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Smart Money Orderflow M15 ApproachIn this context, we define an intelligent order flow, which is a convergence of flows, in this case, downwards, leading the price to create congestions, i.e., internal breaks, and then consolidation phases, i.e., external breaks, which bring the price into the demand zone, where we should consider opening a long position subsequently. The pattern is clear: demand zone on H4 after a defined structural change with the main consolidation phase, and then we expect a retest in the demand zone, where it is highly likely that the price may reverse its direction, especially when analyzing the market from an M15 perspective. I remain available for further clarifications, greetings, and happy studying to all.
Education
by EdgeTradingJourney
1
Mitigation + BOS M15 Setup In this scenario, we examine a very common approach: trend continuation. The particular aspect of viewing it in this light compared to simply looking at trendlines is how we can identify demand zones and structural changes called BOS. Prices always tend to retrace in these zones before continuing. Personally, I identify demand or supply zones at H4, and once the price retraces, I look for rebounds at M15. In that timeframe, I aim to identify a structural change to the upside if I'm looking for a long position. Sometimes during an uptrend, it's very common to identify inefficiencies or FVG, which in turn support the price during retracement. Best wishes and happy trading to all.
Education
by EdgeTradingJourney
1
Pullback After Breakout Entry M15 ApproachIn this model, we define an approach that I personally use a lot, namely the creation of a demand or supply zone on the H4. In this case, we are observing a demand zone. Once the zone has been plotted on the chart, we wait for a retracement on the M15, and as soon as the market shows a structural change, in this case to the upside during the three London, pre-NY, and NY sessions, always considering to have the midnight open behind us, we can enter the market. The target will be the nearest swing high level, always considering to have at least a risk/reward ratio of 1.5. Best regards and have a good day everyone.
Education
by EdgeTradingJourney
2
Equal High & Low SweepToday I wanted to talk about two scenarios concerning market structure: the equal high for a bullish structure and the low sweep for a bearish structure. The crucial point of each setup, as always, is to identify a structural change called BOS. From there, I start looking for a demand or supply zone in the market where we should pay attention to observe the price return. This price return should occur as indicated in the setup, with the market starting to consolidate and form a double bottom or top of momentum. It is also important to consider the presence of a liquidity zone, as this will be our primary target zone, followed by the minimum or maximum of the structure. I wish everyone happy trading and remain available for further discussions on the matter.
Education
by EdgeTradingJourney
1
The Best Entry on the MarketIn this model, we will examine a tactical approach to achieve high-performance entry. It all starts with an uptrend characterized by continuous structural changes. In fact, there are continuous directional changes until the retest of the supply zone on M30. Subsequently, the market reacts to this zone by pushing downwards and generating a CHoCH. Here, switching to a 1-minute timeframe, it will be possible to wait for a retest of the supply zone before entering. The trade will target the session or daily low. Greetings and happy trading to all.
Education
by EdgeTradingJourney
1
New Approach on Forex: Inducement LowIn my analysis model, I focus on a bearish structure, where I identify the so-called "false demand zones" (SM Trap). It all starts with a supply zone, where the price begins to decline, creating a liquidity zone with a double bottom. Subsequently, the price retests the supply zone, declines again, and breaks the false demand zone, generating another one. Then, the market starts forming decreasing lows and highs, clear signals of the ongoing bearish trend. This is where I pay attention, as it constitutes a clear signal of the developing trend. To enter the market, I prefer identifying an FVG M15, targeting weekly, daily lows, or the H4 timeframe, in line with my trading plan. I find it crucial to observe the evolution of lows and highs, as their decrease further confirms the bearish trend. I wish everyone happy trading and success in their operations.
Education
by EdgeTradingJourney
1
The Best Strategy of 2024: Reversal Entry ModelGood morning, today I would like to draw your attention to a model that I am integrating into my analyses for this year. In this model, we define simple structural changes either downwards or upwards, in this context downwards using two BOS. Subsequently, we define the main demand zone where the price retests. After the retest, the price breaks upwards the structure creating a CHOCH, or an internal breakout. Afterwards, the price will move into a lateral phase accumulating a lot of liquidity, and as it is known, as soon as the price absorbs liquidity above or below a range, it then moves in the opposite direction of the filled liquidity. In this case, liquidity is absorbed below in the order block zone and the price moves upwards. I recommend supplementing charts with this model and identifying these setups starting from an H4 timeframe which can be simpler compared to smaller timeframes. Best regards and happy trading to everyone.
Education
by EdgeTradingJourney
1
The Ultimate Strategy | ChoCh + InducementThis strategy is based on identifying a market structure, which can be bullish or bearish. In this specific case, a bullish structure characterized by rising highs and lows is considered. The expectation is for the market to change direction, creating a shock. Subsequently, the formation of a liquidity block is observed during a market consolidation phase, followed by entering a demand zone where the imbalance dictates, and the response is a downward movement, as anticipated. The target of this movement is defined graphically. Greetings and happy trading to everyone.
