COUNTER-TREND TRADING...SAFE OR RISKY?....EURCAD LIVE EXAMPLEWhat is going on everybody! Hope you are having an amazing weekend so far! Just wanted to come on here and speak a little bit about one of my favorite trading subjects which is counter-trend trading! I personally do counter-trend trading as one of my trading strategies so I wanted to come on here and share a real life example of some things I look for and the mentality behind trading against the current trend of price
Hope you guys enjoy! Please boost and follow my page for more breakdowns! Appreciate you all!
Cheers!
Supply and Demand
How to Find Key Levels on Gold XAUUSD Chart Easily
In this short article, you will learn how to find powerful levels on a gold chart.
I will explain to you what is a key level, how to apply it in trading. We will discuss key levels and different time frames, valid and invalid key levels. I will share with you a lot of useful trading tips.
First, let's start with a definition of a key level.
Key level is a single important historic price level on the chart,
from where a significant price movement initiated.
Usually, key levels are based on the edges of candlestick wicks.
Look at Gold chart on a 4H time frame.
I underlined a key level. You can see how strong was a bullish reaction to that. The price tested that level, bounced up and formed a long wick.
Key levels that are above current prices will be called resistances .
We will assume that sellers are placing their selling orders there.
Above is the example of a key resistance on Gold on an hourly time frame.
The price tested 2479 level, dropped rapidly and formed a long wick.
From a key resistance level, a bearish movement is expected.
Key levels that are below current prices will be called supports.
We will assume that buyers are placing their buying orders there.
That is the example of a key support level on Gold chart on a daily.
From a key support level a bullish movement is expected.
Key levels that are lying close to each other will compose support and resistance clusters.
Look at 2 key support levels on Gold on a 4H time frame.
These 2 levels are lying very close to each other and compose a support cluster.
3 key resistance above will compose a resistance cluster on Gold on a daily time frame, because these levels lye close to each other.
With time, the market tends to break key levels.
If the price violated a key support level and closes below that, it turns into a resistance level.
Look at a breakout of key support on an hourly time frame on Gold chart.
After a candle close below that, the broken key level turned into resistance.
If the price violates a key resistance level and closes above that, it turns into a support level.
Above is a recently broken horizontal resistance on Gold on a 4H time frame. After a breakout, that key level turned into support.
Key levels tend to lose their significance with time.
Key level that is broken by the buyers and the sellers or vice versa loses the status of a key level.
The underlined level was a significant resistance in the past.
However, the market stopped respecting this level and it lost its importance.
Remember that you can find key levels on any time frame.
But key levels are not equal in their significance.
Key levels that are spotted on higher time frame will be stronger than key levels that are spotted on lower time frames.
On the chart on the left, I underlined key support and resistance levels on a daily time frame on Gold.
While on the right, I market key support and resistance levels on a 4H time frame.
Daily structures will be considered to be more significant structures.
Hence, the market reaction to such structures tend to be stronger.
In comparison to support and resistance areas,
key levels provide the safest points to look for a trading opportunity from.
Once you spotted a confirmation after a test of a key level,
simply set your stop loss below a support or above a resistance.
You will have a very good reward to risk ratio.
Key levels play a crucial role in technical analysis of Gold.
No matter whether you are day trader, scalper, swing trader or investor, key levels is the first thing that you should always start your analysis from.
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Options Blueprint Series [Basic]: H&S amid Surging Wheat Supply1. Introduction: Bearish Opportunity in Wheat amid Rising Supply
With the U.S. Grain Stocks Wheat (USGSW) report showing a notable rise in wheat stock levels, a bearish scenario is unfolding for wheat futures. This increase in supply, which could drive prices downward, aligns with a technical setup showing potential for a bearish breakout.
From a technical perspective, Wheat futures exhibit a Complex Head and Shoulders formation, signaling a possible breakdown as prices approach a critical support level. By combining the supply dynamics and technical formation, this article outlines a Bear Put Spread strategy, ideal for capitalizing on this bearish outlook with limited risk.
2. Fundamental Analysis: Rising Wheat Stock Levels
The most recent USGSW report has recorded wheat stock levels breaking upward to 1.98 billion bushels, up from the previous level of 1.779 billion bushels. This shift indicates a higher supply of wheat available in the market, which, in the absence of proportional demand, typically should result in price pressure to the downside.
Higher wheat stock levels often dampen demand sentiment, as markets anticipate reduced scarcity and increased availability. Such fundamentals offer a conducive backdrop for a bearish approach, supporting the downside breakout anticipated in the technical setup.
3. Technical Analysis: Complex Head and Shoulders Formation
The technical landscape for Wheat futures supports the bearish case, with a Complex Head and Shoulders pattern forming on the chart. This pattern is characterized by multiple peaks (heads) flanked by smaller peaks (shoulders), indicating a potential reversal from recent highs.
The critical neckline for this formation sits at 585'6. A break below this level would signal the likelihood of further downside movement. The target for this setup aligns with a UFO support zone at 552'4, which serves as an optimal price point to close the trade if the breakout confirms.
4. Trade Setup: Bear Put Spread on Wheat Futures (Ticker: ZWH2025)
To capitalize on the bearish setup, a Bear Put Spread is employed. This strategy allows for limited downside risk while still offering attractive profit potential. Here are the specifics:
o Contract Details for ZWH2025 (Wheat Futures):
Contract Size: 5,000 bushels
Tick Size: 1/4 of one cent (0.0025) per bushel (equivalent to $12.50 per tick)
Point value of 1 future unit: $50
Point value of 1 option unit: $50
Expiration: December 27, 2024
Margin Requirement: While the exact margin depends on the broker, the requirement typically ranges between $1,500 and $2,000 per futures contract. The margin for a Bear Put Spread in Wheat futures options is limited to the debit paid (15.2 points *$50 = $760).
o Options Strategy: Bear Put Spread
Buy the 585 put option at 25.84 and Sell the 550 put option at 10.64, both expiring on December 27, 2024.
The net debit paid is 25.84 – 10.64 = 15.2 points = $760
This spread provides a capped-risk opportunity for profiting from a downside move in Wheat futures.
o Risk Management:
While stop loss orders can be used, no stop loss is required given the limited-risk nature of the Bear Put Spread. The maximum potential loss is predefined by the cost of the spread.
5. Options Risk Profile Analysis
The Bear Put Spread strategy involves buying a put option at a higher strike price (585) and selling a put option at a lower strike price (550). This configuration:
Maximizes potential profit if Wheat futures drop to or below the 550 level by expiration.
Caps maximum loss at the initial cost of the spread, regardless of how the underlying Wheat futures move.
For this setup, the maximum potential profit is the difference between the strikes (585 - 550) minus the premium paid = 19.80 ($990). The maximum potential loss is the cost of the spread, making it a controlled-risk strategy suited to volatile or downward-trending markets.
6. Trade Execution Plan
Entry: Initiate the Bear Put Spread as Wheat futures break below the 585'6 neckline, confirming the downside breakout.
Target: Close the trade at 552'4, which aligns with a nearby UFO support zone, marking a logical exit point.
7. Risk Management Considerations
Effective risk management is essential in any options strategy, and the Bear Put Spread inherently offers several risk control advantages:
Limited Risk: By buying a put and selling a lower-strike put, the Bear Put Spread creates a defined risk position, capping potential losses at the initial premium paid for the spread.
No Stop Loss Required: With maximum risk predetermined by the cost of the spread, there's no need for a stop loss, which could otherwise be triggered prematurely in a volatile market.
Predefined Entry and Exit: This strategy's effectiveness hinges on precise entry (below the 585'6 neckline) and a clear target at 552'4. By maintaining these predefined parameters, the trade maximizes its alignment with both technical and fundamental setups.
This trade setup offers a balanced approach, allowing for downside exposure with risk under control, making it well-suited for periods of volatility or substantial downward moves.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. Also, some of the calculations and analytics used in this article have been derived using the QuikStrike® tool available on the CME Group website.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Learn Supply and Demand Zones in Gold Trading
In this article, I will teach you how to identify supply and demand zones on Gold chart easily.
You will learn what are supply and demand zones and how to apply it in Gold trading.
In order to identify supply and demand zones on Gold chart, the first thing that you should do is to execute a complete structure analysis.
You should identify horizontal structures: support and resistance levels/zones; vertical structures - trend lines.
That's how a complete support and resistance analysis should look.
On a daily time frame, I have underlined all significant horizontal and vertical structures.
First, let's look for demand zones.
A demand zone is a specific area on a price chart that combines multiple key structure supports: horizontal or vertical ones.
Buying orders of the market participants will be placed within that entire area.
Our first demand zone will be based on a Horizontal Support 1 and a Vertical Support 1. A trend line and a horizontal support compose an expanding area.
