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Trading - Expectations VS RealityHey Traders, In this post we will aim to clear some of common misconceptions of trading and how we can help you go further in your trading career by giving you all the tools you need to better understand the market and kill the game. ____________________________________________________________ 1. Trading is easy. Trading is relatively easy IF you know the rules of the market and use certain analytical techniques. Once you have a full arsenal of technical tools, you can easily understand the market and figure out where it may go next. 2. Market moves in one direction. That can be true to a certain extent where we have trending markets. However, within that trend there are various types of pullbacks. Once you understand the different market phases, you can make money whether it's a trending or ranging market. Opportunities are endless! 3. Buy when low. Sell when high. If only things were that straight forward, right? Sometimes the lows aren't really the lows and the highs push higher and higher. This is when you need to understand the different patterns and structure of the market to help you figure out where the best possible place is to buy or sell. Once we understand the market, we need a trading plan. How do we enter? Where do we enter? Where is the stop loss? This is where having rigid checklist really helps! You can tick things off the list and grade the trade setup from good to bad and then enter accordingly using various entry methods. It may sound like a lot of but once broken down into little bits, you can learn this EASILY and know exactly how to analyse and enter trades! ____________________________________________________________ What we will be covering: - Market structure: Impulse & Corrections - Using Index charts to correlate your trades (Very important Topic!) - Drawing a trendline and levels correctly – There’s a hack to it! - Using Moving Averages Correctly - Combining higher timeframe & lower timeframe - Different patterns and how to trade them - More topics to come! Comment below on what other topics you would like to see! I hope this post help clarify some of the misconceptions of trading and the different elements involved. See the links below for information on how we can help you!
OANDA:XAUUSDEducation
by WicktatorFX
15
Price Action vs Indicators: Who wins?Happy Friday, ladies and gentlemen. The topic of our first educational post for the day is the following: Price Action vs Technical Indicators. To begin with, each and every traders has his or her own strategy. Some of them would prefer using only indicators to open trades, some would use indicators as confluences, some of them do not use indicators at all and so forth. The truth is, indicators deceive a lot of new beginner traders into thinking that they are the key to successful trading and investing. Right after hoping on the charts, beginners tend to saturate their graphics with tons of indicators which contradict to each other. One indicator shows a buy signal, another one shows a sell signal, which makes it harder for traders to make decisions on the markets. Of course, using some spesific indicators as confluences to open positions is not bad at all. If it fits your strategy, you may add some technical indicators to backup your analysis. But at the end of the day, using several indicators and saturating your beautiful graphs with them will never lead you to success. All in all, as it has been stated above, everyone has his or her own strategy. Therefore, if indicators work for you, go ahead and implement them in your analyses! At the end of the day, it is all about making money, isn’t it? Have an amazing Friday and a brilliant upcoming weekend, everyone!
Education
by Investroy
30
EURCHF - How To Trade This BreakoutEURCHF is within a descending channel of an ascending channel... pretty confusing I know but have a look at the chart and you can see which way price will be heading. What we need to do now is find the best entry which is safe and clean. From the diagram in the chart, you can see that our entry will only be after the break of the descending channel and after a bullish correction such as a bull flag. We need to make sure that price has the momentum to move up so we will be waiting for a breakout of the bullflag before entering with stops below the correction. Goodluck and trade safe!
Education
by WicktatorFX
2
EURCHF - How To Trade This BreakoutEURCHF is within a descending channel of an ascending channel... pretty confusing I know but have a look at the chart and you can see which way price will be heading. What we need to do now is find the best entry which is safe and clean. From the diagram in the chart, you can see that our entry will only be after the break of the descending channel and after a bullish correction such as a bull flag. We need to make sure that price has the momentum to move up so we will be waiting for a breakout of the bullflag before entering with stops below the correction. Goodluck and trade safe!
Education
by WicktatorFX
1
EMAS ARE YOUR BEST TRADING FRIEND TRADE TIPAlthough EMAs lagg but every trader at every level needs to have a combination of several that they use they are a vital tool for every trader and a must have the right EMA after the right market move can be your crystal ball to the next few weeks direction of a pair or as in this case Bitcoin in this chart you will see a cross of our 2 favorite emas after a few bearish 8 hour sessions this was a signal to us to short and this gave us 24,000 Bitcoin monkey nuts Its all about finding the right pair the right time frame and the right ema crossing this is especially important in Crypto currency trading where have little confluentual history to go on have a great trading week
BITSTAMP:BTCUSDEducation
by London_fx_club
3
The Importance of Yearly Open / CloseAs you see, yearly open (usually its the same as yearly close) is crucial for determining the price bias during the year. For euro to continue bullish, it needs to close ABOVE yearly open on weekly. But even if it does, there will be struggle at this level. Then, as you see, yearly pivots usually serve as yearly tops and bottoms. We saw price reversal at yearly pivot this year. Also during previous years price always stops or reverses at yearly pivots. Watch them! Keep an eye on yearly opens! For educational purposes only.