Education
by EdgeTradingJourney
3
15M Pro OrderFlow | A Unique and Profitable StrategyIn this approach, we will outline one of the best entry points on M15. The model involves quickly assessing a potential demand area by identifying a liquidity zone formed during the Fibonacci retracement at the .62-0.78 level. From this zone, the market initiates a physiological uptrend before retracing downward, creating a sharp movement with an internal break, followed by a bounce in the demand area. It is at this moment that a precise entry will be executed, aiming to reach the structure's peak. It is important to note that this model is also applicable to H1, H4, and Daily time frames. Greetings to everyone and happy trading.
Education
by EdgeTradingJourney
3
SMC Sell Setup: High Probability EntryGood morning everyone, today we will explore a short entry model using the concepts of smart money. This model involves entering the market in a short position after a series of specific patterns. Firstly, we start with a bearish structure where the price breaks a significant low, creating a BOS. Subsequently, we will identify the SMC zone, which is a trap zone to avoid. In this zone, the price makes a false descent before rising, creating the most important peak that we will use to evaluate a short entry. After identifying this peak, the market begins to decline, forming a CHOCH, representing an internal break. This will signal our sell point, and we could define our sell zone indicated by the POI on the chart. Once the price enters this zone, we may consider opening a short position on the security. Greetings to everyone.
Education
by EdgeTradingJourney
3
Perfect ChoCh : Entry + SetupWith this trading model, I aim to share with the community a particularly significant approach that has revolutionized my way of operating in the markets, especially on shorter timeframes such as 1, 5, and 15 minutes. This model involves defining a clear structure before entering the market, specifically a demand zone already present in the market. A price that reaches this zone through a double structural break (BOS) before rallying and creating an internal break (ChoCh) before returning to the demand zone. Subsequently, the price will surpass the previous high, thereby defining a new demand zone. One will then await the price to reach this zone, and once there, enter the market with the aim of reaching the supply zone depicted on the chart.
Education
by EdgeTradingJourney
1
Following the trend with support and resistance• It is always important to understand who is in control at the moment, buyers or sellers, and be aware that the trend can change very quick so its key to adapt and don’t have a bias. After you know what the trend is, then you can mark a high probability support or resistance level in different time frames. • In an up trending currency, a support will always have a higher probability of holding and the resistance will not be too reliable, the opposite happens in a down trending currency. Also notice that when a resistance level in a uptrending move works, the pullback has low probability of creating new lows (lower lows) meaning it is not a strong move down, it could just be testing lower prices for liquidity and to continue the move up. • It is common to see that a resistance once broken tends to be support and a support once broken tends to be resistance. This is a good spot to have a continuation of the trend (see example below). • Support and resistance levels in high time frames like 6hr, daily and weekly that are strong pivot points can be known as key levels. These levels act as historical levels which means that have been relevant since months even years ago. These levels can change the trend. • Price action around support and resistance levels can be similar to the price action at supply/demand zones (read "How to identify high quality Supply and Demand zones" link below), where price reaches the level with strength and then rejects, volume increases with no follow through and the candle closes with a wick but never below/above the support/resistance level. • Also it is common to observe that price gets near a support/resistance area and breaks below/above, grabs liquidity and then comes back above/below the area. In this cases, enter the trade after it regains the level.
Education
by FTWTraders
5 Steps Smart Money Concept Model5 STEPS SMART MONEY CONCEPT MODEL Break of Structure (BOS): Definition: A Break of Structure occurs when the market provides the initial indication that the price is likely to reverse. For example, a new lower low and lower high signal a disrupted market structure, indicating a forthcoming reversal to the downside. Trading Approach: Traders typically align their trades with the Higher Time Frame (HTF) BOS, especially when the price closes above/below a swing high/low. Change in Character (CHOCH): Definition: A CHOCH represents an initial shift that can signal a short- or long-term price reversal. It is considered a reversal pattern, utilized by SMC traders on higher time frames for market direction and on lower time frames for trade opportunities. Implementation: SMC traders use CHOCHs on various time frames to gauge market direction and identify intraday reversals or reactions to Points of Interest (POIs). Fair Value Gap (FVG): Definition: Fair Value Gaps highlight market inefficiencies or imbalances, where buying and selling are not equal. These gaps become magnets for price, resolving the inefficiency as resting orders are filled. Utilization: Traders use FVG information to target these gaps, identifying potential entry points for long or short positions. Fair Value Gaps are considered valuable Points of Interest (POIs) in price action trading.
