PowerZone Trading Blog

Beginner's Guide to NinjaTrader Trading Software

Jean Folger - Monday, March 26, 2012
NinjaTrader, LLC was established in 2004 as a privately held company. Headquartered in Denver, Colorado, NinjaTrader, LLC develops high-performance trading software and market data services. NinjaTrader is its award winning trading platform developed for active traders interested in the stock, futures and forex markets. There is no fee for using NinjaTrader's standard features, which include advanced charting, market analytics, automated strategy development, backtesting and optimization, and trade simulation. Traders who wish to use NinjaTrader to execute live trades through a brokerage account may either purchase a lifetime license or lease the platform on a quarterly, semi-annual, or annual basis. NinjaTrader users may select from hundreds of international brokerage providers that support live trading with the NinjaTrader platform, including CQG, FXCM, GAIN Capital, FOREX.com, Interactive Brokers, MB Trading, Patsystems, PFGBEST.com, TD Ameritrade, Trading Technologies, Vision Financial Markets and Zen Fire. more

Beginner's Guide to MetaTrader 4

Jean Folger - Wednesday, February 08, 2012
MetaTrader 4 is a trading platform developed by MetaQuotes Software for online trading in forex, contract for differences (CFDs) and futures markets. MT4, as it is commonly known, can be downloaded at no charge directly from the MetaQuotes web site (metaquotes.net) or through dozens of online forex brokers. MT4 provides tools and resources that allow traders to analyze price, place and manage trades, and employ automated trading techniques. This tutorial will provide an introduction to many of MetaTrader 4's features, including chart settings, technical analysis tools and trade placements. more

Forex Broker Guide

Jean Folger - Monday, January 30, 2012
As of January 2012, foreign exchange market accounts for more than $4 trillion in average traded daily value, making it the largest financial market in the world. No central marketplace exists for the forex market; rather, traders must conduct their trading activities through forex brokers. An increasing number of forex brokers are available, and traders should take the time to research, evaluate and compare options to find the broker that best fits their needs. This guide will explore the various important considerations when choosing a broker in today's competitive forex marketplace. more

Using Trading Indicators Effectively

Jean Folger - Tuesday, January 17, 2012

Many investors and active traders use technical trading indicators to help identify high probability trade entry and exit points. Hundreds of indicators are available on most trading platforms, therefore, it is easy to use too many indicators or to use them inefficiently. This article will explain how to select multiple indicators, how to avoid information overload and how to optimize indicators to most effectively take advantage of these technical analysis tools.

Using Multiple Indicators
Types of Indicators

Technical indicators are mathematical calculations based on a trading instrument's past and current price and/or volume activity. Technical analysts use this information to evaluate historical performance and to predict future prices. Indicators do not specifically provide any buy and sell signals; a trader must interpret the signals to determine trade entry and exit points that conform to his or her own unique trading style. Several different types of indicators exist, including those that interpret trend, momentum, volatility, and volume. More

Back vs Forward Test: Test Twice (or more) Trade Once

Jean Folger - Tuesday, January 03, 2012

This article appears in the January, 2012 issue of Futures Magazine.

Traders eager to begin trading in a live market frequently make the mistake of relying exclusively on backtesting results to evaluate a system’s potential. Backtestingwhich refers to the testing of a trading idea on historical data to verify how a system would have performed during a particular time period, can produce misleading results. It’s important to have a more complete approach to trading system evaluation.

Because backtesting is only part of a proper evaluation process, focusing on backtesting results alone can lead a trader to believe he or she has a rock-star trading system when, in fact, the system may perform poorly in other phases of testing and, eventually, during live trading. Finding positive correlation between backtesting results and other phases of testing, including out-of-sample and forward performance testing, is vital in accurately assessing the viability of a trading system. more

The Psychology of Support and Resistance Zones

Jean Folger - Friday, October 21, 2011
Technical analysts use support and resistance to identify points on a chart where the probabilities favor a pause, or reversal, of a prevailing trend. Support occurs where a downtrend is expected to pause, due to a concentration of demand. Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply. The article "Interpreting Support and Resistance Zones" examines the basics of the technical analysis tool. This article will examine how support and resistance zones are largely shaped by human emotion and psychology. more

Interpreting Support and Resistance Zones

Jean Folger - Friday, October 21, 2011

Technical analysts use support and resistance zones to identify points on a chart where a pause, or the reversal of a prevailing trend, is likely to occur. Once an area of support or resistance has been identified, it provides valuable potential trade entry or exit points. This is because, as price reaches a point of support or resistance, it will do one of two things: bounce back away from the support of resistance level, or violate the price level and continue in its direction.

Most form of trades based on these indicators are based on the belief that support and resistance zones will not be broken. Whether price is halted by the support or resistance level, or breaks through, traders can "bet" on the direction and can quickly determine if they are correct. If price moves in the right direction, however, the move may be substantial. This article will examine key factors in measuring and interpreting support and resistance zones. more

Automated Trading Systems

Jean Folger - Thursday, August 11, 2011
Traders and investors can turn precise entry, exit and money management rules into automated trading systems that allow computers to execute and monitor the trades. One of the biggest attractions of strategy automation is that it can take some of the emotion out of trading since trades are automatically placed once certain criteria are met. This article will introduce readers to and explain some of the advantages and disadvantages, as well as the realities, of automated trading systems.

What Is An Automated Trading System?
Automated trading systems, also referred to as mechanical trading systems, algorithmic trading, automated trading or system trading, allow traders to establish specific rules for both trade entries and exits that, once programmed, can be automatically executed via a computer. The trade entry and exit rules can be based on simple conditions such as a moving average crossover, or can be complicated strategies that require a comprehensive understanding of the programming language specific to the user's trading platform, or the expertise of a qualified programmer. more

10 Ways to Avoid Losing Money in Forex

Jean Folger - Friday, June 10, 2011

The global forex market boasts over $4 trillion in average daily trading volume, making it the largest financial market in the world. Forex's popularity entices traders of all levels, from greenhorns just learning about the financial markets to well-seasoned professionals. Because it is so easy to trade forex - with round-the-clock sessions, access to significant leverage and relatively low costs - it is also very easy to lose money trading forex. This article will take a look at 10 ways that traders can avoid losing money in the competitive forex market. more

How to Interpret Technical Analysis Price Patterns: Triple Tops and Bottoms

Jean Folger - Monday, May 23, 2011
Price patterns are identifiable sequences of price bars that appear in technical analysis charts. These patterns can be used by technical analysts to examine past price movements and predict future ones for a particular trading instrument. Readers should already be familiar with trendlines, continuation price patterns and reversal price patterns. (If you aren't, check out Introduction to Technical Analysis Price Patterns). In this article, we will explore how to interpret the patterns once they have been identified, and examine the rare but powerful triple tops and bottoms patterns.

Duration
The duration of the price pattern is an important consideration when interpreting a pattern and forecasting future price movement. Price patterns can appear on any charting period, from a fast 144-tick chart, to 60-minute, daily, weekly or annual charts. The significance of a pattern, however, is often directly related to its size and depth. more