Education
by ICFX
Currency Correlations: The unspoken truthHappy Friday, ladies and gents, and welcome on our another educational post for the day. Today, we are gonna talk about positive currency correlations and examine how they impact our trading. But to begin with, what is currency correlation? Currency correlations are a statistical measure of the extent that currency pairs​ are related in value and will move together. If two currency pairs go up at the same time, this represents a positive correlation, while if one appreciates and the other depreciates, this is a negative correlation. As it can be clearly inferred from the graph, the charts of EUR/USD and GBP/USD have been chosen to be scrutinised. These two currency pairs are highly correlated and are moving in the same direction. As we can see, 2 major similarities have been identified on the Daily timeframe charts of both currency pairs. However, there are a lot more than just 2. As it can be inferred from Similarity #1, the price managed to leave a long wick in late February 2020 for both pairs. Looking at Similarity #2, we can observe that the price is forming a top for both pairs and preparing to reverse and continue its move to the downside. Now that we have talked about the basics, let's move on and talk about some problems faced by currency correlations. Most of the time, new traders do not pay attention to this basic concept and make false decisions without noticing. I have seen hundreds if not thousands of traders that ignore the rule of currency correlations and make irrational conclusions like the following: opening Buy positions on EUR/USD and opening Sell positions on GBP/USD. Of course, you can do that as well, depending on the timeframe that you are trading and depending on how long you are planning on keeping the trades open. However, on the longer term trading, you won't be able to succeed. Furthermore, most of the new traders open buy or sell positions for both of the trades, which results in increasing their risks. If you open BUY or SELL positions for both trades at the same time, and the price moves in the opposite direction of your bias, you are gonna lose both of the trades. Again, not in all cases, but 80-90% of the time, as the two pairs are highly correlated. What can be done to avoid being the victim of the highly correlative pairs and keep it safe? There are two strict rules that we follow, which have always worked for us: -Open positions for the trade with the better setup or -Open positions for both trades but cut the lot sizes by half So in the first case, we compare the two setups that we have, in our case it's either EUR/USD or GBP/USD. For instance, let's say that EUR/USD gives us more confluences for opening a transaction. Therefore, what we do is, we ignore GBP/USD and trade EUR/USD. For the second case, let's say that we use 1.0 lot size to open transactions. What we can implement, is using 0.5 for each trade and opening positions for both EUR/USD and GBP/USD. I hope you liked this educational post, family! If you have any suggestions on what we should post next as an educational post, feel free to let us know in the comment section below. Have an awesome upcoming weekend, everyone!
Education
by Investroy
29
Trend Continuation Patterns with Real-Time ExamplesGood morning, Traders! Today we will make an educational post about the most used corrective patterns. There are numerous patterns, even more complex, such as Elliott counts where each internal wave of corrections is explored, but the reality is that it is not 100% necessary to apply it in the market. The idea of ​​this information is to provide a simplified, useful and applicable overview. For this, we will explain the corrective patterns and then we will show real-time examples that are being presented in the market at the moment or that have happened recently. The examples will be in high temporalities so that the charts are valid for a few days/weeks. One concept that encompasses all the corrective patterns that we are going to talk about is that they are all trend continuation patterns. That is to say, it is a correction that is formed and then continues to the previous trend. That said, in all cases, it is necessary that prior to the pattern, there is an impulse in that direction, that is, if we see a triangle, for it to have an upward resolution it is necessary that the previous trend be upward. While there are some cases where the patterns can go in both directions depending on the context, we won't get into them. Keep in mind that we ALWAYS have to analyze the context of the pattern correctly. For example, if we see a bullish continuation pattern forming near a major resistance or trend line that could interrupt the price movement, it is clearly not the place to put your money. You should always look for the correct pattern + the appropriate scenario for the trade, where the risk-benefit ratio that we obtain is appropriate. 🔸Pennant Pattern: is a type of continuation pattern formed when there is a large movement in a security, known as the flagpole, followed by a consolidation period with converging trend lines—the pennant—followed by a breakout movement in the same direction as the initial large movement, which represents the second half of the flagpole. 🔸Ascending Triangle: it is created by price moves that allow a horizontal line to be drawn along the swing highs and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. 🔸Flag Pattern: when price moves counter to the prevailing price trend observed in a longer time frame on a price chart. It is named because of the way it reminds the viewer of a flag on a flagpole. The flag pattern is used to identify the possible continuation of a previous trend from a point at which price has drifted against that same trend. Should the trend resume, the price increase could be rapid, making trade timing advantageous by noticing the flag pattern. 🔸Descending Wedge: The wedge pattern is a continuation pattern formed when the price bounces between two downward slopings, converging trendlines. It is considered a bullish chart formation but can indicate both reversal and continuation patterns – depending on where it appears in the trend. 🔸Rectangle: is when the price reaches the same horizontal support and resistance levels multiple times. The price is confined to moving between the two horizontal levels, creating a rectangle. Real-Time examples: AUD/USD Descending Wedge: EUR/GBP Rectangle: EUR/NZD Rectangle: GBP/USD Flag: NZD/USD Flag: USD/JPY Flag:
Education
by ThinkingAntsOk
Understanding the NFP EU PumpHere are some questions I put out to my community group the other day followed by the answers. The reasoning being the move has been annotated on the chart. Why did price slowly decline prior to NFP? - Price had to decline slightly before NFP to mitigate the impulsive move created earlier in the day. - Price had to stop out break and re-test buyers with a tight stop loss - Price had to lure sellers into the market before NFP Why did price reject the exact box marked before skyrocketing? - Price skyrocketed because it had gathered enough liquidity from stopping out the buyers. - It utilised the previous order block to skyrocket to take out the impulsive sellers before NFP.