Education
by EdgeTradingJourney
1
2024 US Recession | Key Factors2000 DOT-COM CRISIS The dot-com crisis, also known as the "dot-com bubble" or "dot-com crash," was a period of economic turbulence that affected the technology and telecommunications sectors in the late 1990s and early 2000s. Here are some key points: Euphoria Phase: In the 1990s, there was a boom in the technology and dot-com industry fueled by irrational investor euphoria. Many companies secured significant funding, even if they had weak or nonexistent business models. Excessive Valuations: Valuations of technology companies skyrocketed, often based on exaggerated growth projections and unrealistic expectations. This led to rampant speculation in financial markets. Bubble and Collapse: In 2000, the dot-com bubble began to burst. Many investors realized that numerous technology companies were unable to generate profits in the short term. This triggered a massive sell-off of stocks and a collapse in tech stock prices. Economic Impacts: The crisis had widespread economic impacts, with the loss of value in many technology stocks and the bankruptcy of numerous companies. Investors suffered heavy losses, and this had repercussions on the entire stock market. Economic Lessons: The dot-com crisis led to a reassessment of investment practices and taught lessons about the importance of carefully analyzing companies' fundamentals and avoiding investments based solely on speculative expectations. Following this crisis, the technology sector experienced a correction but also contributed to shaping the industry in a more sustainable way. Many companies that survived the crisis implemented more realistic and sustainable strategies, contributing to the subsequent growth and development of the technology sector. 2007-2008 FINANCIAL CRISIS The 2007-2008 financial crisis was a widespread event that had a significant impact on the global economy. Here are some key points: Origins in the Subprime Mortgage Crisis: The crisis originated in the U.S. real estate sector, particularly in subprime mortgages (high-risk). An increase in mortgage defaults led to severe losses for financial institutions holding securities tied to these loans. Spread of Financial Problems: Losses in the mortgage sector spread globally, involving international financial institutions. Lack of transparency in complex financial products contributed to the crisis's diffusion. Bank Failures and Government Bailouts: Several major financial institutions either failed or were on the brink of failure. Government interventions, including bailouts and nationalizations, were necessary to prevent the collapse of the financial system. Stock Market Crashes: Global stock markets experienced significant crashes. Investors lost confidence in financial institutions, leading to a flight from risk and an economic contraction. Impact on the Real Economy: The financial crisis directly impacted the real economy. The ensuing global recession resulted in the loss of millions of jobs, decreased industrial production, and a contraction in consumer spending. Financial Sector Reforms: The crisis prompted a reevaluation of financial regulations. In response, many nations implemented reforms to enhance financial oversight and mitigate systemic risks. Lessons Learned: The financial crisis underscored the need for more effective risk management, increased transparency in financial markets, and better monitoring of financial institutions. The 2007-2008 financial crisis had a lasting impact on the approach to economic and financial policies, leading to greater awareness of systemic risks and the adoption of measures to prevent future crises. 2019 PRE COVID In 2019, I closely observed a significant event in the financial markets: the inversion of the yield curve, with 3-month yields surpassing those at 2, 5, and 10 years. This phenomenon, known as an inverted yield curve, is generally considered an advanced signal of a potential economic recession and has often been linked to various financial crises in the past. The inversion of the yield curve occurred when short-term government bond yields, such as those at 3 months, exceeded those at long-term, like 2, 5, and 10 years. This situation raised concerns among investors and analysts, as historically, similar inversions have been followed by periods of economic contraction. Subsequently, in 2020, the COVID-19 pandemic occurred, originating in late 2019 in the city of Wuhan, Hubei province, China. The virus was identified as a new strain of coronavirus, known as SARS-CoV-2. The global spread of the virus was rapid throughout 2020, causing a worldwide pandemic. Countries worldwide implemented lockdown and social distancing measures to contain the virus's spread. The economic impact of the pandemic was significant globally, with sectors such as tourism, aviation, and hospitality particularly affected, leading to business closures and job losses. Efforts to develop a vaccine for COVID-19 were intense, and in 2020, several vaccines were approved, contributing to efforts to contain the virus's spread. In 2021, the Delta variant of the virus emerged as a highly transmissible variant, leading to new increases in cases in many regions worldwide. Subsequent variants continued to impact pandemic management. Government and health authorities' responses varied from country to country, with measures ranging from lockdowns and mass vaccinations to specific crisis management strategies. The pandemic highlighted the need for international cooperation, robust healthcare systems, and global preparedness to address future pandemics. In summary, the observation of the yield curve inversion in 2019 served as a predictive element, suggesting imminent economic challenges, and the subsequent pandemic confirmed the complexity and interconnectedness of factors influencing global economic health. 2024 Outlook The outlook for 2024 presents significant economic challenges, outlined by a series of critical indicators. At the core of these dynamics are the interest rates, which have reached exceptionally high levels, fueling an atmosphere of uncertainty and impacting access to credit and spending by businesses and consumers. One of the primary concerns is the inversion of the yield curve, manifested between July and September 2022. This phenomenon, often associated with periods of economic recession, has heightened alarm about the stability of the economic environment. The upward break of the 3-month curve compared to the 2, 5, 10, and 30-year curves has raised questions about the future trajectory of the economy. Simultaneously, housing prices in the United States have reached historic highs, raising concerns about a potential real estate bubble. This situation prompts questions about the sustainability of the real estate market and the risks associated with a potential collapse in housing prices. Geopolitical instability further contributes to the complexity of the economic landscape. With ongoing conflicts in Russia, the Red Sea, Palestine, and escalating tensions in Taiwan, investors are compelled to assess the potential impact of these events on global economic stability. The S&P/Experian Consumer Credit Default Composite Index, showing an upward trend since December 2021, suggests an increase in financial difficulties among consumers. Similarly, the charge-off rate on credit card loans for all commercial banks, increasing since the first quarter of 2022, reflects growing financial pressure on consumers and the banking sector. In this context, it is essential to adopt a prudent approach based on a detailed analysis of economic and financial data. The ability to adapt to changing market conditions becomes crucial for individuals, businesses, and financial institutions. Continuous monitoring of the evolution of economic and geopolitical indicators will be decisive in understanding and addressing the challenges that 2024 may bring.
