Click here now to get a huge 100% bonus at StockPair!

Bonus and Promotions

Stockpair offers more than just an easy to use trading platform: they also feature no restrictions bonus promotions to their clients and Stop Loss/ Take Profit as an added incentive for trading via their system as well as Volume Cash Back. Right now the current promotion available on their website awards user with a 100% bonus on all deposits made that are over $500. We recommend you check out the official site for full details as new and ongoing promotions are constantly being updated.

Account Info

Stockpair has designed a platform that is suitable for traders of all types, regardless of experience or account size. The minimum deposit amount is $200 and the maximum is $50,000, thereby allowing everyone from new traders to seasoned an access point to trading on the markets. Accounts can be operated in multiple currencies and opening a new account is quick and easy and can be done from the convenience of your own PC.  Stockpair is available in English, French, Italian, Spanish, German, Dutch, Arabic and Greek.

Trading Requirements

After opening a new account, traders will find the browser-based platform very easy and convenient to use from any Internet access point. They also accept a number of different deposit methods for the user’s convenience including: most major credit and debit cards, bank wire and Moneybookers.

Platform and Markets

Stockpair’s live trading platform allows user to make instantaneous traders on all the major markets including Commodities, Stocks, Currencies, Indices and Pairs, totaling over 100 tradable assets from 8 different markets spread out around the world.

The unique Stockpair platform features flexibility and high profitability with the potential for huge returns of up to 350% per trade. The user can easily set the desired time for trades, which range from as little as 5 minutes and go up to 150 days. Stockpair offers something for all types of traders.

The Stockpair platform also features several popular instrument types, including options such as One Touch, High/Low, and thereby making it appealing and accessible to just about every type of trader.

Customer Support

Stockpair has already built a reputation for offering fair pricing and timely customer service. They place a heavy emphasis on keeping their clients satisfied and feature a friendly support team, which is available to help in case you run into any snags along the way.  Customer support is available round the clock via live chat, phone and email.  Deposits and withdrawals and easy and secure and can be made via a number of popular payment methods including major credit and debit cards, bank wire and Moneybookers. Stockpair also features an in-depth FAQ section on their website and tutorials for helping new traders get started.

Conclusion

Overall the Stockpair platform is a breeze to use, even for those with no prior trading experience. They offer a wide range of trading options for all the major markets, as well as short and long term trades, which is sure to appeal to a diverse group of traders. They also feature some nice incentives like the no restrictions bonus, stop loss/take profit and volume cash back. Their reputation for transparent and fair pricing along with a strong emphasis on customer satisfaction make them a great choice for just about anyone interested in Binary and Pair Options with over 100 assets.

Average True Range (ATR)

By far the indicator I use the most. Simply put, ATR is the amount an asset moves in the day.

The indicator takes an average over a number of days (or bars), such as 10 or 20, to give you a representation of daily price movement of the asset. The average is based on the largest following number: Current High minus Current Low, Current High minus Previous Close or Current Low minus Previous Close. Luckily the indicator tool within your trading platform will calculate this all for you, so all you have to is look at the current indicator reading.

Figure 1. EUR/USD Daily with ATR

 Source: Oanda – MetaTrader

Figure 1 shows the ATR over ten days–shown as “ATR (10)”– for the EUR/USD on Daily bars. Therefore, the current reading of 0.0099 means the EUR/USD is moving on average 99 pips per day. If you used a 5 minute chart, the reading you get would be a 10 period average of how much the EUR/USD moves in a 5 minute period.

So how does this reading help you make better trades? Assume it is near the end of the day, and the EUR/USD has already moved up 140 pips on the day and you want to take a long trade. Do you take it?

Maybe, but only if you believe something important is going on. Since the average daily movement is about 99 pips, it is quite likely that the EUR/USD is bit overextended (at 140 pips), having already moved well beyond average. That is not too say that if you go long/buy calls you won’t make money, but it does make you sit back and examine the trade to make sure it is worth taking.

I generally use this indicator as a filter. While wide ranging days happen (much larger than average), I like to trade based on statistics.  If I get a signal to go long or short on an intra-day trade, and the asset has already moved well beyond the average, I will usually skip it and look for another trade which has more room to run.