Education
by AlkalineFX
📚Easiest and most accurate way to trade EUR/USDHi traders! I have long wanted to share the simplest trading strategy, which is suitable for both experienced and beginners. The easiest way to trade EURUSD is to trade channels + support and resistance lines. 1. How to find a channel. As you can see from the chart, over the past 6 years (immediately after Brexit), the price has always been in a channel. You need to build channels on the D1 timeframe. I have provided you with the existing channels on the chart, now the price is in a growing channel. To build a new channel, 4 points are enough (2 above and 2 below). Although for more advanced traders, 3 points will be enough. Examples. 2. Once you have built the channel, you can trade. 3. With the entrances sorted out. Everything is simple here. It will be more difficult to choose SL and Tp To make it simple and easy to remember (especially for beginners) always set SL 3 times less than TP (Risk to reward ratio 1 to 3) It remains to decide on the TP. Strong support and resistance lines will help us a lot. It is better to close the trade when the price reaches strong lines. In fact, there are few important lines, so they are not difficult to find (otherwise, they are most likely not important lines). Example: 4. Important notes. 1) It is better to trade with the trend (open buy trades in an upward channel and sell trades in a falling channel) 2) Better not to enter a trade during very important events (like Covid-19) 3) False breakouts occur at times, but the price quickly returns to the channel, so after the price quickly returns, you can open a trade. 4) If the price is both on the channel line and + on the strong line, then you can open a deal with 2 times larger volume 5) If the price touches the channel line twice in a short period of time, then it's okay if you open two trades + you can double the stop loss in this case. 5. Output In total for the last 2.5. of the year there were 15 entries, 14 of them in plus 1 in minus (Accuracy 93% !!) Average risk to reward ratio of 1 to 3 (although entries are so accurate that experienced traders can make a risk to reward ratio of 1 to 5) If you take the risk for trade 1% of the deposit (although you can take 2% with such accuracy) then: Profit 14 * 3 = 42%, and loss 1% The total profit is 41% for 2.5 years, that is, 16.4% + RISK-FREE profit per year, only for EURUSD. experienced traders know these are great numbers. Find 2-3 more such strategies and you will be an excellent trader Like and comment if you like the idea This will be my motivation to create posts like this.
Education
by UnknownUnicorn15614419
22
📚Easiest and most accurate way to trade EURUSDHi traders! I have long wanted to share the simplest trading strategy, which is suitable for both experienced and beginners. The easiest way to trade EURUSD is to trade channels + support and resistance lines. 1. How to find a channel. As you can see from the chart, over the past 6 years (immediately after Brexit), the price has always been in a channel. You need to build channels on the D1 timeframe. I have provided you with the existing channels on the chart, now the price is in a growing channel. To build a new channel, 4 points are enough (2 above and 2 below). Although for more advanced traders, 3 points will be enough. Examples. 2. Once you have built the channel, you can trade. 3. With the entrances sorted out. Everything is simple here. It will be more difficult to choose SL and Tp To make it simple and easy to remember (especially for beginners) always set SL 3 times less than TP (Risk to reward ratio 1 to 3) It remains to decide on the TP. Strong support and resistance lines will help us a lot. It is better to close the trade when the price reaches strong lines. In fact, there are few important lines, so they are not difficult to find (otherwise, they are most likely not important lines). Example: 4. Important notes. 1) It is better to trade with the trend (open buy trades in an upward channel and sell trades in a falling channel) 2) Better not to enter a trade during very important events (like Covid-19) 3) False breakouts occur at times, but the price quickly returns to the channel, so after the price quickly returns, you can open a trade. 4) If the price is both on the channel line and + on the strong line, then you can open a deal with 2 times larger volume 5) If the price touches the channel line twice in a short period of time, then it's okay if you open two trades + you can double the stop loss in this case. 5. Output In total for the last 2.5. of the year there were 15 entries, 14 of them in plus 1 in minus (Accuracy 93% !!) Average risk to reward ratio of 1 to 3 (although entries are so accurate that experienced traders can make a risk to reward ratio of 1 to 5) If you take the risk for trade 1% of the deposit (although you can take 2% with such accuracy) then: Profit 14 * 3 = 42%, and loss 1% The total profit is 41% for 2.5 years, that is, 16.4% + RISK-FREE profit per year, only for EURUSD. experienced traders know these are great numbers. Find 2-3 more such strategies and you will be an excellent trader Like and comment if you like the idea This will be my motivation to create posts like this.
