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Technical Analysis

Technical analysis is the study of market action, primarily through the use the movement of charts for the purpose of forecasting future price trends movement.
Technicians use technical indicators, chart patterns & technical strategies to forecast the next movement of the chart & compare it with the previous the run the trade in that base of comparison.

Types Of Charts

What are charts?

A chart or graph is a type of information graphic or graphic organizer that represents tabular numeric data and/or functions that it is a graph of the price movements of a given security over a given time period, sometimes along with volume data.
Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data.
Certain types of charts are more useful for presenting a given data set than others.
The charts are one of the main interests at Sigma.
Charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading.
Currency charts bring clearly a single period of time and that period could range from one minute to one month to several years.
Charts are the main tool that technical analysts use in order to plot data and predict prices.

According to the above chart,
Y axis represents prices
X axis represent period which can be customized within that range: M1, M5, M15, M30, H1, H4, D1, W1 and MN where M is minuets, H is hours, D is days, W is week and MN is months.
The fluctuations in the chart based on the demand & supply in the market & for that the technical analysis made to predict the next events by using different indicators.
Most of traders use daily charts & intraday date to forecast short-term price movements.
Most of investors use weekly & monthly charts to forecast long-term price movements.
Others might use combination between short-term & long-term charts.

What are support, resistance & trend?

Support: is the price level at which demand is strong enough to prevent the price from declining further.
Resistance: is the price level at which selling is strong enough to prevent the price from rising further.
- There is no support without resistance & there is no fixed support or fixed resistance in which each support can be a resistance next period by breaking prices below a support level, the broken support level can turn into resistance & Visa versa.
- It’s very difficult to predict the next support or next resistance

Trend: A trend line is a straight line that connects two or more price points and then extends into the future to act as line support or resistance. There are three cases
Uptrend: is a connection between two or more low prices in which the second price must be higher tan the first price (It acts as support line).
Downtrend: Is a connection between two or more high prices in which the second must be lower than the first price (It act as resistance line).

What are types of charts?
There are three types of charts in Sigma platform:
1) Bar Chart: It’s a style of chart used by some technical analysts where the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.

2) Line chart: It’s a style of charts created by connecting series of points together in a line.
It’s the most popular chart but has less use by the technical analytics.

This chart does not show what happened during the time unit selected by the viewer, only closing rates for such time intervals. The line chart is a simple tool for setting support and resistance levels.

3) Candlestick Chart: It’s the oldest types of charts developed in the 18th century by legendary Japanese rice trader Homma Munehisa, this style of charting is very popular due to the level of ease in reading and understanding the graphs.
Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.
Below are examples of candlesticks and a definition for each candlestick component:

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Introduction to Forex

The purpose of this overview is to introduce the forex market to you. As with many markets there are many derivative of the central market such as futures, options and forwards. In these tutorials we will be discussing the main market sometimes referred to as the Spot or Cash market.

The word "FOREX" is derived from the words Foreign Exchange and is the largest financial market in the world. Unlike many markets the FX market is open 24 hours per day and has an estimated $3.2 Trillion in turnover every day.

This tremendous turnover is more than the combined turnover of the main worlds' stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded) the FX market does not have a fixed exchange. It is primarily traded through banks, brokers, dealers, financial institutions and private individuals.

Trades are executed through phone and increasingly through the Internet.

It is only in the last few years that the smaller investor has been able to gain access to this market. Previously the large amounts of deposits required precluded the smaller investors. With the advent of the Internet and growing competition it is now easily within the reach of most investors.

Take Bonus

Due to increasing demand on our enhanced live accounts, SigmaForex.com is extending its live accounts bonus program till 31 December 2008

Don not waste your chance!

SigmaForex.com is pleased to have you as a loyal client, and we would like to thank you for your continued support and interest in our trading programs.

As appreciation and gratitude we are offering you a chance to join our bonus program and have up to 5% bonus credit on your deposit.
All current and new clients are eligible to participate in this program. Qualifying clients earn up to 5% bonus credit on all new deposits received and credited to the account before the close of business day 31 December 2008.

The bonus credit to the account is effective when the new deposit is credited and is subject to the client opening at least 100 lots and closing the trades on or before the close of business day 31 December 2008.

If you have any questions, please feel free to contact our customers care department at

SigmaForex.com, in its sole discretion, will determine if a client's deposit and trading activity entitles it to retain the bonus credit.

