H) before breaking out in late January of 2002 accompanied by strong volume (point D).
Each week we look for stocks which are exhibiting favorable chart patterns that have good Sales and Earnings Growth which may break out in the future and undergo significant price appreciation.
Forex Market Basics
The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
What to trade in Forex Market?
In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.
Understanding Forex quote
- Base currency: The first currency in the pair.
- Counter Currency: The second currency in the pair. Also known as the terms currency.
The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.
BID and ASK Prices
When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).
Commission-free, but with spreads
Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.
Rollover - What happens to my open positions at the end of the trading day?
Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.
Leverage & Margin
The leverage available in forex trading is one of main attractions for many traders. Leveraged trading, or trading on margin, simply means that you are not required to put up the full value of the position. Forex brokers provide more leverage than stocks or futures. In forex trading, the amount of leverage available can be up to 400 times the value of your account.