Editors' picks
Education
by UnknownUnicorn15614419
33
How To Trade a P-Shaped Volume Profile (EUR/AUD Analysis)Hello guys, in today’s day trading analysis I would like to show you how to trade the P – shaped profile on a nice example that has formed on EUR/AUD. Price Action Analysis If you look at the EUR/AUD (60 Minute chart) then you can see, that last week the price went down, then up, and then there was a rotation. This tells us that the price tested the lower prices, but Buyers pushed the price upwards again – back into a rotation which is considered a current “Fair Value” area. Fair Value – that’s where most of the trading takes place. Market participants consider the price to be fair there. At least for now. Volume Profile Analysis If you look at the Weekly Volume Profile, then you can see that it is the thickest at the place where the rotation (Fair Value) was. This makes sense, because most trading took place there. But, there is one more important place in the P – shaped profile . It is the little “bump” in the lower part of it. This little “bump” is called a “Volume Cluster“. In this case, it points to a place where strong Buyers placed their aggressive ( Market Orders ) to turn the price upwards again. Back into the “Fair Value” area. Even though this Volume Cluster can’t match the volumes traded in the Fair Value area, it is really significant. The reason is that it points to a place where strong and aggressive Buyers were active. When the price comes back into this area, then it is likely that those Buyers will become active again and that they will want to push the price upwards again. This is why this Volume Cluster represents a Support (around 1.5494). When the price makes it there at some point in the future, then I expect there will be a reaction to it. How To Trade The P-Shaped Profile The way to trade this would be to hold the Long trade from 1.5494 until it reaches the Fair Value area again. Ideally its Point Of Control (POC) . In this case it’s at 1.5574. This is a long way, right? So, what I prefer instead is to split the trade in two halves. Bank the first profit soon (30 pips max). And then secure your position by moving SL and trail the 2nd half towards the POC. I hope you guys liked today’s analysis! Let me know what you think in the comments below! Happy trading, -Dale
Education
by Trader_Dale
2
📚 Understanding Price Action - Impulsive & Corrective Moves 📚For every currency pair, all the price action can be broken down into 2 different waves. Impulse waves and corrective waves. Both of these waves have the same patterns within them such as flags, ascending/descending corrections, channels etc. The tip to finding out what phase we're in is to zoom out to a bigger timeframe and look at price action as a whole and ask yourself "is this impulsive or is this corrective". Once you understand that, you can more often than not understand where price will be going next. For CADJPY, we are in a flat ABC triangle and we are approaching the upper limits of the triangle. We also are in an ABC correction. On the smaller timeframe, if things line up, we can get in at the very top of the impulse and ride this back down! Try spotting corrections and impulses and watch how your chart game levels up!
Education
by WicktatorFX
7
📚 Understanding Price Action - Impulsive & Corrective Moves 📚For every currency pair, all the price action can be broken down into 2 different waves. Impulse waves and corrective waves. Both of these waves have the same patterns within them such as flags, ascending/descending corrections, channels etc. The tip to finding out what phase we're in is to zoom out to a bigger timeframe and look at price action as a whole and ask yourself "is this impulsive or is this corrective". Once you understand that, you can more often than not understand where price will be going next. For CADJPY, we are in a flat ABC triangle and we are approaching the upper limits of the triangle. We also are in an ABC correction. On the smaller timeframe, if things line up, we can get in at the very top of the impulse and ride this back down! Try spotting corrections and impulses and watch how your chart game levels up!
Education
by WicktatorFX
11
📚 Impulsive & Corrective Breaks - How To Identify & Trade Them 📚What is an Impulse? An impulse is defined as a strong move whereby the market moves quite strongly or heavily in one direction, covering a great distance in a short period of time. Typically, when there's a trend reversal occurring, we require an impulse in the opposite direction of the trend, indicating to us that there's a possible trend reversal. The question we face now is "What does an impulse need to look like for there to be a trend reversal?". Throughout my years in trading, I've found that if a significant level is broken during the impulse, we can expect a follow through of that impulse after a brief correction or a retest. In the Impulse diagrams, you can see that I've marked out a recent significant level where price reacted. When there was an impulse, I kept an eye on the level to see if it breaks. If it did not break, I can assume that the impulse wasn't strong enough to create a trend reversal and it is merely a bigger more aggressive correction. However, if the level did break along with the trendline, we can assume that there is a trend reversal taking place and we should keep our focus on the key level and price action for corrections such as flags, pennants , channels etc. Please see chart updates for examples of Impulsive Breaks and how to trade them. What is a Correction? A correction is defined as a relatively short-term movement of the market in the direction opposite to the main trend. To identify whether a break of a trendline is an impulsive break of corrective break, we must also identify the key level by looking at a significant level where price reacts. If the impulse that breaks the trendline does NOT break the level, we can assume that the trend isn't ready to reverse yet and it is a corrective break. Often a corrective break ends up with an impulse breaking the significant level, at which time we can look for a correction to take our trade. See chart updates below for examples of corrective breaks and how to trade them. Please leave a like and comment what you think! As always, Goodluck and trade safe! Mr Wick.