Relative Strength Index (RSI)

Known as an oscillator, this indicator fluctuates between 0 and 100 and measures the speed and change of price. If you have watched business news or read some technical comments from traders, you will often hear the words “Overbought” or “Oversold.” While the speaker may be addressing something else, often technical analysts are referring to the current RSI reading when they use these words. A reading above 70 is typically overbought, while below 30 is oversold. Once an asset enters these area, a reversal is usually not far off.

But to me, timing is important and therefore standard overbought/oversold RSI readings are pretty much useless. For one, in a strong uptrend, the reading will be frequently above 70, but yet you want to be long most of the time. Same goes for a downtrend; the RSI will frequent the area below 30 and yet you want to be short/buying puts during downtrends.

I prefer to use the RSI in a “relative” fashion; comparing current RSI readings in uptrends to past uptrends, and current RSI readings in downtrends to past downtrends. This concept comes from Constance Brown’s book Technical Analysis for the Trading Professional. What the author finds is that in downtrends the RSI generally stays below 60, and that in uptrends it generally stays above 40.

Figure 2. EUR/USD 4 Hour Chart

Source: Oanda – MetaTrader

In figure 2, notice how the RSI shifts; during the downtrend it often touches below 40 and rarely gets above 60 (red line). But when the trend moves higher toward the right hand side of the chart, the RSI doesn’t move below 40 (green line) and spends much of the time above 60.

This is an excellent method for confirming trends, although some tolerance is often required. The RSI may squeak just beyond the levels mentioned, or the levels used may vary slightly by asset.

Final Word

Indicators are derivatives of price. Generally I do not use indicators very much, as I prefer just to look at the actual price chart. Indicators can only provide this same price information, but may present it visually in a way that is preferable, or summarize the data for easier use. ATR is one such summarizing tool. It quickly gives you a number–the daily average range–you can work with. If an asset has moved well beyond its daily average range, it’s possible something important is happening, but more often than not I find the trade should simple be skipped if it requires the asset move even further.

The RSI presents price information in a different way, which can be quite useful for confirming trends or catching trend reversals. The RSI has different tendencies during downtrends than it does during uptrends. Typically in a downtrend the RSI stays below 60, and in uptrend stays above 40. When you notice the RSI shift from one tendency to another, the trend has likely reversed.

Support

Support, or Support Level, is a price at which buyers tend to enter an asset (stock, currency, future, commodity, etc). If a stock, for example, is falling and buyers enter the stock repeatedly near a similar price, pushing it higher, this would be a support level.  In essence,  support is like a floor, supporting the price.  If the price drops below a support level, then support is broken. If the level isn’t broken, then support has been (re)confirmed or “support held.”

Resistance

Resistance, or Resistance Level, is a price at which sellers tend to enter an asset. If the S&P 500 futures, for example, are rising and sellers enter the futures repeatedly near a similar price, pushing it lower, this would be a resistance level.  Resistance is like a ceiling, resisting a rise in price.  If the price rises above a resistance level, then resistance is broken. If the level isn’t broken, then resistance has been (re)confirmed or “resistance held.”

Horizontal S&R

Most commonly discussed is horizontal support and resistance. A horizontal is a specific price, or a price area, which has supported or resisted price movement beyond it. Figure 1 shows an example of horizontal support and resistance.

Figure 1. EUR/USD 15 Minute Chart

 Source: Oanda – MetaTrader

The price moves higher and stops near 1.3039; sellers enter and this now becomes a resistance level. This is confirmed a couple days later. Support kicks in near the 1.2970 region on a couple occasions as well. Eventually the price rallies and breaks through the resistance area.

As a very basic guideline, when the price moves through resistance it is a positive sign as it shows the price is making headway higher. When the prices moves through support it is a negative as it shows the price is progressing lower. For more on breakouts see Improving the Odds When Trading Intra-Day Breakouts.

If an asset breaks though support or resistance, but then shortly after crosses back through it in the opposite direction, this is a warning sign the breakout was false, and is called a false breakout.

Diagonal S&R

A horizontal support or resistance level/area is static, but with a diagonal the level is dynamic and will change over time. The most common form of diagonal support or resistance is created by a trendline. A line is drawn between a price low and a higher price low, or a price high and a lower price high, and then the line is extended out to the right to create a trendline. In this case it is not a specific price that brings in buyers or sellers, but rather the dynamics of the trend.