We will call such an area a demand zone, simply because we assume that buying volumes will accumulate within that entire zone. And lower the price will move inside that area, more buying orders will become active.
Our second demand zone will be based on Horizontal Support 3/4/5.
All these structures are lying very close to each other. Some supports even have common boundaries.
These supports will compose a demand zone , a wide horizontal area where buying orders will be placed.
Vertical Support 2 is lying very closely to our Demand Zone 2.
A horizontal demand zone and a trend line will compose and expanding demand zone.
Now let's discuss supply zones.
A supply zone is a specific area on a price chart that combines multiple key structure resistances: horizontal or vertical ones.
Selling orders of the market participants will be placed within that entire area.
There is one supply zone on our Gold price chart. It will be based on a Horizontal Resistance 1 and Vertical Resistance 1.
Both structures are lying very close to each other.
We will assume that selling orders will be placed throughout that entire area and the higher the price moves within that, the more selling orders will become active.
Remember that you can identify Supply and Demand Zones on Gold on any time frame.
A bullish movement and a bullish reaction will be expected from a Demand Zone.
While a bearish movement and a bearish reaction will be expected from a Supply Zone.
Because Supply and Demand Zones are relatively large areas, it is very important to analyze a price action within these zones before you place a trade.
Thank you for reading!
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THE TREND IS YOUR FRIEND...UNTIL THE END...EURUSD EXAMPLEHey everyone! Hope you are having an AMAZING weekend and beautiful Sunday so far! I just wanted to get on here and post a quick educational video for my Trading View community and share some nuggets I have learned over the last 14 years of being in the markets that hopefully can help you guys reach consistency and ultimately profitability.
The subject in this video is "THE TREND IS YOUR FRIEND..UNTIL THE END" hope you guys enjoy get a notepad and paper or iPhone out lol and take some notes! You won't want to miss this!
Cheers!
How To Have An Edge Over The Markets!Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst.
Today I want to share a basic trading plan that you can follow to quantify your trading edge.
📌Step 1:
First, start from the higher timeframes like Daily/Weekly to identify the current long-term trend. is it bullish, bearish or stuck inside a range?
If the price is sitting in the middle of nowhere, then it is a NO trade zone as price has 50% change to go either up or down. Thus no edge!
📚Wait for the price to approach the lower bound or upper bound. Then proceed to Step 2
📌Step 2:
No matter how strong a horizontal / non-horizontal support or resistance is, it can still be broken. Thus don't buy/sell blindly as price approaches a support/resistance.
Instead, zoom in to lower timeframes like H1 and M30 to look for setups.
🏹A basic approach would be to wait for a swing low to be broken downward around a resistance as a signal that the bears are taking over.
In parallel, wait for a swing high to be broken upward around a support for the bulls to take over.
This would be the confirmation to enter the trade.
⚙️Of course, your second edge would be through risk management by targeting at least double than your indented risk.
But that's a topic for another post 😉
Always follow your trading plan regarding entry, risk management, and trade management.
Hope you find the content of this post useful 🙏
All Strategies Are Good; If Managed Properly!
~Rich
MARKET STRUCTURE explained (THE ULTIMATE SIMPLIFIED GUIDE)(In this guide I will attempt for explain Market Structure in the most simplified and easy to understand terms)
WHAT IS MARKET STRUCTURE?
Market structure is the overall framework of a market that helps traders understand price movements and trends. Think of it as the skeleton of the market, showing how prices move over time and where key levels of support and resistance are located.
COMPONENTS OF MARKET STRUCTURE:
TRENDS:
Trends are the general direction in which the market is moving. There are three main types of trends:
- UPTREND: This is when the market is moving upwards. It is characterized by a series of higher highs (HH) and higher lows (HL). Imagine a staircase going up; each step represents a higher high and a higher low.
- HIGHER HIGH (HH): The highest point reached during a price movement before the price starts to fall again.
- HIGHER LOW (HL): The lowest point reached during a price movement before the price starts to rise again.
- DOWNTREND: This is when the market is moving downwards. It is characterized by a series of lower lows (LL) and lower highs (LH). Think of a staircase going down; each step represents a lower low and a lower high.
- LOWER LOW (LL): The lowest point reached during a price movement before the price starts to rise again.
-LOWER HIGH (LH): The highest point reached during a price movement before the price starts to fall again.
- SIDEWAYS/RANGE-BOUND: This is when the market is moving horizontally, neither up nor down. It is characterized by equal highs (EQH) and equal lows (EQL). Picture a flat road; the price moves back and forth within a certain range.
- EQUAL HIGH (EQH): The highest point reached during a price movement that is roughly the - EQUAL LOW (EQL): The lowest point reached during a price movement that is roughly the same as previous lows.
SUPPORT & RESISTANCE LEVELS:
- SUPPORT: A support level is a price point where the market tends to find buying interest, preventing the price from falling further. Think of it as a floor that supports the price.
- RESISTANCE: A resistance level is a price point where the market tends to find selling interest, preventing the price from rising further. Think of it as a ceiling that resists the price.
SWING POINTS:
Swing points are the peaks and troughs that form the structure of the market. They help in identifying the trend direction.
- SWING HIGH: A peak formed when the price reaches a high point and then starts to decline.
- SWING LOW: A trough formed when the price reaches a low point and then starts to rise.
ANALYZING MARKET STRUCTURE:
IDENTIFY THE TREND:
To identify the trend, look at the sequence of highs and lows on the price chart:
- UPTREND: Look for a series of higher highs and higher lows.
- DOWNTREND: Look for a series of lower lows and lower highs.
- SIDEWAYS: Look for equal highs and equal lows.
MARK KEY LEVELS:
Identify and mark significant support and resistance levels on the chart. These levels are where the price has previously reversed or paused.
OBSERVE PRICE ACTION:
Analyze how the price reacts at these key levels. Look for patterns such as:
- BREAKOUTS: When the price moves above a resistance level or below a support level.
- REVERSALS: When the price changes direction after reaching a support or resistance level.
- CONSOLIDATIONS: When the price moves within a narrow range, indicating indecision in the market.
RISK MANAGEMENT:
Always use stop-loss orders to manage risk. Place stop-loss orders:
- Below support levels in an uptrend.
- Above resistance levels in a downtrend.
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This is the basics of Market Structure, explained in the most simplified manner as possible. I hope this publication was simple and easy to understand and helps you understand Market structure better.
I will be doing more easy to understand publications like this within the upcoming days so stay tune...
==================================================================================
HAPPY TRADING :)
Trend Based Fib Extension (PRO HACK) SUPPORT & RESISTANCE is one of the most important key elements in trading.
Without knowing the key Support & Resistance levels, you will never have a true understanding of where the market could go to or reverse from.
One very important factor worth knowing is the markets overall, trend Support & Resistance levels. While there are a lot of different methods in finding these levels, like pivot points, previous day high and low, or monthly or yearly and so on. One of the most promising, tried and tested ways is to use a Fibonacci Tool.
Now YES, there are MANY Fibonacci Tools to choose from and use but if you need to know the fib levels for a trend, use the TREND BASED FIB EXTENSION.
Along with using the TREND BASED FIB EXTENSION, you need to know the correct time frame to actually plot this tool on.
There is no right or wrong time frame nor is there no right or wrong way in plotting this tool, BUT we need to know and understand the overall picture of the market as a whole and if you are thinking about the market as a whole, we need to use the correct time frame to show us that.
So we turn to the 12M TIME FRAME!
The 12M Time Frame is what's going to show us the OVERALL TREND of the asset we are looking at, from the start right to current time.
Now keep in mind that this can work on EVERY SINGLE ASSET.
We use the 12M time frame because we need to plot the trend base fib extension to show us our MAJOR FIBONACCI SUPPORT AND RESISTANCE LEVELS. These levels are for the OVERALL TREND OF THE GIVEN ASSET. By plotting it this way we actually have an idea as to where the market is going LONG TERM.
So head over to whichever asset you are tracking, choose the 12M time frame and make your chart large enough to fit the screen.
In order to plot this tool, you need to know your highs and lows because this tool is used from your lowest point to the first swing high and down to your next swing low, once those 3 are connected the tool will automatically plot your levels.
One easy way to find your swing highs and lows is to use a ZIGZAG with a length of either 1 or 2. That setting will give you the most accurate points.
In the drawing tool box you can you the TREND BASED FIB EXTENSION tool, once you select it and you know where your 3 points are then you plot it accordingly, you will start from your Lowest, to your Swing High and then down to your Swing Low.
To get accurate plots, use the data window and get the exact low and high prices and enter the accordingly into the fib tool settings (coordinates tab).