TVC:US03MYEducation
by EdgeTradingJourney
1
Trading Forex and Bitcoin with CFDs: How Does It Work?Trading Forex and Bitcoin with CFDs: How Does It Work? In the dynamic world of financial markets, currencies and cryptocurrencies represent two distinct assets with unique characteristics. This article aims to demystify these popular trading avenues, focusing on their mechanisms, risks, and opportunities. As we delve deeper, we'll compare forex trading with cryptocurrency trading and explain how Contracts for Difference (CFDs) are used for both types of trading. Understanding the Forex Market Forex, short for foreign exchange and abbreviated to FX, is the global marketplace where currencies are traded. At the core of this market is the concept of currency pairs, like EUR/USD or GBP/JPY, which represents the exchange rate between two currencies. Traders speculate on these rates, buying and selling currencies with the aim of taking advantage of fluctuations in their value. They often use trading tools and indicators, like those found in FXOpen’s free TickTrader platform. Forex markets operate 24 hours a day, five days a week, providing continuous opportunities for traders. The accessibility and high liquidity of forex make it ideal for many traders across the globe. However, it's vital to approach forex trading with a sound strategy and an understanding of the risks involved. The Basics of Cryptocurrency Trading Cryptocurrencies have created a unique niche in the financial markets. Bitcoin stands as the pioneering and most widely recognised cryptocurrency. Unlike traditional currencies, cryptos operate on a decentralised network using blockchain technology, which ensures transparency and security in transactions. Trading crypto assets involves speculating on their price movements against other currencies, typically the US dollar and often on cryptocurrency exchanges or through Contracts for Difference (CFDs). Unlike forex, cryptocurrency markets, including Bitcoin, are known for their high volatility. This means crypto prices can experience significant fluctuations in a short period, influenced by factors like technological developments, regulatory news, and market sentiment. While such volatility comes with the opportunity for outsized returns, it also comes with increased risk. Bitcoin trading is accessible 24/7, contrasting the forex market's five-day trading week. This round-the-clock availability enables traders to react immediately to market-moving news at any time. For those entering the cryptocurrency market, understanding its volatility and the impact of market news and having a robust risk management strategy is essential for navigating its challenges. Comparing Bitcoin and Forex Trading When contrasting Bitcoin and FX trading, key differences emerge in market dynamics and trading characteristics. Forex, with a daily turnover exceeding $6 trillion, dwarfs the cryptocurrency market in terms of size and liquidity. This vast market features a diverse range of participants, from central banks to individual traders, with currency values influenced by multiple economic factors. Bitcoin and other cryptocurrencies are significantly influenced by technological changes and regulatory updates. For example, news of a country legalising or banning Bitcoin can lead to abrupt and substantial price movements. Conversely, FX prices are more sensitive to monetary policies and geopolitical events. The euro might react sharply to changes in European Central Bank interest rates or political shifts within the EU. This is one of the key differences between Bitcoin and currency trading. Volatility is another differentiator. Bitcoin’s price can swing dramatically within hours – a situation less common in the forex market. For example, Bitcoin is known to see swings of 5-10% in a single day; major currencies rarely fluctuate more than 2% in a day. Using CFDs to Trade Forex and Bitcoin Contracts for Difference (CFDs) provide a versatile way to trade both forex and cryptocurrencies, offering traders the ability to speculate on price movements without owning the underlying asset. This method involves a contract between the trader and broker, agreeing to exchange the difference in the asset's price from the start to the end of the contract. One of the benefits of trading Bitcoin and other cryptocurrencies through CFDs is the ability to go long or short, allowing traders to take advantage of the rise and fall of a price. This flexibility also applies to forex trading, where traders can speculate on currency pairs' movements in either direction. Both markets allow the use of leverage, though it tends to be higher in forex due to typically smaller price movements. For instance, a forex trader might access leverage of up to 1:30, while in Bitcoin trading, the leverage might be lower due to its higher volatility. Both cryptocurrency and forex CFD trading offer the possibility of hedging, allowing traders to open positions that offset potential losses in their investment portfolio. This strategy can be particularly useful in managing risk in volatile markets. However, trading CFDs involves costs, such as the spread (the difference between the buy and sell price) and overnight holding fees. These costs can vary between forex and crypto trades. In forex, the spread might be narrower, reflecting the market's higher liquidity, whereas in Bitcoin, spreads can be wider due to its volatile nature. At FXOpen, traders can enjoy tight spreads from 0.0 pips. Note: at FXOpen, FX prices are for Spot FX. FXOpen doesn’t offer FX futures. Regulation and Legal Considerations It’s important to understand the regulatory landscape