Figure 2. AUD/USD Hourly Chart

 Source: Oanda – MetaTrader

If the diagonal is upward, the trend on that time frame is up. When the diagonal is down, the trend is down. It is important note though that there may different trends occurring on different time frames. As a general guideline, when the asset price bounces up off the trendline this is positive. It breaks below the trendline it is a warning signal of potentially further weakness. In a downtrend it is negative if the price can’t rally through the trendline, but if it does then it is warning the trend may turn up. For more on this topic, see Beginners Trading Concepts: Using Trendlines Effectively.

If an asset breaks though support or resistance, but then shortly after crosses back through it in the opposite direction, this is a warning sign the breakout was false, and is called a false breakout.

Historic

When traders refer to support or resistance, typically they are referring to historic price action to determine the level. This is especially true with horizontal S&R. We are looking to the past to see where price has struggled to rise above, or fall below, a certain threshold. These levels can help to determine entry or exit points or can used to create strategies. Diagonal S&R levels has a historic element, since we need at least two price lows or highs to create a trendline. The trendline though also has a predictive property, since it can be extended out to the right and therefore provides a rough estimate of where the trend may go in the future.

Predictive

Less common, but arguably more valuable, is predictive S&R. Trendlines are one from of predictive S&R, since the line extends out to the right and may support or resistance price movement in the future. Horizontal S&R may also be predictive as the price may continue to struggle to get through these levels in the future.

Traders also use other tools to determine where future support or resistance may develop. Such tools include Elliott Wave analysis, which uses wave patterns to determine where a price is within its overall trend. This information can then be used determine when the trend may reverse or continue on its course. Fibonacci retracements are another common tool. You may hear someone say “Expect support at the 50% retracement level.” While there may no horizontal or diagonal support at this level, many traders believe that markets correct and advance in Fibonacci numbers, and therefore use these numbers to predict where the market is likely to tucker out because it hits support or resistance.

These tools are beyond the scope of this article, but if you are interested, researching and understanding these tools and trading concepts can add another element to your trading.

Final World

Most traders think of support and resistance in terms of a set price, such as described in the Horizontal S&R section. There are other forms of S&R though, which include diagonal–such as trendlines–as well as predictive S&R which require the use of more complex tools. Use support and resistance to determine strength or weakness; if an asset is dropping through support levels, it is weak. If it is rising through resistance levels it is strong. If an asset breaks though support or resistance, but then shortly after crosses back through it in the opposite direction, this is a warning sign the breakout was false, and is called a false breakout. Before trading always have a game plan: Creating a Trading Plan

Correlation and Comparing Markets

Say you look at the USD/JPY price chart and see a potential trade, and also happen to notice one on the EUR/JPY chart as well. This is quite likely as these two forex pairs share a high correlation (at the time of this writing). A correlation is how closely the movement of one asset mimics another, with a high correlation of 90 to 100 meaning the markets move in a very similar fashion. A correlation of -90 to -100 means the markets move in the opposite direction to each other.

Based on my May  2, 2013 correlation data (updated regularly here: Forex Daily Stats) there are a number of forex pairs which have high correlations to each other.

On the shorter time frame, there are many strong correlations. Although, these short-term correlations are not very reliable, therefore the daily correlation provides a more accurate picture of which pairs are moving together and which are not.

Here are some of the strong correlations (90+) worth noting:

USD/CHF and USD/CAD at 90.9

Since these pairs are trading with a high correlation, one pair could be used a substitute for the other. For example, one may provide a slightly better opportunity than the other. If you see a trade in one, check the other as well. In the next section we’ll go over what to look for.

USD/JPY and EUR/JPY at 96.4

USD/JPY and GBP/JPY at 97.1

EUR/JPY and GBP/JPY at 94.3

The JPY is moving similarly against the USD, EUR and GBP. Therefore, if making a trade using a Yen (JPY) pair, look at the charts of other Yen pairs to see which is likely to provide you with the most successful trade based on which direction you want to go, long (call) or short (put).

Finding Strength

You’re checking your charts, looking for trades, and you see the following:

While you may not trade the daily time frame, and prefer shorter term trades, the massive uptrend grabs your attention and gets you thinking about taking a long position/buying calls in the USD/JPY.

But you now also know, based on the correlations, that the EUR/JPY and GBP/JPY are likely moving in a similar fashion. Now you have a choice. Which pair provides the higher probability for going long/buying calls?

Often picking the one which is showing relative strength is the best choice. Relative strength is simply the strongest of the possible choices, often determined by percentage increase, or the ability to continually generate higher highs and higher lows (while another of the choices may not be able to).