Adjust your settings with your style preferences, the fib levels that you want to see on your chart, and once done, lock the tool in place and BOOM, YOU NOW HAVE YOUR MAJOR ALL TIME SUPPORT AND RESISTANCE LEVELS PLOTTED ON YOUR CHART.
Now you have a full understanding on the market overall trend by knowing where the major support and resistance levels are.
You can go back to your lower time frame in which you trade from and now you will have a much clearer understanding as to where the market might stop or reverse from, according to the bigger picture.
With that in place, you can use other methods of confluence to get entries, set stops, find direction, you can even go down to lower time frames to use a Fibonacci retracement tool or the trend based fib extension to get sniper entries and set targets.
The key takeaway from this is for you to know the overall direction of the market you are trading and to know where potential areas of support and resistances are which leads to the major reversals in the market.
I do hope this publication helps you in some way or another, even if it helped just 1 person out of many, I will be glad.
HAPPY TRADING :)
==if you have any questions then please drop a comment, thanks==
Unlock the Market's Hidden Rollercoaster: How to Ride the WavesXau/Usd Review with my trading personality
As a Whimsical Rollercoaster Enthusiast, your trading style is likely driven by the excitement of quick market movements and the thrill of capturing early trades. You're probably someone who thrives on dynamic entries, enjoys the fast-paced action, and may have a more intuitive approach to the market. Let’s blend that with risk management to balance your adventurous spirit while still keeping a solid trading plan.
Technical Review for a Whimsical Rollercoaster Trader:
1. Key Levels to Watch:
2,595 (Resistance) and 2,580 (Support) are your playgrounds right now. You’re drawn to the thrill of what might happen at these zones.
If price pushes toward 2,595, you might feel an urge to jump in, expecting an immediate reaction. However, I encourage you to:
Embrace your adventurous nature but temper it with tactical precision.
Let the level hit and then wait for a quick confirmation (like a wick rejection or a mini pullback). This gives you both the excitement of early entry and higher probability without losing your edge.
Scenario: Price pushes toward 2,595. Here, your Risk Entry could be triggered:
Risk-Entry Plan:
Enter short at the first rejection of 2,595.
Set a tight stop-loss just above the liquidity zone (2,600), respecting your love for quick moves but protecting from being shaken out too soon.
Target the 2,580 area first, knowing the ride might be wild but worth it.
Why it suits you: It’s a quick decision, satisfying your need for speed, while the tight stop-loss aligns with managing risk. You get that thrill, but within guardrails.
2. Confirmation Entry – Building Momentum:
Confirmation Entries might feel a bit “slow” to you, but they can help ensure you stay in the game longer. Consider them when you want to ride bigger moves, not just quick scalp trades.
Scenario: If price breaks through 2,595, wait for a retest to confirm this zone is now support. Here’s where you bring in your whimsical nature: instead of waiting too long, spot a smaller timeframe pattern, like a bullish engulfing candle or a rejection wick, and go long.
Confirmation-Entry Plan:
Enter long at the retest of 2,595 after a clear rejection pattern. Think of it as waiting for the next loop on the rollercoaster — the bigger move is coming, and you want to be on board for it.
Set a slightly wider stop-loss, maybe under 2,580, to allow the trade to develop without getting knocked out early.
Aim for the next higher liquidity zones, like 2,600 or 2,615.
Why it suits you: This method still lets you catch the excitement of a momentum breakout, but the confirmation gives you more confidence. You still get the rush but with less risk of getting thrown out before the big move.
3. Patterns Within Patterns – Your Playground:
As a Whimsical Rollercoaster Enthusiast, you probably love when the market shows intricate patterns — they're like hidden rollercoaster tracks, revealing sudden twists and turns.
Scenario: If price breaks above 2,595, zoom into lower time frames and look for miniature patterns within the broader trend. You might find a bull flag within a larger ascending channel. Entering on these small corrective patterns can satisfy your need for fast-paced decision-making while riding the overall trend.
Plan:
Use these smaller patterns for quick entries. Set your stops just outside the pattern, and take profits quickly as the price breaks out.
Think of it as riding the small waves, but always looking for the bigger momentum move to follow.
Why it suits you: You’re jumping in on short-term opportunities while always keeping an eye on the next big move. This keeps you engaged and allows you to take action when you feel that burst of adrenaline without losing sight of the bigger picture.
4. Managing Whimsical Risk:
Stop-loss flexibility: As someone who enjoys spontaneity, a tight stop might feel restrictive but necessary. Here’s the compromise:
Set initial stops tight (like just above 2,595 if shorting), but allow yourself room to evolve the trade based on market action. If the trade moves in your favor, quickly move the stop to breakeven.
Mental Resilience: Losses will happen, but you need that mental discipline to jump back in without chasing every tick. Treat each trade like a separate rollercoaster ride — whether it’s a good or bad one, there’s always another one coming.
Use your intuition and excitement to recognize evolving setups. But keep a few rules in place to avoid the pitfalls of impulsivity (e.g., no more than 3 trades per day on a single idea to avoid over-trading).
5. Incorporating the Rule of Three:
For the rollercoaster trader, the Rule of Three is your ultimate guide. This rule asks you to identify at least three confirming factors before entering a trade:
Scenario: Price reaches 2,595:
You see a rejection (touch #1).
The lower time frame shows consolidation or a mini bear flag (touch #2).
Momentum begins to fade (touch #3).
Action: This triple confirmation allows you to short confidently, knowing you have the right mix of signals to back your bold entry.
Why it suits you: The Rule of Three still gives you the excitement of quickly entering trades but ensures they are high-probability setups. It prevents you from overtrading out of sheer excitement while still letting you capture those thrilling moves.
Summary Action Plan for a Whimsical Rollercoaster Trader:
Risk Entry: When you feel the market is ready to react at key levels (like 2,595), dive in! But do it smartly — use tight stop-losses and a quick decision-making process. Think of it as jumping onto the coaster right before it starts moving.
Confirmation Entry: Use this when you're looking for a bigger, smoother ride. Wait for the breakout-retest combo, then get in for the larger trend move. Stay patient here; it’s worth the wait.
Patterns within Patterns: Zoom into the mini rollercoasters inside the bigger structure. Catch the small waves but keep your eyes on the longer ride.
Trinity Rule : Ensure three factors align before entering. This rule keeps you disciplined while still embracing your whimsical nature.
Bots vs Brains; The hidden edge of Human touch in tradingBots vs Brains; The hidden edge of Human touch in trading
A random Google search on the internet about forex trading robots reveals thousands of forex robots exist. With all these trading robots promising handsome returns in the shortest time, the forex trading industry should be minting new millionaires daily. However, statistics from forex brokers paint a sad picture—a failure rate as high as 90%.
In 2024, you can’t go a day without reading or watching a reel about Artificial Intelligence (AI). The high failure rate, especially in the world of finance, is baffling given all these technological advancements. This led me to take a deeper look into the world of automated forex trading, also known as bots or Expert Advisors (EA).
Overview of Automated Trading
A trading bot is software developed to analyze financial markets and execute trades on your behalf. Semi-automatic trading bots analyze the markets but do not execute trades.
Large financial institutions, such as banks and hedge funds, use specialized algorithmic trading bots. These institutions bring together mathematicians, programmers, and economists to develop sophisticated algorithms. Needless to say, it requires significant financial resources and time to develop these bots. Development can take at least six months, followed by an additional six months of testing. The high cost makes these bots inaccessible to retail traders.
Retail traders, however, are not left out. There are individuals and software platforms where you can develop your own trading bot. These bots are often marketed as being developed by experts with deep market knowledge—or so I thought. Trading bots follow specific rules based on the developer’s strategy, which ideally should mirror the success of an experienced trader. Therefore, if a trader is profitable, the bot should at least mimic their results, if not surpass them—more on this later.
Before launching these bots, developers conduct extensive backtesting and refinement to optimize them for ideal market conditions.
Advantages of Automated Trading
Developers of trading bots often market them as superior to manual trading. They emphasize the need to eliminate human error and emotions, highlight faster execution speeds, and promote the ability to trade 24 hours a day as long as markets are open. Additionally, bots can save traders significant time that would otherwise be spent analyzing markets and executing trades. On the surface, purchasing trading robots seems like a smart decision.
Limitations of Automated Trading
Bots rely on historical data, assuming the future will mirror the past. However, global events are unpredictable. Take, for example, the 2008 financial crisis or the sudden shock of COVID-19—events like these can completely throw off a bot’s programming. Robots struggle to adjust to such volatility unless they’re frequently updated with new data, which many are not. This is a major limitation, especially when you consider how quickly the forex market moves with trillions of dollars in circulation.
