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Easy Forex
Benefits of Short Selling
Short selling adds uniformity to trading by allowing traders the potential to profit in down markets. Even when a market is bullish there are always some currencies falling. However, extremely few currencies rise to any appreciable degree during a bear market. Whether they are liquidating in a bear market or profit-taking in a bull market, short sellers can always locate a chance to sell short for a profit.

When a pair rises, it often increases slowly due to incremental profit taking throughout the rise. However, when a pair declines, it tends to do so very rapidly and severely. Short sellers position themselves in order to take advantage of a drop in the price.

Price often rallies slowly, with gradually increasing volume providing the power to make the upside move. As price begins to reach a level, look for the volume to start to decrease. This is where short traders often attempt to execute the short trade, seeking for the reversal of trend to begin.

As the price reverses to the downside, it often does so with far more momentum and force than the up move. In the case of panic selling, volume will increase until the selling begins to subside. At that point, buyers will begin to move back in and short traders will see their profits.

Volume is probably the most useful indicator in determining trend strength and warning of potential reversals, as well as an indicator of whether traders are buying on weakness and supporting price or selling into strength and limiting price. Volume has a direct relationship to price. The more buyers the higher the price goes; the fewer buyers, the better the chance the price will lower.

There are six simple rules to learn to interpret price and volume movements:

    1. Increasing volume on increasing price points towards increasing buying pressure and a possible price advance.

    2. Increasing volume on decreasing price points to increasing selling pressure and a possible price decrease.

    3. Decreasing volume on increasing price shows easing buying pressure and a possible price plateau or reversal.

    4. Decreasing volume on decreasing price signifies a slowing of selling pressure and a possible price plateau or reversal.

    5. Higher-than-normal volume (a/k/a spikes) at price highs indicates selling into strength and a price ceiling.

    6. Higher than normal volume (a/k/a spikes) at price lows indicates buying on weakness and price support.


Tip: For the short seller looking to position near the top of a rally, a progressive decrease in volume as price continues to rise will be the first indicator of a potential trend reversal. It will happen before any other indicator begins to suggest an impending price reversal.
08, October 2006
The New Oil Boom
Searching for an investment opportunity that involves oil alternatives is a logical move, but recent studies have shown there are other oil opportunities that could prove to be highly profitable.
24, September 2006
US Congress Approves Oman Trade Pact
In a 63 to 31 vote, the United States Senate put its seal of approval on a free trade agreement with the Arabian Gulf state of Oman.
Easy Forex
Symbol Rate
GBP:CHF 2.007608
GBP:JPY 182.222212
GBP:USD 1.757198
NZD:USD 0.658397
EUR:CAD 1.503413
EUR:CHF 1.557680
EUR:GBP 0.775889
EUR:JPY 141.384148
EUR:USD 1.363390
AUD:JPY 80.415028
AUD:USD 0.775455
USD:CAD 1.102702
USD:CHF 1.142505
USD:JPY 103.700427
USD:SEK 7.185028

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