before trading forex and cryptocurrencies. Forex trading is well-regulated in most countries, with oversight by financial authorities like the Financial Conduct Authority (FCA) in the UK and the Cyprus Securities and Exchange Commission (CySEC) in Cyprus. These regulations ensure broker compliance, provide trader protection, and maintain market integrity. For instance, regulated brokers must follow strict rules regarding capital requirements and client fund protection. Cryptocurrency trading, however, encounters a more complex regulatory environment. Its decentralised nature and global reach pose challenges for consistent regulatory oversight. Different countries have varying stances on crypto assets, ranging from full acceptance to outright bans. For example, while the US treats Bitcoin as a commodity subject to taxation, other countries, like China, have imposed restrictions on its use. The Bottom Line In conclusion, while forex and cryptocurrency trading each offer unique opportunities and challenges, understanding their nuances is key to effective trading. Whether navigating the vast liquidity of forex markets or manoeuvring through crypto's volatility, a well-informed strategy is essential. For those looking to explore these markets, consider opening an FXOpen account. We cater to forex and cryptocurrency CFD trading, offering competitive trading costs, rapid execution speeds, and the advanced TickTrader platform. Good luck! At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
BITSTAMP:BTCUSDEducation
by FXOpen
3
Advanced Forex Trading Strategy M15The trading strategy under examination is tailored for the M15 timeframe in the forex market, focusing on identifying supply and demand zones to make well-informed trading decisions. Let's delve into the key steps to successfully implement this strategy. Step 1: M15 Chart Analysis Position yourself on an M15 timeframe chart to gain a more detailed view of the market. This shorter time frame allows for capturing swift movements and identifying potential trading opportunities. Step 2: Identification of Supply and Demand Zones Utilize technical analysis tools such as supports, resistances, and volume indicators to clearly pinpoint supply and demand zones. Demand areas represent points where price is expected to rise, while supply zones indicate potential downward reversal points. Step 3: Confirmation of Demand Zone Breakout Wait for the breakout of a demand zone, accompanied by a bounce. This confirms the strength of the movement and suggests a potential change in the price direction. Step 4: Waiting for Price Bounce Above the Broken Zone After the demand zone breakout, observe price behavior and wait for it to return above the same zone. This confirms the effectiveness of the breakout and suggests a potential entry opportunity. Step 5: Identification of Supply Zone Once the price has surpassed the demand zone, identify a possible supply zone. This is the level where price is expected to encounter resistance. Step 6: Market Entry and Goal Planning Enter the market when the price reaches the identified supply zone, aiming to capture the downward movement. Set the target corresponding to the minimum that led to the last uptrend, intending to capitalize on the potential downward movement. Conclusions: This advanced forex trading strategy on the M15 timeframe is based on analyzing supply and demand dynamics. Always remember to manage risk carefully and adapt the strategy to evolving market conditions.
Education
by EdgeTradingJourney
1
Fair Value Gap Trading StrategyFair Value Gap Trading Strategy To implementing a fair value gap as a trading strategy you need to understand these three basic components of this trading strategy. Time Liquidity Hunt Market Structure Shift Fair Value Gap Let’s begin by discussing the importance of time in trading. According to ICT Trader, time is considered to be fractal, meaning that what happens on higher time frames is reflected in lower time frames if studied in the proper context. In this context, fractal refers to the idea that patterns and behaviors observed on longer time frames, such as daily or weekly charts, can be seen in shorter time frames, like hourly or minute charts. By studying price action and market behavior across different time frames, traders can gain a deeper understanding of market dynamics and potentially identify profitable trading opportunities. Time indeed holds significant importance in the fair value gap trading strategy, particularly when it comes to identifying favorable trading setups. Despite the forex market being open 24 hours a day, not all times present ideal conditions for executing fair value gap trades. That’s where the concept of ICT Kill Zones comes into play. ICT Kill Zones ICT Kill Zones refer to specific time periods during the day that have been observed to offer higher probability trading opportunities. These zones are associated with the entry of smart money, which are institutional or banks who have the ability to influence market direction. In short, ICT Kill Zones correspond to specific time periods during the day that are particularly relevant for trading activities. These zones include the London Open, London Close, New York Open, and New York Close. Traders using the fair value gap trading strategy often focus on these times as they tend to offer higher probability trading setups. The ICT Kill Zones are associated with the entry of smart money and can provide enhanced opportunities for traders to capitalize on market movements. By aligning their trading activities with these specific time periods, traders aim to improve their chances of success. Liquidity