The closing price is more important than the opening price. Knowing this can give you a serious advantage over most other traders. I’m going to show you how to pull profits out of this truth like money being spit at you from a broken ATM machine!

Let us just dive right into this.

The closing price reflects the final consensus of value for the day. This is the price most people look at when they get off work or when they print their daily charts at the end of the day. It is especially important in the futures markets, because the settlement of trading accounts depends on it.

Professional traders trade throughout the day. Early in the day they take advantage of opening prices, selling high openings and buying low openings, and then unwinding those positions as the day goes on. Their normal mode of operations is to fade”trade against”market extremes and for the return to normalcy. When prices reach a new high and stall, professionals sell, nudging the market down. When prices stabilize after a fall, they buy, helping the market rally.

The waves of buying and selling by amateurs that hit the market at the opening usually subside as the day goes on. Why? Most traders on the west coast have a day job they have to go to so they log-on in the morning before work, put on a trade, then check it when they get home. Even traders on the east coast will put on a position at market open while at work and then check it at the end of the day. Near the closing time the market is dominated by professional traders.

Knowing this is a huge advantage! Why? Because it means that closing prices reflect the opinions of professionals. Look at any chart, and you will see how often the opening and closing ticks are at the opposite ends of a price bar. This is because amateurs and professionals tend to be on the opposite sides of trades. You want to trade with the professionals, not against them.

You should consider closing out your long position if the stock you are trading opens and then goes up near its day’s high but drops the rest of the day and closes near its day’s low. What this tells you is that professionals are fading against your position and so you need to get out.

Using a MACD Indicator as an integral part of your Forex trading activities can greatly increase the profitability of your trades.

For those new to MACD, this stands for Moving Average Convergence Divergence and it can tell you which trades you should avoid, which currencies you should trade short on and most importantly, which you should trade on for the best profits.

The foreign currency market is one which moves at a rapid pace. A trade which can do quite well for you at one moment can suddenly become a loss in the space of just a few hours.

Like any kind of investment, being successful in Forex trading means using tools which help you predict the movements of the market and well thought out trading strategies which lead to increased profitability. Using a MACD indicator shows you the trends in currency prices in real time as well as showing you longer term trends, so you will be able to decide exactly when the ideal time is to make your trades.

How Do MACD Indicators Work?

The MACD is made up of easy to understand moving average indicators. The signal line, or sometimes also called the water line shows an exponential moving average, or EMA, based on the closing prices for the previous 9 days trading.

The upward or downward trend of a given currency are based on two different EMAs. There is a 12 day EMA as well as a 26 day EMA; taken together, these figures give you a better picture of the movements of this currency.

The MACD line of the currency you`re watching may fall below or above your EMA signal line. The position of this line relative to the MACD line tells you whether the currency is on its way up or down.

Using A MACD Indicator in Forex Trades

Learning and understanding the movements of the MACD on your charts lets you make better informed trades; and in the Forex market, understanding trends is everything. You can look at one and four hour charts to give you a picture of which way the winds are blowing at the moment in the foreign currency exchange markets.

Once you`ve learned to watch both charts, you`ll be able to see at a glance which currencies are a good buy and which are dropping in value (or have peaked and are about to decline). These charts let you make your Forex trades based on solid, real time market information.

Watching the more recent MACD that shows you the hourly chart can be a great way to exercise caution when placing your trades. When the MACD indicator crosses above the water line you have the option of increasing your success rate by placing your forex trade long.

It is important to keep in mind that any investment comes with a degree of risk and there is no one tool or indicator which guarantees a successful trade every time. Using a MACD indicator along with other tools and a solid knowledge of the workings of the Forex market can make your Forex trades more profitable, however. Of course, even if you use the MACD indicator alone to help you make your trading decisions, it will still provide you with more consistently profitable trades than going it alone.

If you`d like to make the most of your Forex trades and minimize your risk, then a MACD indicator is an investment in your Forex trading success that is certainly worth your consideration.