Earlier, I mentioned that robots are supposedly developed by profitable traders. But to my surprise, I found that with little trading experience, anyone can create a robot on platforms like EA Trading Academy. All it takes is registering, selecting a few parameters, running a back test, and then selling it. It’s really that simple. The ease with which these bots can be built raises questions about their reliability, especially when they aren’t crafted by experts. I even plan to build one myself, and I’ll give you feedback in a year’s time.
Why I Think Robots Don’t Work
The main issue is that there’s a shortage of consistently profitable traders. A trader who dedicates the time and effort to developing a reliable robot is likely to charge a hefty fee. The likelihood that they would focus solely on developing robots instead of trading themselves is very slim. This makes me wonder—who is actually building all these robots? If most profitable traders are busy trading, it raises concerns about the experience level and expertise of those creating the majority of these products.
Secondly, trading styles vary significantly from trader to trader. Purchasing a robot based solely on profitability or low cost is unwise. In addition to checking a developer’s track record, you should assess whether their risk tolerance and trading approach align with yours. For instance, buying a scalping robot when you prefer swing trading could be a costly mismatch.
Finally, purchasing robots without a solid understanding of the markets is irresponsible, and the disasters that follow are often justified. Many experienced traders who have tested and reviewed bots on YouTube agree that 99% of them are either scams or simply don’t work. I encourage you to watch some of these reviews to see for yourself.
The Future: Automation vs. Human Touch
Mastery in trading comes from a combination of skill, time, and experience. While bots claim to save you the time spent on analysis, it's precisely that time—the deep learning and constant market study—that ultimately leads to true mastery. There are no shortcuts. Bots may be designed to minimize human error, and in theory, they do. But the reality is that even the most sophisticated bots are not infallible. They can and often do fail, sometimes catastrophically. When accounts are blown—whether by a human or a bot—it’s still the trader who bears the loss and the disappointment. So, while bots may reduce human error, they can never eliminate the human responsibility for those errors.
Trading the financial markets is a craft like any other. Automation, AI, and machine learning can be valuable tools in your journey to becoming a skilled trader. They cannot replace the critical thinking and adaptability that come with human experience. AI can assist by analyzing large sets of data, flagging trends, or executing trades faster than a human could—but the nuanced understanding of market sentiment, global events, and individual risk tolerance is something only a human can develop through dedication and practice. Automation might help you refine your craft, but it's the time spent learning, making mistakes, and adapting that leads to true mastery. As promising as they are, AI and bots are tools—not substitutes—for the expertise that comes from being deeply engaged in the markets.
Others before you have achieved mastery, and with enough commitment, you can too.
Trend lines - how to build them and how to use them?Before we dive into the world of trend lines, I recommend familiarizing yourself with the support and resistance zone
Here we go:
Trend lines are one of the most universal tools for trading in any market, used in intraday, swing and position trading strategies. Properly drawn on charts, they help to predict the direction of price movement and identify trend reversals.
In addition, trend lines help you to accurately determine the optimal entry and exit points, as well as set a stop loss.
It is recommended not to rely on trend lines alone, but to integrate them with other methods of technical analysis, expanding your trading arsenal.
Often many traders draw too many lines, it is uninformative and useless
How to place trend lines on a chart?
An uptrend is a combination of at least two pullbacks
Similar in a downtrend:
Instructions for markings:
Find at least two points on the chart
Connect them with a line
But, let's remember the Axiom:
1. Randomness
2. Coincidence.
3. Regularity
Until a trendline is pushed back a third time - it is considered unconfirmed...
Once the third bounce has occurred, the line can be considered valid, but does not guarantee that it will necessarily bounce the fourth time!
Like all patterns in the market, trend patterns can be drawn on any timeframe, also - they are more effective on older ones (as well as all others)
How to use trend lines in your trading?
Frequent trades from a trend line are rebound or breakout trades
Example:
Trendline confirmed (bounced three times) - on the fourth approach we can pay attention - what happens next? Price will either bounce from our trendline again or there will be a breakout
Next example:
How can we determine whether there will be a breakout or a bounce? As I said before, you need to take into account the context: indicators, price action, nearby levels and so on (it all depends on your psychology)
How do trend lines fit together?
Support and resistance levels are areas on a chart that indicate potential pressure (on a side)
The same principle applies to trend lines. The only difference is that trend lines are sloped rather than horizontal.
How to properly label/draw trend lines?
Which trend lines are important and which ones should be ignored?
Focus only on the major pivot points
Connect at least two major pivot points.
Adjust the slope of the line to get the most amount of price touching the line, whether it is the shadows of candles or their bodies.
Important clarification - trend lines represent a support zone, not specific levels.
How can you use trend lines?
The trend is our friend. Where the trend goes, so goes we. Trading against the trend is foolish. If you do decide to do it, it must be justified!
Trend lines are the direction of the current market.
Also the trend line itself can be divided into two positions:
If the trend becomes flatter, it means that the market is moving into a state of consolidation
If the trend is becoming steeper, it means that the trend is getting stronger (or perhaps it is reaching its climax and is approaching its final stage).
Trend Lines Entry Point:
Like all other patterns in technical analysis or price action - trend lines can help you find a more favorable entry point in terms of risk-to-reward ratio
How to use a trend line to identify a market reversal?
Chances are you have encountered this before. There is a trend line breakout, you are already expecting a trend reversal, but the market continues its original movement
Like all indicators/patterns - not a panacea. Each strategy has its own risks, just when we add other osnovnopologologayuschih signs to one strategy, the chance of risking a loss - decreases!
Technique for determining a trend reversal:
Wait for a trend breakout
Wait for a lower low/maximum to form.
If the price breaks the previous minimum/maximum, most likely the trend will go in the direction of the breakdown...
This is how you tradethis is not a signal but I'm showing you how I look and treat the chart...
I will publish more tut in the future hope you get benefit of it...
dump and pump template after Non farm payrolls. level trading is a great idea for trading when you master it . enabling you to target specific parabolical movements where the market only moves in one direction . No stress trading.
Learn 7 Types of Liquidity Zones in Trading
In the today's article, we will discuss 7 main types of liquidity zones every trader must know.
Just a quick reminder that a liquidity zone is a specific area on a price chart where a huge amount of trading orders concentrate.
Read carefully, because your ability to recognize and distinguish them is essential for profitable trading.
1. Fibonacci Zones
The zones based on Fibonacci levels can concentrate the market liquidity.
Classic Fibonacci retracement levels: 0,382; 0,5; 0,618; 0.786
and Fibonacci Extension levels: 1,272; 1,414; 1,618 attract market participants and the liquidity.
Above, you can see an example of a liquidity zone based on 0,618 retracement level.
The reaction of the price to that Fib.level clearly indicate the concentration of liquidity around that.
Also, there are specific areas on a price chart where Fibonacci levels of different impulse legs will match.
Such zones will be called Fibonacci confluence zones.
Fibonacci confluence zones will be more significant Fibonacci based liquidity zones.
Above, is the example of a confluence zone that is based on 0,618 and 0,5 retracement levels of 2 impulses.
The underlined area is a perfect example of a significant liquidity zone that serves as the magnet for the price.
2. Psychological Zones
Psychological zones, based on psychological price levels and round numbers , quite often concentrate the market liquidity.
Look at a psychological level on WTI Crude Oil. 80.0 level composes a significant liquidity zones that proved its significance by multiple tests and strong bullish and bearish reactions to that.
3. Volume Based Zones
The analysis of market volumes with different technical indicators can show the liquidity zones where high trading volumes concentrate.
One of such indicators is Volume Profile.
On the right side, Volume Profile indicate the concentration of trading volumes on different price levels.
Volume spikes will show us the liquidity zones.
4. Historic Zones
Historic liquidity zones will be the areas on a price chart based on historically significant price levels.
Market participants pay close attention to the price levels that were respected by the market in the past. For that reason, such levels attract the market liquidity.
Above, you can see a historically significant price level on Silver.
It will compose an important liquidity zone.
5. Trend Lined Based Zones
Quite often, historically significant falling or rising trend lines can compose the liquidity zones.
Above is the example of an important rising trend line on GBPJPY pair.
Because of its historical significance, it will attract the market liquidity.
Trend lined based liquidity zone will be also called a floating liquidity area because it moves with time.
6. Technical Indicators Based Zones
Popular technical indicators may attract the market liquidity.
For example, universally applied Moving Average can concentrate huge trading volumes.
In the example above, a floating area around a commonly applied Simple Moving Average with 50 length, acts as a significant liquidity zone on EURJPY.
7. Confluence Zones
Confluence zones are the liquidity zones based on a confluence of liquidity zones of different types.
For example, a match between historic zones, Fibonacci zones and volume based zones.
Such liquidity zones are considered to be the most significant.
