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Trading Divergences of Forex Indicators

Trading Divergences of Forex Indicators

As you being to build experience and trade forex more frequently, it is common to engage with more advanced methods of trading. Top forex traders seek to eliminate the risk of trading as much as possible. This is done through extensive types of analysis which can reveal some key information as to the direction of a particular market. One such indication is known as a divergence. Noting such an event will act as a clear sign to an experienced trader that they should take some action to alter their market position.

Identifying Divergences Correctly

At their very core, a divergence is a movement in the price action away from the movement as shown by a technical indicator. This indicator can be any which you care to use in your technical market analysis. The important point is that when the indicator and the price action show conflicting signals, this is a divergence.

With forex trading practice, the aim is that traders can use such divergences to their advantage in reading the early trend of the market. Ultimately, this allows those who are experienced trading forex to adjust their position and increase their chances of success. Common indicators which are used in the identification of divergences are RSI, MACD, CCI, or Stochastic Oscillator, although virtually any technical indicator will work for the purpose. Your forex broker should facilitate trading through a platform such as Metatrader 4 where all of these indicators, and more, are readily available.

Examples of divergence could be when price action is showing a higher high or a lower low than your technical indicator. For experienced traders, with enough practice and time spent viewing various market trends, divergence can be quite easy to spot and help them in opening trade opportunities.

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Black Gold Blues: The Causes Behind Oil Stock Fluctuations

The Causes Behind Oil Stock Fluctuations

Commodities, such as oil, gold, tea, and such are physical substances and thus are more susceptible to the various effects of the natural and man-made world on them. Commodity traders all understand that they will experience more fluctuations on the prices of their holdings than they would if they held bonds and stocks, but many will argue that greater risk (fluctuation) equals greater rewards.

Looking at oil specifically, there are plenty of factors that impact the value of oil stocks in international exchanges and markets. These are what we will be looking at here. Before diving in, it’s prudent to keep in mind that commodity prices obey the simple cardinal rule of supply and demand – what we’re looking at here are basically some of the factors that influence the levels of either of these two essential qualities, in no particular order of importance.

OK. Let’s get into it.

Organization of Oil Producing Countries (OPEC)

Historically speaking, it cannot be denied that OPEC is the most substantial determinant of the prices of oil stocks in the world. The organization was created in order to introduce some measure of coordination in the global oil industry by bringing together different oil producing countries so that they can regulate oil supply levels, thereby avoiding catastrophic collapses or unsustainable gains.

The 14 member countries are Angola, Algeria, Equatorial Guinea, Ecuador, Gabon, Iraq, Iran, Libya, Kuwait, Nigeria, Qatar, the United Arab Emirates, Saudi Arabia, and Venezuela. Combined, they have control over a whopping 40% of the world’s oil supply.

In keeping with their policies, or global market conditions, they are able to come together and decide whether to increase or decrease the supply of oil on the world market, effectively influencing the price of oil stocks. With the decreased reliance on Middle Eastern oil by the USA in the wake of their recent advances in oil extraction, OPEC nations have less ability to cause international oil market catastrophes on their own.

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