Editors' picks
Education
by WicktatorFX
143
📚 Impulsive & Corrective Breaks - How To Identify & Trade Them 📚What is an Impulse? An impulse is defined as a strong move whereby the market moves quite strongly or heavily in one direction, covering a great distance in a short period of time. Typically, when there's a trend reversal occurring, we require an impulse in the opposite direction of the trend, indicating to us that there's a possible trend reversal. The question we face now is "What does an impulse need to look like for there to be a trend reversal?". Throughout my years in trading, I've found that if a significant level is broken during the impulse, we can expect a follow through of that impulse after a brief correction or a retest. In the Impulse diagrams, you can see that I've marked out a recent significant level where price reacted. When there was an impulse, I kept an eye on the level to see if it breaks. If it did not break , I can assume that the impulse wasn't strong enough to create a trend reversal and it is merely a bigger more aggressive correction. However, if the level did break along with the trendline, we can assume that there is a trend reversal taking place and we should keep our focus on the key level and price action for corrections such as flags, pennants, channels etc. Please see chart updates for examples of Impulsive Breaks and how to trade them. What is a Correction? A correction is defined as a relatively short-term movement of the market in the direction opposite to the main trend. To identify whether a break of a trendline is an impulsive break of corrective break, we must also identify the key level by looking at a significant level where price reacts. If the impulse that breaks the trendline does NOT break the level, we can assume that the trend isn't ready to reverse yet and it is a corrective break. Often a corrective break ends up with an impulse breaking the significant level, at which time we can look for a correction to take our trade. See chart updates below for examples of corrective breaks and how to trade them. Please leave a like and comment what you think! As always, Goodluck and trade safe! Mr Wick.
Editors' picks
Education
by WicktatorFX
57
Stop Loss Hunting – Are You The Hunter 🤠 Or The Prey 🍖 ? Hello guys, In today’s article, I am not going to tell you which type of order to use, because that was the main message of the previous one. Today, I will focus on another interesting phenomenon related to this topic – Stop Loss Hunting. “My Broker Is Hunting My Stop Loss” A typical thing beginner traders say: “My broker is hunting my SL, he knows exactly where it is and he always makes the price go exactly there.” Or “I am the most unlucky person ever – the price always hits my SL and then turns the way I predicted.” Sure, having a reliable broker is crucial but in this case, it’s very often the fault of the beginner trader. Well, in fact this is not just beginners. Even advanced traders have such problems… Let’s now talk about what is the reason of this “SL hunting” and let’s use a recent example. Heavy Volume Zones On DAX A couple of days ago I wrote an analysis on DAX. In this analysis, I showed a strong volume-based swing Support around 14.600. As a reaction to this I received a couple of emails from people asking me why not the higher area, around 15.250? Both are heavy volume zones , so why not trade both? Lets talk about the 15.250 zone now. Those heavy volumes you see there were accumulated in a rotation area around 15.250 (marked in red). That rotation area though, had a very “weak low“. The Weak Low There were so many little reactions to the low of the price channel, but not a single big and strong rejection. What many traders do is that they have their SL orders below the rotation channel. This is usually traders who trade breakout strategies, or traders who are trailing the trend. The picture below shows this rotation zone more in detail and it shows all those small and weak rejections. Below such rejections, many people place their SL orders. I call the areas where people place a lot of their SL orders “SL Clusters“. What usually happens is that the price goes there and “consumes”all those SL orders there. Who is doing this? Not the “evil broker”. It’s the BIG trading institutions who manipulate the price to go there. Then they take all that free liquidity there (liquidity from those SL orders). Big guys need liquidity. They need it to enter their trades. They actively manipulate the price and look for places with liquidity like the one I showed you. BOOM! – Everybody Out! A phenomenon worth noticing with such “SL hunting” is that the price usually shoots rapidly through such zones. BOOM! Everybody is out 🙂 Often with slippage. Why does the price shoot so fast through such areas? Because STOP LOSS order is a MARKET ORDER. This is important! Stop Loss Order = Market Order If you read the previous part of this article then you know that a Market Order means that you are able to quit (or enter) your trader NOW. The downside is that you may get a slippage, because NOW there might not be a big enough counter-party (exactly at your desired price level) to Buy what you Sell, or to Sell what you Buy. Stop Loss Hunting When there is a SL run, then all those people whose SL get hit enter a Market Order to quit their position. Market Orders are sort of catalyst that move the market. Those are aggressive orders. This is the reason the price shoots fast past SL Cluster areas. SL clusters are catalysts and people often get slippage when their SL gets hit there. Now, lets get back to that 15.250 level on DAX. Stop Loss Hunting On DAX – EXAMPLE Below this heavy volume area, there was a SL cluster. For this reason it was not a good idea to go Long from 15.250, because the SL cluster was right below it. As you can see, the institutions recognized this SL cluster and they moved the price towards it. When the price hit this area it was quick. Whoosh! All those SL orders got hit. The fact that SL orders are Market Orders helped the price to shoot past this area fast. Remember – Market Order means – I want in (or out) NOW! So, that’s exactly why I don’t like trading Longs when there is such SL cluster below the potential Long entry level – when there is the “weak low“ You guys liked this article? I hope you did! Let me know your thoughts in the comments below. Have a GREAT weekend and happy trading! -Dale