Look at the underlined liquidity zone on US100 index.
It is based on a historical price action, psychological level 17000, significant volume concentration indicated by volume indicator and 618 Fibonacci retracement.
Always remember a simple rule: the more different liquidity zone types match within a single area, the more significant is the confluence zone.
Your ability to recognize the significant liquidity zones is essential for predicting the market movements and recognition of important reversal areas.
Liquidity zones are the integral element of various trading strategies. Its identification and recognition is a core stone of technical analysis.
Study that with care and learn by heart all the liquidity types that we discussed today.
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Two Roads to Profit. A Comparison of ICT/SMC and Advanced VSAHello traders and investors!
When we start engaging in trading and investing, we get acquainted with various methods of forecasting price movements. Gradually, if we have enough persistence, strength, and patience, we choose our own path to profitable trades. Among the most popular approaches, we can highlight the use of various oscillators and channels, Dow Theory, Elliott Waves, Fibonacci levels, supply and demand, Volume Spread Analysis (VSA), market auction theory, and the Inner Circle Trader/Smart Money Concept (ICT/SMC). Many traders combine elements from different approaches into their trading system.
I personally prefer a concept I call Advanced VSA. It’s a comprehensive set of tools that combines ideas from VSA, Dow Theory, and Supply and Demand analysis. The name "Advanced VSA" perfectly captures the essence of the method, as it is fundamentally based on analyzing volume and price spread.
Recently, the ICT/SMC concept has been gaining more and more popularity. Today, I want to explore the similarities and differences between ICT/SMC and Advanced VSA. If there are any inaccuracies in my explanation of ICT/SMC basics, feel free to correct me in the comments. Perhaps after reading this article, you’ll be able to decide which approach resonates more with you and which one you believe will help you in your trading. I hope this will be helpful. Let’s dive in!
Basic Differences
Before diving into the technical details, let's first clarify the key differences between these concepts.
Who Controls Price Movements
The ICT/SMC concept assumes that price movements are controlled by large players, such as market makers, who direct prices in the desired direction. This is similar to a model where one "center of power" determines the market's direction.
In contrast, Advanced VSA is based on the idea that two forces influence price — the Buyer and the Seller. All analysis revolves around the interaction between these two sides, creating a more balanced model where both forces are equally important.
Traded Volume
The ICT/SMC concept does not use traded volume as a part of its analysis.
In Advanced VSA, volume is an important factor. It is considered an integral part of the data that helps to understand market processes and the actions of participants.
Now let’s move on to a detailed comparison of the elements of these concepts.
What They Have in Common
Both concepts teach traders to identify price ranges on the chart where a large player (Market Maker in ICT/SMC) or a Buyer (in Advanced VSA) shows interest in buying, and ranges where the Market Maker or Seller is interested in selling. When the price returns to these ranges, traders can execute buys or sells. We can call these price ranges contextual areas for buying and selling.
Neither concept relies on technical indicators. Instead, they focus on the following key terms for identifying the trade direction and the trade entry point:
Trend
Trend break/half-trend
Trend confirmation
Accumulation/Distribution/Sideways movement/Flat
Contextual areas for buying and selling
The first four terms help determine the direction of the trade, while the fifth helps identify the entry point and the likely target of the trade.
Both methods suggest using higher timeframes to find contextual areas and lower timeframes to find entry points within those areas.
What Are the Differences
The differences between the concepts lie in the interpretation of key terms. For the first four terms (trend, trend break, trend confirmation, accumulation/distribution/Sideways movement), the distinctions are minor and relate mostly to specific interpretations. However, the main differences arise in the rules for identifying contextual areas of interest (buyer, seller, or market maker). Let's look at these differences in more detail.
Difference 1: Use of Volume
In ICT/SMC, contextual areas of interest are determined solely based on price action and candlestick patterns, without taking traded volume into account.
In contrast, Advanced VSA sees volume as an integral part of the analysis. contextual areas of interest are identified by both traded volume and price behavior (candlestick patterns). If there was interest from a buyer, seller in a specific price range, leading to a price change, it's logical to assume that the volume traded in that range should be higher than in previous periods over a similar timeframe.
To illustrate the importance of using all available data for analysis, consider an analogy with choosing the best time for a seaside vacation. If the decision is based only on water and air temperature, while ignoring factors like wind or rainfall, the choice may be misguided. For example, choosing April for its comfortable temperature might result in encountering constant rain and high waves.
Thus, in Advanced VSA, volume plays a crucial role, whereas it is absent in ICT/SMC.
Difference 2: Types of Contextual Areas of Interest
In ICT/SMC, the following types of contextual areas of interest are used: order block, breaker, mitigation block, and rejection block. All of these areas are formed by a specific arrangement of candles on the chart.
In contrast, Advanced VSA operates with a different set of contextual areas of interest: effort, zone, and range (sideways movement). Effort refers to a single candle or bar that indicates significant market activity. Zone is formed by a sequence of candles or bars, taking into account their traded volumes. Range (sideways movement) is defined by a series of consecutive candles/bars where price fluctuates within a limited range, interacting alternately with the upper and lower boundaries of the range. It's only possible to identify which party (buyer, seller, or market maker) controls the range after the price breaks out and confirms the move.
If the volumes align with Advanced VSA's criteria, order blocks and mitigation blocks in ICT/SMC can be considered as zones in Advanced VSA. So, not all order blocks and mitigation blocks will be considered zones in Advanced VSA. The breaker will be discussed separately, and there is no equivalent to the rejection block in Advanced VSA.
Difference 3. Price Attraction Points
In ICT/SMC, concepts such as fair value gap, liquidity void, and liquidity are used to describe price attraction points.
In Advanced VSA, the terms fair value gap and liquidity void are not utilized. Most of the time, these ICT/SMC elements correspond to price interest points in Advanced VSA, such as effort. The term liquidity has the same meaning.
Difference 4. Importance of Levels
In Advanced VSA, levels play an important role in identifying trade opportunities. To understand the significance of levels, let’s first recall the concepts of trend and range (sideways movement). In both ICT/SMC and Advanced VSA, a trend is broken down into components, often referred to as impulses or expansion moves. A range, on the other hand, is characterized by its boundaries and the vectors of price movement between those boundaries.
In Advanced VSA, important trading signals include the defense of a broken level or a price retracement to a level followed by its defense.
In Advanced VSA, the defense of a broken level or the cancellation of a breakout (where the price returns back behind the broken level) followed by a defense of that level is considered a signal for identifying trades. This method helps traders spot potential entry points where either buyers or sellers to protect a key price level, giving more confidence in the direction of the market. The most important levels include the base of the last impulse, the boundaries of a range, and the test level of a zone.
In ICT/SMC, there are no direct equivalents of these elements when it comes to searching for trades. However, breakers and sometimes mitigation blocks serve similar purposes to the levels in Advanced VSA, but the approaches differ. In ICT/SMC, trades are typically executed within the breaker or mitigation block, whereas in Advanced VSA, trades are found when a level is defended: buy trades above the level (supported by buyers), and sell trades below the level (supported by sellers).
Additionally, Advanced VSA allows for trading within ranges, moving from one boundary to the other, as long as the boundaries are defended.
Summary
Despite the shared terms and similar approaches, there are significant differences between the two concepts:
Number of forces influencing price movement: In ICT/SMC, it is believed that price is controlled by a single force, the Market Maker (MM). In contrast, Advanced VSA considers the interaction of two forces—buyers and sellers—as driving price movements.
Use of volume in analysis: ICT/SMC does not take traded volume into account during analysis, while in Advanced VSA, volume is a crucial element for identifying market forces and areas of interest.
Use of levels for trade entries: In ICT/SMC, levels do not play an important role, whereas in Advanced VSA, levels one of the possible places for identifying potential trade setups.
Good luck with your trading and investing!
Best Swing Trading Strategies For Beginners (FOREX, GOLD)
I am going to reveal 3 profitable swing trading strategies for beginners.
These strategies are tailored for trading Gold, Forex or any other financial market.
I will explain entry signal, stop loss and take profit placement for every strategy and share a lot of examples based on real trades that we took with my students.
First, let's discuss key elements that unite these strategies.
1. All the strategies will be trend-following.
It means that the trades will be taken strictly in the direction of the market trend.
2. All the strategies will be daily time frame based.
Daily time frame will be the main time frame for the market analysis.
3. All the strategies are technical analysis strategies.
The decision-making and market analysis will be strictly based on technical analysis: price action, support and resistance.
Strategy 1: Break of Structure Strategy
Break of Structure is a classic swing trading trend following strategy that is based on:
1. Bullish breakout of the level of the last higher high in a bullish trend
2. Bearish breakout of the levels of the last lower low in a bearish trend
In a bullish trend, a bullish violation of the level of the last higher high and a candle close above that is a very strong bullish signal.