One way to easily compare the performance of assets is to use the Comparison setting on www.freestockcharts.com.

Overall the chart shows the EUR/JPY (purple) and USD/JPY (green) have been stronger than the GBP/JPY. But that may be changing as the GBP/JPY is approaching its recent highs, while the EUR/JPY and USD/JPY have fallen off their respective highs. If the GBP/JPY breaks to a new high before the other pairs do, it will be showing relative strength and therefore presents a relatively good trading opportunity compared to the other two on a short-time frame.

Overall though, since the USD/JPY and EUR/JPY have been stronger over the long term, if the weaker GBP/JPY breaks higher, it could be a good opportunity to go long the USD/JPY or EUR/JPY as the historical precedent here (which could change at any time) is that they will continue to outperform the GBP/JPY.

Finding Weakness

When you find a short or put trade you like, the same concepts apply except you’ll want to take the trade in the weakest of the choices.

Let’s use the same pairs, and decide which is weakest over a few day period.

Since the start of this week, the USD/JPY (green) has consistently underperformed the EUR/JPY and GBP/JPY showing that on this timeframe it is weaker. Notice also how the USD/JPY continually makes lower lows and lower highs, while the other two pairs haven’t (they’ve been stronger).

If you were looking take a short position in either the USD/JPY, EUR/JPY or GBP/JPY, based on this evidence the best choice would be the USD/JPY.

Final Word

Relative strength is a tool to be used in conjunction with your trade strategies. You may get a signal in one pair, but if you know that pair is highly correlated to others, check those pairs as well as they may present a better opportunity. Ideally you want to always be buying (calls) in the strongest assets and shorting or buying puts in the weakest ones. Remember though, what is weak or strong one day, may not be the next. Don’t simply trust historical tendencies, but rather monitor them in real time by comparing the movement of one asset to another. This is a more advanced technique, but can pay big dividends as it may keep you on the right side of strong and weak markets.

Triangles

Triangles come in three forms, descending, ascending and symmetric, but for trading purposes there’s no real difference except for how they look. All triangles are created by narrowing price action, so when you draw a border around it, it looks like a triangle.

Figure 1 shows a symmetric triangle, as the lines converge toward each other. With an ascending triangle, the upper line is horizontal, and the bottom line ascends toward it. With a descending triangle, the lower line is horizontal and the upper line descends toward it.

Figure 1. GBP/USD Daily Chart

Source: Oanada – MetaTrader

Go long or buy calls when the price passes above the upper border as it does in Figure 1. If the price would have broken below the lower border, you’d enter short or buy puts.

A daily chart is used in this example, the same concept can be applied to other time frames though, such as a 1, 5, 15 minute or hourly chart.

It is common (in my experience, it happens about 50%of the time) for the price to re-test the breakout area after the breakout. Notice how the price moves back toward the green breakout line–marked “Pullback” on the chart– after having broken out. Time options trades to accommodate for this. Alternatively, you can wait for this pullback to occur, and then enter a trade when the pullback “bounces” off the former triangle as it did in Figure 1.

Flags and Pennants

These formations get their name from a sharp price move, the pole, followed by either a small channel like correction which looks like a flag, or a small triangle which looks like a pennant. There’s little difference between the two patterns, except a slight difference in appearance. Pennants have converging price action similar to triangles discussed in the prior section. For trading purposes, the method for trading them is the same.

Figure 2 shows a pennant occurring in a move higher, and two flags occurring during a decline. Go long or buy calls when the price breaks higher out of a flag/pennant and the pole is up. Sell or buy puts when the price breaks below a flag/pennant and the pole is down.

Whether these formations occur on a daily chart, or a 5 minute chart, it is typically explosive. Trades generally do not last very long. Trade the breakout and look for another set-up. You simply want to take advantage of any remaining momentum left after the sharp move and a pause.  The flag/pennant portion of the formation is typically about 4 to 8 bars. Draw the pattern once 4 bars of price data are present (not including the pole). If you draw it before this, you are more likely to get false breakout signals.

Figure 2. GBP/USD 5 Minute Chart

Source: Oanda – MetaTrader

Things to Note

Spotting and drawing chart patterns will always be someone subjective. For example, if we were to compare trades, my breakout price may be a bit different than your breakout price just because there is a slight discrepancy in where we put our lines. Don’t be overly concerned about this. The real world rarely provides markets that move within exact confines. For this reason, I’ll usually wait till a currency moves a couple pips beyond my breakout point before making a trade. In the case of a stock, I’ll wait for the price to move a couple cents beyond the breakout point before making a binary option trade.