EUREX:FDAX1!Education
by Trader_Dale
2
How to trade wedge patterns? An example based on EURUSD chartWedge Patterns are a type of chart pattern that is formed by converging two trend lines. Wedge patterns can indicate both continuation of the trend as well as reversal. Rising Wedge- On the left upper side of the chart, you can see a rising wedge. Rising wedges usually form during an uptrend and it is denoted by the formation higher highs(HHs) and Higher Lows(HLs). This pattern gives traders the opportunity to take short positions in the market. When price breaks out of the lower Trend Line(TL) of the wedge, a trader can execute a short position. Falling Wedge - On the left lower side of the chart, you can see a falling wedge. Falling wedges when formed during a downtrend is a reversal pattern and it denoted by the formation of lower lows(LLs) and lower highs(LHs). If you notice this pattern during a downtrend, it usually indicates that the downtrend is losing momentum and buyers are stepping into the market gradually. When price breaks out of the upper TL, one can execute a buy trade. On the right side, you can see the recent EUR/USD chart. The wedge pattern in this particular chart is the Broadening Wedge Traders can trade this pattern by taking short positions whenever bearish price action takes place in the upper TL of the wedge. On the other hand, buy trades can be executed on the lower trend line of the wedge.
Education
by MarcellusLUX
36
🎓 EDU 5 of 20: FUNDAMENTALS ARE THE HOLY GRAIL OF TRADINGHello traders! In the previous Educational Post (4 of 20) we learned what FIST (Fundamentals, Intermarket, Sentiment, Technicals) is about and why you need to use this trading framework in your trading. I strongly believe that incorporating a range of analytical disciplines returns better trading results than focusing only on one tool. This is how big players play the market, and this is how you should trade too - if you want to become a consistently profitable trader. Most retail traders put too much emphasis on technical analysis. The majority of traders even trade solely with technical tools. In an earlier post, we have covered why you shouldn't trade only on technicals , so this might be a good time to revisit that lesson and read it if you haven't already. Most retail traders will wait for a signal like a pullback, MA crossover, overbought/oversold RSI conditions, MACD, and follow candlestick patterns and chart patterns to enter into a trade. Guess what? That's an easy way to blow your trading account! If you look at your broker's homepage, you'll see a sentence stating how many retail traders lose money. I have yet to find a retail broker where less than 20-30% of traders are profitable. The rest, 70-80% of clients, lose money on a consistent basis. I bet that, of those who lose money, the majority use technical strategies and/or have poor risk management skills. Institutional traders don't open a trade based on MA crossovers or extreme RSI levels. They follow a range of fundamental signals, analyze correlations between different asset classes, and follow the general market sentiment. Technical analysis accounts for 5% of their work. Technical levels are only used to determine entry and exit points - ONLY after they already know in which direction they want to trade. Fundamental Analysis Unlike technical analysis which is based on the premise that history repeats itself, markets like to trend, and all available news is instantly discounted in the price, the fundamental analysis aims to explore the underlying factors of why a market is going up or down. Technical analysis is all about charts. Technicians are not interested in the reasons behind price movements, which often creates an environment where technicals alone produce fake signals. I bet many of you have seen that: a failed triangle breakout, a failed trendline breakout, or the RSI remaining in oversold conditions as the price continues to trade lower. Fundamental analysis can be grouped into two groups: macro fundamentals, and micro fundamentals. In trading, macro fundamentals refer to the bigger picture fundamentals: interest rates, economic growth, inflation rates, and labor market conditions. Micro fundamentals are more subtle, but can also have a large influence on the price. Those are comments by central bankers, news, market indicators (PMIs, CPIs...), political developments in a country, etc. Central Bank Meetings My students often ask me whether they should follow central bank meetings and press conferences. My answer: If you want to make money trading, then yes! Nothing has such a large impact on prices as central bank meetings and interest rate decisions. And if you do your homework, you can profit from those meetings most of the time. Follow press conferences that are scheduled shortly after the meeting and listen to the Q&A session, and read the entire meeting report once it's out. You'll find it astonishing how much you can learn from those reports - and how easy it can be to make money in the markets. There are eight major central banks in FX: US Federal Reserve (Fed), Bank of Canada (BoC), Bank of England (BoE), European Central Bank (ECB), Bank of Japan (BoJ), Reserve Bank of Australia (RBA), and Reserve Bank of New Zealand (RBNZ). Create a bookmark for each of those central bank websites, and read their reports and articles at least once a week. I like to do it on weekends. You can even have very profitable trades after the Central Bank meeting is over and the market has already reacted to the news. Commercial banks and other sell-side institutions will often drain liquidity in the markets to purchase a currency at discount after a major news report or interest rate decision. If you know how to identify this liquidity drain, you'll be able to catch amazing trades in the future. Thanks for reading and stay tuned for Part 6: What Market Indicators do I Need to Follow?