It signifies the strength of the buyers and indicates a highly probable bullish continuation.
A perfect entry point after a confirmed Break of Structure is the retest of the level of the last higher high.
Stop loss is 1 ATR.
Take Profit - the next key resistance.
Look at EURCAD pair on a daily time frame.
The market is trading in a bullish trend and we see a confirmed break of structure - a daily candle close above the level of the last higher high.
Here is how the trading position should look.
Take profit is the closest resistance based on a historic price action.
Look how perfectly this trade played out.
In a bearish trend, a bearish violation of the level of the last lower low and a candle close below that is a strong bearish signal.
It signifies the strength of the sellers and indicates a highly probable bearish continuation.
A perfect entry point after a confirmed Break of Structure is the retest of the level of the last lower low.
Stop loss is 1 ATR.
Take Profit - the next key support.
Above, EURNZD is trading in a bearish trend on a daily and we see a confirmed break of structure - a daily candle close below the level of the last lower low.
Here is how a short position looks - entry is on a retest of a broken structure, stop loss is 1 ATR and take profit the closest key support.
163 pips of pure profit were made.
Strategy 2: Trend Line Strategy
Trend Line is a classic swing trading trend following strategy that is based on:
1. Rising trend line based on higher lows in a bullish trend
2. Falling trend line based on lower high in a bearish trend
In a bullish trend, higher lows may respect a rising trend line.
Such a trend line will be a strong vertical support.
It will provide a safe point for buying the market.
Entry will be based on a test of a trend line.
Take profit will be at least the level of the current higher high.
Stop loss will be 1 ATR.
When you are looking for a trend line in a bullish trend, remember a simple rule.
A valid trend line should be confirmed by at least 3 touches and 3 consequent bullish reactions to that.
For example, a rising trend line on a GBPUSD above will be invalid trend line because it is confirmed by just 2 touches.
While the trend line that I spotted on USDCAD is valid, because it was already respected 3 times in a row in the past.
Above is the valid rising trend line based on higher lows in a bullish trend.
Here is how a swing long trend from that trend line should look.
Stop loss is based on 1 ATR. Entry from a trend line.
Take profit is based on the current higher high.
Almost 300 pips were made.
In a bearish trend, lower highs may respect a falling trend line.
Such a trend line will be a strong vertical resistance.
It will provide a safe point for selling the market.
Entry will be based on a test of a trend line.
Take profit will be at least the level of the current lower low.
Stop loss is 1 ATR.
When you are looking for a trend line in a bearish, remember a simple rule.
A valid trend line should be confirmed by at least 3 touches and 3 consequent bearish reactions to that.
The trend line on EURGBP above is invalid because 2 touches confirm it.
While that trend line is valid and confirmed by 3 strong bearish reactions.
In the example above, EURCHF is trading in a long term bearish trend.
Lowers highs perfectly respect a falling trend line.
It can provide a safe entry for swing short trade.
Following the rules of our trading strategy, here is a swing short trade from that trend line.
Stop loss is 1 ATR. Take profit is based on the current lower low.
250 pips of pure profit were made.
Strategy 3: Higher Low / Lower High Strategy
Higher Low / Lower High is a classic swing trading trend following strategy that is based on:
1. The last higher low in a bullish trend
2. The last lower high in a bearish trend
In a bullish trend, the level of the last higher low composes an important horizontal support from where, with a high probability,
a bullish wave may initiate.
This level will provide a perfect entry for swing long trade.
Stop loss will be 1 ATR.
Take profit will be the resistance based on current higher high.
USDCHF is trading in a bullish trend on a daily.
The levels of the last higher low is a perfect point to buy the market .
According to the rules, stop loss is based on 1 ATR.
Take profit is based on the current higher high.
Great winner and nice trade!
In a bearish trend, the level of the last lower high composes a key horizontal resistance from where, with a high probability,
a bearish wave will initiate.
This level will provide a perfect entry for swing short trade.
Stop loss will be 1 ATR.
Take profit will be the support based on current lower low.
Look at EURUSD on a daily.
The pair is trading in a bearish trend.
The level of the last lower high provides a safe point
to sell the market from.
That's how a short position should look based on the rules of the trading strategy.
Stop loss is 1 ATR.
Take profit is based on the last lower low.
Entry is the level of the last lower high.
Target was quickly reached.
All these strategies are very accurate.
It provides good reward to risk ratio and is very easy to understand and apply properly.
Try one of these swing trading strategies and find the one that suites your trading style.
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YOU ONLY NEED 3 TIMEFRAME TO BE PROFITABLE !!!most of the time people on the internet bombard us with so many information when it comes to trading. like use this use that you have to use 5 or 6 timeframes, but in fact using this much could make you even more confused . so in this post I will share the easiest way for you you can to capitalize on timeframe analysis.
THE HIGHER TIMEFRAME - for bias which tells us in what way the price is going.
( up, down, range)
THE MIDDLE TIMEFRAME - to identify our zone for example if your trading system uses FVG you can locate your zone their. i personally use supply and demand so at this time i zone out my i will draw my supply or demand.
THE LOW TIMEFRAME - in this stage use it for entry confirmation.
this multi timeframe analysis can work on every time which means you can scalp , day trade or swing trade .
for example you can use
1 HOUR FOR BIAS
15 MIN ZONE IDENTIFICATION
5 CONFIRMATION
thanks for taking your time and read this post.
tell us your thought in the comment.
Gap Between Understanding and Expect;Why forex traders failThis topic explores how uninformed expectations often lead to failure in Forex trading.
The internet is littered with people explaining how they lost money in Forex trading or how Forex is a scam. In your circle of friends and family, should you make the mistake of mentioning Forex trading, you are likely to get salty looks. To many, Forex trading equals failure and heartbreak.
To further emphasize the magnitude of failure in this industry, Forex brokers issue disclaimers on their websites indicating failure rates ranging from 75-90%. To put it into perspective, out of 1000 individuals who venture into Forex trading, up to 900 inevitably will fail and lose their entire capital outlay. A sad statistic indeed. I must admit, in my 10-year trading career, I have formed part of that painful statistic.
Why do we fail? I wonder? Presently, I seem to gravitate towards the belief that fundamentally, our failure is primarily driven by divergence between understanding and expectations. I posit further when we place a premium on expectations over understanding, we should prepare for rather painful results. From experience, many enter the Forex trading space driven by expectations, not understanding.
By definition, understanding is awareness. Expectation is defined as the belief that something will happen. Let me illustrate how the divergence between understanding and expectation causes failure.
Recall your childhood years watching your favorite superhero, say, superman. Watching the indestructible Superman flying around fighting bad guys was quite a motivator. Children are impressionable, therefore, it wasn't hard to find young boys mimicking Superman's behavior to the degree we thought we could fly. It was common to find boys leaping off tables and high surfaces believing and expecting they could fly. At this point, gravity, or the understanding of the effects of gravity was a foreign concept. Later on, of course, gravity was introduced to us painfully, sometimes with an accompanying injury and or beating from our mothers. I believe this reminder illustrates the outcomes when understanding and expectations are not aligned.
Back to Forex trading. If we are honest, we lose not because we seek understanding and mastery, we lose because we seek to fulfill our expectations. The promise of a lavish lifestyle, and the allure of making X % per month without struggling appeals to many. Ultimately, this leads to disastrous decisions that end in heartbreak.
How do you bridge the gap between understanding and expectations?
1. Education and continuous learning
I am in my fourth profitable year in Forex trading. What is different, my desire to consistently improve my knowledge is constant. I am always learning new things that improve my skills and edge. I am not the same trader I was six months ago.
2. Set realistic goals.
Early in my trading career, I would set goals out of desire and ignorance. Consequently, I would trade aggressively and force the markets to meet my expectations. The outcome was always disastrous. Presently, I target a 20% return annually based on experience. This target is achievable and less risky, allowing me to outlast seasons.
In conclusion, mastery is only achieved through understanding. I leave you with a verse from the Bible to reinforce the above statement, Proverbs 4: 5-9
How Market Dynamics Can Improve Your Trades█ Understanding Optimal Trading Strategies: How Market Dynamics Can Improve Your Trades
As traders, whether seasoned professionals or newcomers to the market, we're constantly looking for ways to improve our trading strategies and reduce costs. One area that often goes overlooked is the dynamic nature of supply and demand in the market and how it can impact your trades. In this article, we'll break down the key insights from a study on optimal trading strategies and show you how this knowledge can be applied to enhance your trading performance.