Final Word

Continuation patterns which include triangles, flags and pennants occur quite often on all time frames. Triangles require some patience to allow the pattern to form, and ultimately for the price to breakout. Pennants and flags generally occur quickly and are seen in fast moving markets, so you’ll need to be on the ball to catch the breakouts. Chart patterns are always somewhat subjective. You may see a pattern someone else doesn’t, or draw a pattern slightly different than they would. Before you commit money to trading these patterns take some time to practice spotting, drawing and trading them in a demo account.  You may also want to check out my recent article on Trading Trend Reversal Price Patterns.

Candlestick Charts

Candlesticks provide the open, high, low and close price data for an asset in a visual way. The difference between the open and close is “fat” and known as the candle or real body. The high and low are thin lines called the tails, shadows or wicks. Therefore, the candle gives you the total range of the day via the high and low, and the different between the open and the close is shown via real body.

Up days–where the close finishes above the open–are generally colored white or green. Down days–where the close finishes below the open–are generally colored black or red. This makes it easier to see small details in the price data, which could be missed looking at other forms of charts like the ones provided by 24 Option or TradeRush.

Figure 1. Up and Down Candlesticks

In figure 1 the first candle is “up” because the close is above the open and it is colored white. The second candle is “down” because the close is below the open and is colored black. Tails can be very long or very short and may not even be present at all. Similarly real bodies may be very small if the open and close are at similar levels, or very large.

Engulfing Pattern

This is the pattern I use most often and find most useful out of all candlestick patterns. This is by no means an exhaustive list; there are more than 25 candlestick patterns, but this is my favorite.

This pattern signals a sharp reversal, where aggressive selling shifts to aggressive buying or aggressive selling.

A bearish engulfing pattern occurs after the price has trended higher. “Bearish” is used to define downward movement or when someone believes the price will drop. A large upward real body is followed immediately by a large downward real body, which completely envelops or engulfs the upward candlestick.

Figure 2. NZD/USD Daily Chart – Bearish Engulfing Pattern

 Source: Oanda – MetaTrader

In the blue highlighted portion of figure 2 the red (down bar) completely engulfs the prior green (up) bar, marking a sudden and sharp shift in momentum after a move higher. This is bearish, and indicates more downside movement is likely to develop.

Enter short or buy put options once the down bar is complete. Place a stop-loss, if required, above the recent high.

A bullish engulfing pattern occurs after the price has trended lower. “Bullish” is used to define upward movement or when someone believes the price will rise. A large downward real body is followed immediate by a large upward real body, which completely envelops or engulfs the downward candlestick.

Figure 3. EUR/USD Daily Chart – Bullish Engulfing Pattern

Source: Oanda – MetaTrader

Figure 3 shows three bullish engulfing patterns. The first may have been unprofitable, the latter two were likely profitable as the price rose substantially following the pattern.

Enter long or buy calls once the up bar is complete. Place a stop-loss, if required, below the recent low.

The main problem with both bullish and bearish engulfing patterns is they occur quite frequently. It’s advisable to only trade these after a sustained or sharp move in one direction. Other technical analysis can be combined with engulfing patterns to isolate which patterns you should trade. For example, figure 3 shows a bullish engulfing occurring exactly at a long-term trendline (red line along bottom of chart). These two signals confirming each other were a strong indication the price was likely to head higher.

Final Word

There are many candlestick patterns for you to explore if you enjoy this type of “visual” trading style. Candlestick patterns are useful for both short and long-term trades as these patterns occur on one minute charts right up to weekly charts (or longer). Looking at a chart you’ll see lots of bearish and bullish engulfing patterns. You don’t want to trade all these patterns though. Be selective, and only trade a bearish engulfing pattern after the market has a strong run higher. The bearish engulfing pattern then signals a potential top and an end to the buying. Trade a bullish engulfing pattern after the market has fallen. The bullish pattern signals a shift in a momentum and a potential bottom. Use other technical analysis methods to validate engulfing patterns. For example, a bullish engulfing pattern that occurs at a support level is more likely to work out than if a bullish engulfing pattern occurs on its own.

More On Candlesticks:

• Price Action And Candlestick Analysis By Daft Gorilla
• Kostasze on taking trades after a reversal