Education
by MujkanovicFX
Stochastic OscillatorA stochastic oscillator is a momentum indicator. Trading Strategy: ✔ Recognise the trend: 👉 In a trendy market only open position in the direction of trend. 👉In a range market you can use both buy and sell signals. ✔ Upper band and lower band indicating different things in different market conditions: 👉In a trendy market upper and lower bands show the momentum in the market for example in an uptrend if the indicator is above 80 it means that buyers have the momentum. 👉In a range market, however upper and lower bands showing the overbought and over-sold areas. So, we may go long if we see oversold in a range market and go short if we see a over-bought situation. ✔ Divergence is another important strategy to adopt when using stochastic indicator as a divergence may indicate a trend reversal.
Education
by apadanaforex
Market Vs. Limit Orders – Which One To Use? 😲Hello guys, this article will be about Market Orders and Limit Orders. I will break down how retail traders use them (that’s us) and how BIG trading institutions use them. One could think that such info is useful only for day traders and for people trading with Order Flow. This is, however very far from the truth! Understanding how Market and Limit Orders work and how to use them will help you to understand how the markets work overall. Not just on the faster time frames! Market VS. Limit Orders - The Main Differences MARKET ORDERS Market orders are used by “aggressive market participants”. An aggressive market participant is anybody (you, me, an institution,…) who wants to enter their trade NOW. A problem is that if you want to enter (or quit) your trade now, there may not be a counter party to your trading order (=when you Buy, somebody needs to Sell). EXAMPLE: Imagine you want to Buy 10 Lots of EUR at 1.1900 but currently, there are not enough people willing to Sell for this price. Let’s say that for 1.1900 there are only 5 Lots available. Other 5 Lots are available, but only for a higher price – 1.1901. If you enter with a Market Order, then you want to enter your whole trading position NOW. No matter what the price is! So, in this case, you Buy 5 Lots for 1.1900 and automatically 5 lots for 1.1901. Pros & Cons Of Market Orders The upside of Market Order: You enter your whole trade NOW. The downside of Market Order: If there is not enough liquidity, then you will get a slippage = you will enter (or quit) your trade (or a part of it) for a worse price. Btw. this is also why it is so important to have a good broker with good liquidity! LIMIT ORDERS Limit orders are used by “passive market participants”. Again, this can be everybody – you, me, Goldman Sachs,… Everybody who enters their trade with a Limit (pending) order. A Limit Order is considered passive because you place it and you wait until the price reaches it. You are passive. You don’t need to enter your trade now. You wait until the price comes to you – to a trading level where you are willing to Buy/Sell. This is the exact opposite of Market Orders, see? EXAMPLE: You want to Buy 10 Lots of EUR. It is important for you that you buy it for 1.1900. You enter a Buy Limit Order for 10 Lots at 1.1900. Then you wait = you are passive. When the price makes it to 1.1900 and there are enough people willing to sell for 1.1900, you will get filled and you buy 10 Lots of EUR for 1.1900 – that’s the good scenario. What can happen with a Limit Order is that when the price makes it to 1.1900, the Sellers will only be willing to sell 5 Lots. In this case, you will buy 5 lots and that will be it. You will need to wait again for the price to go to 1.1900 in order to get matched with some more sellers who will sell you the remaining 5 Lots. See the difference? With Limit Orders, you don’t chase the market. You are only willing to trade for 1.1900. The risk here is that you will get filled only partly. Don’t think this happens only with big trading positions. This can happen also with smaller ones (even below 1 lot). Pros & Cons Of Limit Orders The upside of Limit Order: You will get filled EXACTLY for the price you choose. No slippage. The downside of Limit Order: There may not be enough liquidity (counter party to your trade) at your price level and your trade will get filled only partly. Should I Use Market Or Limit Orders? Is Market Order better than Limit Order? Or is this the other way around? Which one to use in your trading? As usual, there is no a simple answer 🙂 If you need to enter your trade NOW, then you should use a Market Order. Those are also good if the trading instrument you trade is not too liquid. I personally prefer Limit Orders. The reason is that I have a complete control over the exact price where my trade gets filled. An important thing is that I have a good broker with deep liquidity pool. This means that I don’t have problems finding Sellers when I want to Buy and Buyers when I want to Sell. Not even when I use Limit Orders to trade some less popular trading instruments. So, all in all, having a good broker helps because you can trade with Limit Orders without limits (pun intended:)) Do BIG Trading Institutions Use Market Or Limit Orders? Hedge funds, banks, pension funds… All those BIG institutions don’t use Market and Limit Orders exactly like us. Yes, the rules are the same for them but because they have enormous