█ The Basics: What You Need to Know About Supply and Demand Dynamics
When you place a trade, you're interacting with the market's supply and demand. Traditionally, many traders think of supply and demand in static terms—like the bid-ask spread or how deep the market is at any given moment. However, the reality is that supply and demand are dynamic—they change over time, especially after a trade is executed. One of the most important concepts from the study is market resilience. This refers to how quickly the market returns to its normal state after a trade has been placed. In simple terms, resilience is how fast new buy or sell orders come in after you've placed your trade. Understanding this can be a game-changer for your trading strategy.
█ The Strategy: Combining Large and Small Trades for Optimal Results
The study suggests an optimal trading strategy that might seem counterintuitive at first. Instead of splitting your trades evenly over time, it recommends a mix of large and small trades. Here’s how it works:
Start with a Large Trade: Begin with a significant trade that moves the market slightly. This "shakes up" the market and attracts new orders from other traders who see the opportunity.
Follow with Smaller Trades: After the initial large trade, continue with smaller, more frequent trades. These smaller trades allow you to absorb the new orders that come in without pushing the market too far in either direction.
Finish with Another Large Trade: As you approach the end of your trading window, place another large trade to complete your order. At this point, you're less concerned about future market conditions since your goal is to finalize the transaction.
█ Why This Strategy Works
This approach leverages the dynamic nature of the market. By starting with a large trade, you create a temporary imbalance that encourages other traders to place orders, which you can then capitalize on with your smaller trades. The key is understanding that markets don’t just respond to one trade—they continuously adjust. By strategically timing your trades, you can reduce the overall cost of execution.
█ How Retail Traders Can Apply This Knowledge
Even if you're trading smaller volumes, you can still benefit from understanding market dynamics. Here’s how you can apply these principles to your own trading:
Observe Market Depth and Liquidity: Before placing a trade, take a look at the market depth (how many buy and sell orders are available at different price levels) and consider the market's resilience. If the market is less liquid, be cautious about placing large trades all at once.
Adjust Your Trade Sizes: Instead of placing a single large order, consider breaking it up. Start with a larger trade to test the market, then follow up with smaller trades to take advantage of the new orders that might come in.
Be Mindful of Timing: Spread out your trades over time, especially in less liquid markets. This can help you avoid moving the market too much and keep your trading costs lower.
█ For Retail Traders Without Access to the Order Book: How to Spot Big Players
Not all retail traders have access to the order book or sophisticated market data. However, you can still benefit from the principles of dynamic supply and demand by analyzing price charts directly. Here's how you can do it:
⚪ Look for Imbalances in the Price Chart: When a large player enters the market, their trades can create noticeable imbalances in the price action. For example, if you see a sharp move in price followed by a series of smaller movements in the same direction, it could indicate that a big player has started trading and is following up with smaller trades, just as the strategy suggests.
⚪ Fair Value Gaps (FVG): Fair Value Gaps are areas on a price chart where there is little to no trading activity, often due to a large, quick movement in price. These gaps can serve as clues that a large order has just been executed, leading to a temporary imbalance. When the market later returns to these gaps, it can be an opportunity to place trades in the direction of the original move, anticipating that the large player might continue to influence the market.
█ The Big Takeaway: Trading Isn’t Just About Prices—It’s About Timing
Understanding that supply and demand in the market are constantly changing can give you a significant edge. By timing your trades strategically and mixing large and small orders, you can reduce the impact of your trades on the market, ultimately saving on costs and improving your returns. Whether you're a retail trader managing a small portfolio or a professional handling large orders, these principles can be applied to improve your trading strategy. And even if you don’t have access to the order book, studying price imbalances, Fair Value Gaps, and other price action cues can help you detect the underlying intentions of big players, allowing you to trade more effectively in their wake.
The next time you plan a trade, remember: it's not just about what you trade, but how and when you trade that can make all the difference.
█ Reference
Obizhaeva, A. A., & Wang, J. (2013). Optimal trading strategy and supply/demand dynamics. Journal of Financial Markets, 16, 1–32.
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Disclaimer
This is an educational study for entertainment purposes only.
The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
75: Comprehensive Guide to Volume Profiles and Volume in TradingWhat is a Volume Profile?
A Volume Profile is an advanced charting tool that plots the amount of trading activity (volume) across different price levels over a specific period. Unlike traditional volume indicators that only show volume over time, Volume Profiles provide insights into where the majority of trading took place, highlighting key areas of support and resistance, as well as zones of high and low interest among traders.
Key Components of Volume Profiles:
1. Point of Control (POC) : This is the price level where the highest volume of trades occurred. The POC is a crucial level because it represents the price at which traders found the most value, making it a strong indicator of support or resistance.
2. Value Area (VA) : The Value Area represents the range of prices where approximately 70% of the volume was traded. This area is divided into the Value Area High (VAH) and Value Area Low (VAL). The VA is significant because it identifies the zone where most market participants were active, providing a clear picture of market consensus on value.
3. High Volume Nodes (HVN) and Low Volume Nodes (LVN) : HVNs are price levels where there was a large amount of trading activity, indicating significant interest and often serving as strong support or resistance levels. LVNs, on the other hand, represent areas with minimal trading activity, where prices tend to move quickly due to the lack of interest.
The Importance of Volume in Trading
Volume is a fundamental aspect of market analysis, offering insights into the strength and sustainability of price movements. It reflects the level of participation in a market, indicating the intensity of buying or selling at different price levels.
- Confirmation of Price Movements : High volume confirms the legitimacy of a price move. For example, a price breakout from a resistance level on high volume is more likely to be sustained than one on low volume.
- Reversals and Continuations : Spikes in volume can signal potential reversals, especially when occurring at significant price levels such as the POC or near the VA boundaries. Conversely, a sustained high volume along a trend can indicate its continuation.
- Validation of Support and Resistance : Volume at key levels like the POC, VAH, and VAL helps validate these areas as strong support or resistance. When price interacts with these levels on high volume, it suggests that many market participants are active, reinforcing the importance of these price levels.
How to Interpret and Use Volume Profiles:
1. Identifying Key Price Levels :
- The POC acts as a magnet for price, often drawing the price back to it when it moves away. This level is crucial for identifying potential areas of reversal or consolidation.
- The Value Area is where the majority of the trading activity occurs. Prices above the VAH might indicate an overbought condition, while prices below the VAL could suggest an oversold market.
2. Volume and Market Sentiment :
- High Volume Nodes indicate areas of significant interest, where prices tend to stabilize due to heavy trading. These areas often become zones of accumulation or distribution, depending on market conditions.
- Low Volume Nodes indicate price levels with minimal trading interest, where prices may move quickly and encounter less resistance, often leading to rapid price changes or breakouts.
3. Order Flow and Large Volume Blocks :
- Large blocks of volume, particularly at HVNs, suggest the presence of institutional traders or significant market participants placing large orders. These zones are critical because they reflect where big players are accumulating or distributing their positions. As a result, these areas tend to create strong support or resistance levels that can define future market behavior.
4. Dynamic vs. Static Profiles :
- Volume Profile Visible Range (VPVR): This type of profile updates as you scroll through your chart, dynamically showing the volume distribution for the visible price range. It’s useful for analyzing the current market context and finding immediate trading opportunities.
- Fixed Range Volume Profile (FRVP): This profile is static, showing volume data for a specified price range or time period. It’s valuable for comparing current price action to historical data, helping identify long-term support and resistance levels.
Practical Tips for Using Volume Profiles :
1. Customization and Settings :
- Adjust the number of rows or ticks per row in your Volume Profile settings to get a more detailed or broader view of volume distribution. More rows will give you finer detail, while fewer rows will smooth out the data, highlighting major trends.
2. Combining with Other Indicators :
- Use Volume Profiles in conjunction with other technical indicators like moving averages, RSI, or MACD to confirm trading signals and enhance the reliability of your analysis.
3. Adapting to Different Timeframes :
- Tailor your Volume Profile analysis to your trading style. For day traders, shorter timeframes (e.g., 5, 15, 30 minutes) might be more relevant, while swing traders or investors might focus on daily, weekly, or even monthly profiles to identify long-term trends and key levels.
4. Observing Market Reactions at Key Levels :
- Pay close attention to how the market reacts when it approaches HVNs, LVNs, the POC, or the boundaries of the Value Area. These reactions can provide clues about future price movements and potential trading opportunities.
Volume Profiles offer a deep and nuanced view of market behavior by highlighting where significant trading activity has occurred at different price levels. By understanding the interaction between volume and price, traders can make more informed decisions, identify key levels for entry and exit, and gain insights into market sentiment. Integrating Volume Profile analysis into your trading strategy can provide a significant edge, enhancing your ability to navigate the complexities of financial markets.
What is Support and Resistance in Trading. Key Levels Basics
In the today's article, we will discuss the absolute basics of technical analysis: support and resistance levels.