in FVG Trading Strategy Liquidity in the market often takes the form of buy stops and sell stops.market makers or smart money intentionally trap retail traders by manipulating prices to trigger their stop losses. The idea is that they move the market in one direction to hunt for stop losses, causing retail traders to place orders in the false direction and set their stop losses at key levels. After the stop loss hunt, the market reverses in the opposite direction, benefiting the smart money. Let’s analyze the above chart from a retail trader’s perspective. When we observe the chart, we notice that the price levels between 44240 and 44280 have proven to be strong resistance in the past. Based on this observation, many retail traders might place their selling pending orders to anticipate of a price reversal at these levels. To manage their risk, they would likely set their stop loss orders just above this resistance area. What is done by market makers or smart money,they could manipulate the market by initially pushing the price upward, deliberately triggering the stop loss orders placed by retail traders. This action would cause some retail traders to think that a breakout is occurring and prompt them to place buying orders while setting their stop losses at levels below the resistance area. Once the stop loss orders have been hunted and triggered, the market makers or smart money may then reverse the price direction. Enhancing Trading Success with the Fair Value Gap Entry Strategy After a liquidity hunt on a higher time frame, you suggest switching to lower time frames such as 15 minutes, 5 minutes, 3 minutes, or even 1 minute to identify certain patterns that may emerge following the stop loss hunt. These patterns include: 1.Sudden or sharp price movements: Following the liquidity hunt, you may observe rapid and significant price fluctuations on the lower time frames. This sharp movement causing market structure shift and provide an extra confluence. 2. Fair value gap (FVG): Look for gaps between the current price and the fair value of the asset. The fair value represents the equilibrium price based on various factors. Identify instances where the market price deviates significantly from this fair value. 3. Entry position based on the Fair Value Gap strategy: Once you spot a fair value gap pattern after the liquidity hunt, you can consider taking a position in anticipation of the market filling that gap. The expectation is that the market will eventually return to the fair value price. It’s important to carefully train your eyes to recognize these patterns after a liquidity hunt and patiently wait for the market to come back and fill the identified gap. Once you have identified a suitable entry position, you can place your stop loss order above the first candle to manage your risk. Please note that implementing such strategies requires careful analysis, experience, and a deep understanding of the specific market you are trading. It’s crucial to conduct thorough research, backtest your strategy, and consider other factors that may influence price movements before making any trading decisions.
Education
by Golden_Star1994
Market Phases | Buy & Sell zone!Today, we delve into the crucial market phases, focusing on the dynamics of accumulation and distribution, along with the concepts of BOS (Breakout of Structure), Sweep, Range, and Liquidity. Understanding these phases is essential for developing an informed trading strategy and improving trading decisions. The market goes through various phases, such as accumulation and distribution, which play a key role in price formation. Accumulation represents a period when institutional traders accumulate a significant position, while distribution is associated with the sale of these positions. BOS (Breakout of Structure) is a pivotal event where the price surpasses a significant support or resistance level. Analyzing BOS can provide signals for reversal or trend continuation, indicating the end of one phase and the beginning of another. The concept of Sweep involves the rapid and aggressive buying or selling of a large quantity of assets at current market prices. This may indicate institutional interest and influence the future direction of the price. Range refers to a consolidated price interval where the market is temporarily "locked." During these phases, traders can seek breakout or breakdown signals to identify trading opportunities. Liquidity is crucial as it represents the availability of a large volume of trades at a specific price level. Understanding market phases and concepts like BOS, Sweep, Range, and Liquidity provides a solid foundation for chart analysis. Using this knowledge, informed decisions can be made to identify trading opportunities and manage risks more effectively.
Education
by EdgeTradingJourney
1
The best trading setup with Entry!In this model, we observe a market that begins to consolidate before a sharp decline, during which liquidity is created with an imbalance. Immediately after, there is an upward movement with rising highs and lows, forming a bullish liquidity trendline. When the price reaches a point where it starts to consolidate, dual liquidity is generated on the buy side in the upper part of the consolidation. Subsequently, a false upward movement occurs, during which the price gains liquidity from the previous order block created by the initial sharp decline. This creates an excellent opportunity to enter a short position, with the aim of reaching the minimum of the main decline. Updates will be provided with an example applied in a real case study. Greetings and happy trading to everyone from Nicola.