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Through Sigma indicators you can forecast the upcoming prices of the pairs & get a chance to win a $ 50 live Sigma account.

For participation please select the pair that you are predicting for it, then fill in the following form & don't foreget to write down your
forecasted price.

Sigma Forex encourage the clients to study and analyze Forex Market by giving them more promotion and more chances to begin trading at
Forex Market.

• First: Choose one pair from the platform.
• Second: Try to use Technical And Fundamental Analysis to predict Friday's closing price for this pair.
• Third: Write down in an email the following data:

1) Your Telephone Number
2) Your First and Last Name
3) The Choosen Pair
4) The Predicted Price
5) Your E-mail Address

• Fourth: Send this emails at If at any time you need assistance please click on the Live Chat button on the right menu and one of our customer support staff will help you through the process.

Min. Requirements

Sigma’s Software is supported and can operate on the following operation systems:

• Microsoft Windows 98.
• Microsoft Windows Me.
• Microsoft Windows 2000.
• Microsoft Windows XP.

Devices and software required:

• Sigma Trading software.
  
• Pentium 100 MHz, 16 Mb RAM, 2 GB HDD or higher.
• Microsoft Windows 98/Me/2000/XP.
• Internet access (modem or permanent connection).

• Download Sigma Platform Now

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Bollinger Bands

Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time. The indicator consists of three bands.
The middle line is the simple moving average, normally set as a period of 20 (number of bar/ticks in a given time period), and is used as a base to create upper/lower bands. The upper band is the middle band added to the given deviation multiplied by a given period moving average. The lower band is the middle band subtracted by the given deviation multiplied by a given period moving averages.
It used for determining whether current values of a data field are behaving normally or breaking out in a new direction also for identifying when trend reversals may occur.
Using Bollinger Bands
1) Trend – When price moves outside of the bands, it is believed that the current trend will continue.
2) Volatility- The band will expand/contract as the price movement becomes more volatile/or becomes bound into tight trading patterns, respectively.
3) Determine Oversold/Overbought Conditions – When price continues to hit upper band, the price is deemed overbought (may suggest sell). When price continues to hit lower band, the price is deemed oversold (may suggest buy).

• Price Bars

Price bars are a linear representation of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame.

As an example, we use one minute and five-minute bars for our system. Each bar has similar characteristics and tells the viewer several important pieces of information.

First, the highest point of the bar represents the highest price that was achieved during that timer period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represent s the closing price of the period.

..."try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://www.sigmaforex.com/sigma-indicators/parabolic-sar.html">Parabolic SAR

Parabolic Stop and Release was developed by J Welles Wilder. It is made up of a series of evolving points called Stop and Reverse (SAR) points. The position is reversed when the protective stop is triggered.

Parabolic SAR is more popular for setting stops than for establishing direction or trend.
Parabolic SAR is base on the following rule: to shift the levels of closing prices only in direction of opened position. If there is a long position opened before, it is possible to increase the level of closing prices, but not to decrease it. If the short position is opened, it is possible to decrease the level of closing prices. Once a Parabolic SAR is reached, the current position is exited and a new position in the opposite direction is taken.

Signal to buy is given when the upper SAR crosses the price line.
Signal to sell is give when the lower SAR crosses the price line.

Advantages Of Forex

• 24-hour trading, 5 days a week with non-stop access to global FOREX dealers.

• An enormous liquid market making it easy to trade most currencies.

• Volatile markets offering profit opportunities.

• Standard instruments for controlling risk exposure.

• The ability to profit in rising or falling markets.

• Leveraged trading with low margin requirements.

• Many options for zero commission trading.

• Easily accessible and attractive for the investors of different levels.

• Protect your revenues from foreign currency transactions by hedging against exposure to adverse rate movements.

• Trading Forex has much lower transaction costs than other investment products, a very important point for active traders.

• The market on which money are assets, have highest of all possible liquidities.

• It allows to avoid a problem of the instability, existing in futures and other share investments where during one time and for a determined price can be sold only the limited quantity of contracts.

• The FOREX market is so vast and has so many participants that no single entity, even a central bank, can control the market price for an extended period of time.

• Determination of the maximum loss by using stop loss.

• Trading using an easy & fast platform.

• All transactions are over the counter (OTC) that there is no specific location for the market.

• The Market affected only by the supply & demand.

• Real time charts.