I will explain to you why support and resistance are important , how to identify them properly, and we will discuss what is the difference between support and resistance level and support or resistance zone.
Let's start with a definition of a support .
A support is a historically significant price level that lies below the current prices of an asset.
While a resistance is a historically significant price level that is above the current prices.
From a key resistance, a bearish movement will be anticipated in futures, while from a key support, a bullish reaction will be expected.
Take a look at EURAUD pair, we can see a perfect example of a key resistance level.
2 times in a row, the market dropped from that in the past, confirming its significance.
By a historical significance , I mean that the price reacted strongly to such price level in the past and a strong bullish, bearish movement initiated from that.
Above is the example of a key horizontal support on EURCHF. The underlined key level was respected by the market multiple times in the past.
From time to time, the market breaks key levels.
After a breakout , a support turns into resistance
and a resistance turns into support.
Above is the example of a breakout of a key support on GBPNZD, after its violation it turned into resistance from where a bearish movement followed.
Always remember, that in order to confirm a breakout of a key support, we strictly need a candle close below that.
By the way, the structure here is also the zone, but we will discuss it later on.
Above is the example of a breakout of a key resistance, that turned into support after a violation.
Very often, newbie traders ask me, how many times the price should react to a key level to make it valid.
I do believe that 1 time is more than enough, however, make sure that the reaction to that is strong .
Above are key support and resistance on GBPCAD. Even though both structures were respected just one time in the past, the reaction to them was strong enough to confirm that the underlined levels are the key levels.
However, historical significance of a key support or resistance is not enough to make it valid.
What matters is the most recent reaction of the price to that.
Key supports and resistance lose their significance with time, and your job as a technical analyst, is to stay flexible and adapt to changing market conditions, regularly updating your analysis.
Above is a key resistance level on AUDJPY from where the market dropped heavily 2 times in a row.
However, with time, the underlined resistance lost its significance.
Such a structure is not a key level anymore.
Remember a simple rule: if a key structure is not respected by the sellers, and by the buyers after its breakout.
Or vice versa: if a key structure is not respected by the buyers, and then by the sellers after its breakout.
Such a structure is not a key level , and you should not rely on that in the future.
In our example, the resistance was broken - it was neglected by the sellers. After the breakout, it should have turned into support, but the buyers also neglected that and the structure lost its strength.
Now, a couple of words about time frames,
you can identify key support and resistances on any time frame, but
the rule is that higher is the time frame, more significant are the supports and resistances there.
In my analysis, I primarily rely on support and resistance on a daily time frame.
Always remember that the financial markets are not perfect and the prices will quite rarely respect the exact support or resistance levels.
Quite often, the markets may fluctuate around key levels so it is highly recommendable to rely not on single key levels but on zones.
I recommend taking into consideration not only the exact level from where a strong reaction followed, but also a candle close level of such a candle.
The support zone above is based on a wick and a candle close of a candle.
Also, quite often there will be the situations when multiple key levels will lie close to each other.
In such a case, it is better to unite all this structures in one single zone.
Above we see multiple key resistances.
We will unite all these resistances into one single zone. The upper boundary of a resistance zone will be the highest wick and its lower boundary will be the highest candle close.
Above we have 2 key supports lying close to each other.
We will unite these supports into one single zone.
The lower boundary of a support zone will be the lowest wick and the upper boundary will be the lowest candle close.
Here is how a complete structure analysis should look.
Following the rules that we discussed, you should identify at least 2 closest key resistances and 2 closest key supports.
These structures will be applied as the entries for various trading strategies.
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Revealing My Top Gold Trading Secrets for Huge Profits!In this video, I reveal my top trading secrets for making huge profits in gold trading (XAU/USD). This educational content will cover key technical analysis techniques and strategies that I frequently use in my charts, as well as valuable insights into trading mindset and proper risk management. Let's unlock the potential of your trading skills together!
Technical Approach:
In this educational segment, we'll focus on the core technical analysis principles that I use to make informed trading decisions. Here's a detailed breakdown of my approach:
Identifying the Trend:
Uptrends and Downtrends: Learn how to recognize market trends using higher highs and higher lows for uptrends, and lower highs and lower lows for downtrends.
Trendlines: Use trendlines to connect the highs and lows of price movements, helping to identify the direction of the trend and potential reversal points.
Support and Resistance Levels:
Support Levels: Identify areas where the price tends to find support as it falls, acting as a floor preventing further decline.
Resistance Levels: Identify areas where the price tends to find resistance as it rises, acting as a ceiling preventing further ascent.
Historical Price Action: Use past price movements to pinpoint key support and resistance levels that the market respects.
Liquidity Zones (LQZ):
Definition: Liquidity zones are areas on the chart where there is a high concentration of trading activity, often leading to significant price movements.
Identification: Learn how to spot these zones using volume profiles, order flow analysis, and historical price action.
Trading Strategy: Use liquidity zones to identify potential entry and exit points, as they often precede major price moves.
Volume Analysis:
Volume Spikes: Understand how volume spikes can indicate strong buying or selling interest, confirming the validity of price movements.
Volume Trends: Analyze volume trends to gauge the strength of a price trend and anticipate potential reversals.
Entry and Stop Loss Strategies:
Breakouts and Pullbacks: Enter trades on confirmed breakouts above resistance or below support, or on pullbacks to key levels within a trend.
Trailing Stop Loss: Implement a trailing stop loss to lock in profits as the trade moves in your favor, adjusting the stop loss level as the price progresses.
Mini Lessons: Mindset:
Patience and Discipline:
Patience: Wait for the right trading setups that meet your criteria, avoiding impulsive decisions.
Discipline: Stick to your trading plan and rules, even when the market becomes volatile or unpredictable.
Emotional Control:
Stay Calm: Keep your emotions in check to avoid making irrational decisions based on fear or greed.
Mindfulness: Practice mindfulness techniques to remain focused and calm, especially during stressful trading situations.
Proper Risk Management:
Position Sizing:
Risk Per Trade: Limit the amount of capital you risk on any single trade, typically 1-2% of your trading account.
Position Size Calculation: Calculate your position size based on the distance to your stop loss and your risk tolerance.
Risk-Reward Ratio:
Target Ratio: Aim for a risk-reward ratio of at least 2:1, meaning your potential profit should be at least twice your potential loss.
Trade Evaluation: Evaluate each trade based on its risk-reward ratio before entering, ensuring it aligns with your trading strategy.
By incorporating these technical strategies and mindset principles, you can enhance your trading performance and increase your chances of success in the gold market. Stay tuned for more educational content and trading insights!
Best Trend Following Strategies for Gold. XAUUSD Day Trading
The recent bull run on Gold is a perfect example of a strong trending market. For traders, such sentiment always provides very profitable trading opportunities.
In this article, I will share with you 3 best trend-following strategies for day trading Gold that showed extremely high performance this year.
So what I did, I back tested 4H/1H time frame since the middle of February when the bull market started.
I tested various strategies: price action, SMC, multiple indicators, candlestick patterns ; and I was looking for the ones that showed the highest accuracy and profitability.
1. Moving Averages Crossover
The first strategy that showed a very high performance was based on a crossover of 2 moving averages.
Exponential MA with 30 length.
Simple MA with 9 length.
For entry signal, Simple MA should cross Exponential MA from the downside and a candle should close above both MAs'.
Stop loss will be below the closest horizontal support.
The setup is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss.
13 setups we spotted.
9 of them were profitable.
Total winning rate is 69%.
2. Trend-Following Patterns
The second strategy that showed a very high performance was based on classic price action patterns.
I was looking for bullish patterns like bullish flag, falling wedge, horizontal range, double bottom, head and shoulders, ascending triangle, cup & handle.
Bullish confirmation was a breakout and a candle close above a neckline of the pattern.
The pattern is considered to be losing if after the breakout of the neckline, the price dropped below its lows.
The pattern is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss.
From 14th of February to 8th of April, I found 37 bullish patterns.
According to the rules that I described above, 31 pattern turned out to be profitable.
That gives 83% winning rate.
3. Break of Structure (BoS)
The Break of Structure strategy is very old and based on breakouts of current highs.
In a bullish trend, after the price violates the levels of a current Higher High HH, a bullish continuation is expected.
A long trade is opened after the candle closes above HH or on a retest.
With such a strategy, Stop Loss is lying below the last Higher Low HL.
The setup is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss
For the same period, I identified 21 Breaks of Structure.
According to the rules, 18 setups were profitable.
Total win rate is 85%.
Remember that you should not overestimate the performance of these strategies. They work perfectly only in times of a strong bullish market. Such periods are extremely rare.
However, once you see a strong bullish season, these strategies will help you to get maximum from it.
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