amounts of capital to allocate, they play the game a bit differently. To put this very simply – institutions do two things: 1. BIG Institutions Accumulate Their Trading Positions Trade accumulation means that institutions are entering their huge trades slowly. They need time to enter their huge positions. It’s not a one-click situation for them (like it is for us). They need time because their capital and trading positions are too big. They are entering their trades slowly in areas where the price goes sideways (a rotation). In areas, where the price doesn’t move too much. Why? Because they need to enter their trades secretly. Goldman Sachs doesn’t want anybody to know that they are buying crazy amounts of EUR, right? This would start a trend and they wouldn’t be able to fully enter their trades before that. So they need to enter their trades unnoticed – in a rotation. How do they do it? They have algorithms that are entering both Market Orders and Limit Orders automatically. Very often by just small 1-2 Lot amounts, but super fast (such orders are called the “Iceberg Orders”). In a rotation it doesn’t really matter if they use Market or Limit Orders. The reason is that the price doesn’t move too much there. Why they use both type of orders then? To mask their intentions! A Little Extra ***WARNING: Only read this last part if you are ready for a headache. Otherwise, you can skip it :)*** When they enter a Limit Buy, then it gets filled for the price on Bid. When they enter Market Buy, then it gets filled for the Ask price. So, if they Buy 1 Lot with Limit Buy, and then 1 Lot with Market Buy, then 1 Lot will show on Bid, 1 Lot on Ask (you can see this for example with Order Flow software). The funny thing is that the institution has just bought 2 Lots. Confusing? Good. It should be confusing! Because they do this to confuse and hide their intentions 🙂 2. Big Institutions Manipulate The Price After they have entered their huge trading positions, the institutions need to move the price in order to make some money with those positions. If they had been accumulating a huge Long position on EUR, then they need to push the EUR upwards – into an uptrend. This will make those positions profitable. How do they start an uptrend? This is where Market Orders come into play! They will start placing a lot of Market Long Orders. This will start to move the price higher. You can imagine this as if they started to shout “We are Buying all there is, we want it now!” Something like this will definitely bring the attention of others. Other market participants will see this – all those aggressive Long orders and they will start to join in the party – a snowball effect. This is how the manipulation works – through Market Orders. A good time for this is during significant Macro news releases because during macro news this does not look like a market manipulation but only as a reaction to macro news. I hope you guys liked this article. There is a bit more to this topic so let me know if you found this interesting and if you want me to do a 2nd part 🙂 Happy trading, -Dale
Education
by Trader_Dale
8
How To Trade A Trending Market With Volume Profile 🧐 Hello guys, in today’s post, I would like to talk about trading a market that is in a strong trend. A nice example is a current uptrend on AUD/USD. This pair has made over 150 pip move in the last three days. This is something quite extraordinary for a less volatile Forex pair like the AUD/USD. When it comes to trading a trending market I am not a huge fan of breakout strategies and even less a fan of just jumping in at the high/low of the trend. Pullbacks To Volume Clusters What I prefer is to wait for a pullback and then enter the trade. Pullback to where? To areas with significant volumes. In an uptrend, those significant volumes show us places where strong Buyers were entering or adding to their Long positions. Those “Volume Clusters” work as strong Supports because the strong Buyers who placed their Longs there are likely to defend them. Here is an example of two such Supports on AUD/USD. Those two Supports are trading levels I published yesterday in my Member area. Step-by-step Guide In the picture above, you can see two Support levels: 0.7688 and 0.7646. Those are both based on the same logic. Here is how I do it: First, I look for an uptrend. Then I use my Flexible Volume Profile to look at the volume distribution within the trend area. What I want to see are significant “Volume Clusters“ Those should work as strong Supports (in uptrend) and I expect the price to react to both of them. Wait for a pullback and then enter a Long trade from each of them. The Buyers who were active in those “Volume Clusters” in the past should become active again and they should try to push the price upwards from those areas again. This Volume Profile setup is called the “ Trend Setup “. I personally prefer to trade only the 1st test of each trading level. When the price hits the level again I don’t trade it. I consider it already spent. Trading The Trend With VWAP Another cool way how to trade a trending market is using VWAP. If you want to learn more about trend trading with VWAP then you can check this webinar recording: VWAP Treding Setups (WEBINAR) I hope you guys liked today’s post. Let me know what you think in the comments below! Happy trading, -Dale
Education
by Trader_Dale