Education
by EdgeTradingJourney
1
Choch Entry & Liquidity Model | Trading StrategyIntroduction: The trading strategy "Choch Entry & Liquidity Model" has emerged as an innovative model in the financial domain, focusing on market entry and liquidity. This approach is built upon key principles aimed at maximizing returns and effectively managing risk. Fundamental Principles: The strategy relies on an entry approach known as "Choch Entry," which is presumed to provide precise trading signals based on specific indicators. This method aims to capture significant price movements through a detailed analysis of market data. Liquidity Management: Another distinctive element of this strategy is its focus on liquidity. The "Liquidity Model" seeks to optimize order execution, ensuring that the strategy can enter and exit the market efficiently, minimizing slippage and price impact. Practical Implementation: The practical implementation of this strategy requires a thorough understanding of financial instruments and indicators used in the model. Traders must be able to adapt the strategy to changing market conditions and constantly monitor key variables to make informed decisions. Risks and Challenges: As with any trading strategy, it is crucial to understand the potential risks and challenges associated with the "Choch Entry & Liquidity Model" strategy. Market volatility, sudden changes in economic conditions, and other factors can influence outcomes. Conclusions: The "Choch Entry & Liquidity Model" trading strategy represents an intriguing approach that combines targeted entry with careful liquidity management. Its effectiveness depends on the trader's proficiency in consistently and flexibly applying key principles, adapting them to the changing dynamics of the market.
Education
by EdgeTradingJourney
Forex Correlation and Diversification StrategiesIn forex trading, currency correlation and diversification strategies are vital tools for managing risk and optimising returns. This article explores the nuances of these techniques, providing traders with insights to navigate the forex market effectively using currency correlation. Understanding Forex Correlation and Diversification In forex trading, understanding the correlation between currencies is pivotal. This concept refers to how currency pairs move in relation to each other. For example, some pairs exhibit positive correlation, moving in tandem, while others show negative correlation, moving in opposite directions. Grasping these correlations aids traders in analysing market movements and in developing strategies that may minimise risks. Currency diversification plays a crucial role in this context. By diversifying their portfolio across various currencies and not just sticking to a single pair, traders can reduce their exposure to market volatility. This strategy involves investing in currency pairs with different correlations, balancing the risk associated with currency movements. Effective diversification in trading also includes understanding how global economic factors can affect different currencies, thus allowing traders to hedge against potential losses and capitalise on varied market dynamics. Correlation Breakout Strategy The Correlation Breakout Strategy is a nuanced forex correlation strategy used by traders to capitalise on intermittent shifts in currency pair relationships. In essence, it involves monitoring positive correlations in currency pairs and identifying moments when this correlation breaks and turns negative. This divergence often signals a unique trading opportunity. A practical tool in this strategy is the correlation coefficient, which can be found in FXOpen’s free TickTrader platform. This indicator quantifies the degree of correlation between pairs, with a value ranging from -1 to 1. Typically, a strong positive correlation is indicated by values close to 1. However, when traders observe this coefficient turning negative, particularly falling below -0.5, it signals a noteworthy divergence from the usual pattern. This divergence can be a precursor to a significant market move. When such a breakout occurs, the theory states that traders focus on the pair with the most apparent directional movement. The assumption here is that this pair will continue on its trajectory. Traders then anticipate that the correlated pair will follow suit, aligning back to its typical correlation pattern. For example, take EUR/USD and GBP/USD, which are known for their high positive correlation. If they suddenly start moving in opposite directions, with EUR/USD showing a clear trend while GBP/USD shows mixed signals, it’s likely GBP/USD will eventually follow EUR/USD. Hedging With Negatively Correlated Pairs Hedging using negative correlation in currency pairs is a strategy that allows traders to manage risk effectively. In this approach, the trader takes positions in two currency pairs that typically move in opposite directions. The goal is to offset potential losses in one trade with gains in another, thus mitigating overall risk. Consider a scenario where a trader spots a long setup in USD/JPY but harbours some uncertainty about the trade's potential. To hedge this position, the trader can also go long on AUD/USD. Here's why this works: USD/JPY and AUD/USD often exhibit a negative correlation. When USD/JPY rises, AUD/USD tends to fall, and vice versa. By going long on both, the trader is effectively insuring their trade against unexpected movements. In the example shown, EUR/USD forms a pennant after a bullish reaction from a support level, reflecting a potential upward continuation. Simultaneously, USD/CHF also shows a bullish reaction from its support level. By going long on both pairs, the trader capitalises on the potential bullish movement in USD/CHF while hedging against the risk in EUR/USD. This strategy slightly reduces the potential gain but offers protection against losses, a prudent approach in uncertain market conditions. Confirming Signals with Correlated Pairs When using currency correlation in forex trading, one effective strategy is looking at correlated pairs to confirm trade signals. This involves first identifying a potential setup on one currency pair, such as a chart pattern or indicator signal, and then seeking additional confirmation from a correlated pair. For instance, a trader might observe a rising wedge on EUR/USD, a pattern typically indicating a bearish reversal. To strengthen their analysis, the trader can look at a positively correlated pair like AUD/USD. If AUD/USD is already showing a breakdown, it adds confluence to the bearish outlook for EUR/USD, reinforcing the trader's decision to anticipate a potential decline and go short. In the chart above, a trader might notice the