Trading School | Sigma Forex

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.

Alligator

This technical indicator contains of three lines, which are Moving Averages with different parameters.
The blue line: (chap) is a line of balance to the significant time period, which is used for building of the chart (13 period smoothed moving averages, shifted on 8 bars to the future.)
The Red line: (teeth) is the line of balance for the significant time period, which is one step less (8 period smoothed moving average, shifted on 5 bars to the future);
The Green line (lips) is the line of balance for the significant time period, which is one more step less (5 period smoothed moving average, shifted on 3 bars to the future).
Interpretation: When the Jaw, the Teeth and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. As it sleeps, it gets hungrier and hungrier the longer it will sleep, the hungrier it will wake up. The first thing it does after it wakes up is to open its mouth and yawn.
Then the smell of food comes to its nostrils: flesh of a bull or flesh of a bear, and the Alligator starts to hunt it. Having eaten enough to feel quite full, the Alligator starts to lose the interest to the food/price (Balance Lines join together) this is the time to fix the profit.
You should close all positions and wait until Alligator awakes again.
The goals of this indicator are:
- to give integrated way for monitoring of the moving of the market;
- to represent a simple indicator to trade in the current trade only;
- to create a protective way to save the money during the moving of the market limitet with the price channel.