bearish divergence between EUR/USD and the RSI (Relative Strength Index), signalling potential downward movement. NZD/USD, a correlated pair, is already trending downwards, providing additional confirmation of the bearish signal on EUR/USD. This method of using correlated pairs for validation can significantly increase the accuracy of trade entries in forex trading. Limitations of Currency Correlations While currency correlations are a valuable tool in forex trading, they have certain limitations: Temporal Variability: Correlations can change over time due to economic, political, or unforeseen global events, affecting their reliability. False Signals: Correlations do not guarantee effective trades. Misinterpreting correlation data can lead to false signals and potential losses. Data Overload: Relying too heavily on correlation data can lead to analysis paralysis, where a trader struggles to make decisions due to excessive information. Underlying Market Conditions: Correlations often disregard underlying market conditions, which can be crucial for understanding currency movements. Lagging Indicators: Correlations may act as lagging indicators, meaning they reflect past market behaviours and might not accurately identify future movements. The Bottom Line Mastering forex correlation and diversification strategies is essential for any trader seeking to thrive in the forex market. These approaches offer a roadmap to understanding market dynamics, managing risk, and identifying potential opportunities. For traders eager to apply these strategies in real-world scenarios, opening an FXOpen account can be an essential step towards harnessing the full potential of these sophisticated trading techniques in the global forex marketplace. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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Master Candlesticks: The key trading success!Here's an analysis of various candlestick patterns commonly used in technical analysis of financial markets: Dragonfly Doji: This candlestick has a small body with a long lower shadow and no upper shadow, indicating significant price exploration lower but closing near the opening price. It is often interpreted as a signal of a potential bullish reversal. Morning Star: A bullish reversal pattern that forms in a downtrend. It consists of three candles: a long bearish candle, followed by a shorter candle signifying uncertainty, and a third long bullish candle. Doji: The Doji is a candle with a very small body, indicating that the opening and closing prices are nearly equal. This pattern reflects market indecision. Three Bullish Candles: This pattern consists of three consecutive bullish candles, often interpreted as a strong bullish signal, especially if it occurs after a downtrend. Three Bearish Candles: Opposite to the Three Bullish Candles, this pattern shows three consecutive bearish candles and can indicate a strong bearish signal. Bullish Engulfing: A two-candle pattern where a bullish candle follows and completely "engulfs" the body of the preceding bearish candle. It indicates a potential trend reversal to the upside. Hammer: This candle has a small body and a long lower shadow, indicating that the market has rejected lower prices. It's considered a bullish reversal signal. Gravestone Doji: Similar to the Dragonfly but with a long upper shadow and no lower shadow, suggesting that prices rose but were then rejected, often interpreted as a bearish reversal signal. Hanging Man: This candle resembles a Hammer but occurs at the top of an uptrend, suggesting that bearish pressure is starting to emerge. Morning Doji Star: A variation of the Morning Star, where the middle candle is a Doji. This pattern further strengthens the indication of a potential bullish reversal. Each of these candle formations provides valuable insights into market sentiments and potential trend reversals. However, it's important to use them in conjunction with other forms of technical analysis for greater reliability. Have a nice trading day.
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Taking the Guesswork Out of Take Profit: A Fibonacci Approach In the world of trading, one of the most influential factors that can either make or break a trader is the mind. How often have we found ourselves saying, "I should have done this" or "I would have done that" after a trade has unfolded? Yet, when we were in the heat of the moment, those seemingly obvious solutions never crossed our minds. To overcome this common pitfall and make more calculated decisions when it comes to setting take profit levels, we can turn to the Fibonacci tool. Utilizing Fibonacci retracement levels can help traders establish mechanical and consistent take profit points. This is especially crucial for mechanical traders who rely on predetermined parameters for their trading strategies. Let's delve into how you can use Fibonacci step by step to set your take profit levels, taking into consideration a buying scenario (though the process remains the same for selling, but in reverse). **Step 1: Add -0.272 and -0.618 Levels to Your Fibonacci Tool** Begin by adding the -0.272 and -0.618 Fibonacci retracement levels to your Fibonacci tool. These negative levels will be instrumental in creating mechanical take profit points. **Step 2: Place Your Fibonacci Tool from Low to High** Next, take your Fibonacci tool and place it from the low point to the high point of the relative price movement you're analyzing. This essentially helps you identify potential retracement levels within the price action. **Step 3: Identify Negative Levels** As you apply the Fibonacci tool, you'll notice the negative levels (-0.272 and -0.618) on your chart. These levels will suggest specific price points that you can consider for setting your take profit. Interestingly, you'll often find that prices tend to react near these negative Fibonacci levels because they represent strong psychological levels in the market. By following these steps, you can establish a mechanical and objective approach to determine your take profit levels. This approach not only reduces the influence of emotions in your trading decisions but also provides you with a systematic way to lock in profits. Remember that while the example here focuses on buying, the process remains the same for selling, with the Fibonacci levels adjusted accordingly. Incorporating Fibonacci retracement levels into your trading strategy can be a game-changer, helping you trade with greater discipline and consistency. The key is to trust the numbers and your predetermined plan, allowing you to make more informed trading decisions and ultimately enhance your overall trading performance.
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