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The Importance of Measuring Trading Performance with "R"In today’s fast-paced trading environment, having an effective and clear method to track performance is essential for success. This article is tailored for short-term traders who typically manage 1–3 positions at a time and are looking for practical strategies to evaluate their trading outcomes. Unlike diversified stock portfolios or hedge funds that deal with long-term asset management, this guide focuses on the everyday realities of prop and retail traders. Not everyone will agree with the concepts I discuss in this article, but this is how I track trading performance and how many other successful retail and prop traders track theirs. This is what I do, and it’s what I suggest. Let’s explore why tracking performance in terms of dollars risked versus dollars gained—using a metric called “R”—is a superior method compared to traditional measures like percentages or pips. Why Percentages and Pips Fall Short Most trading blogs and forums emphasize percentage or pip returns, but these metrics don’t tell the full story. Every trader operates under unique circumstances, influenced by their account size, risk tolerance, and trading style. A trader managing $1,000 doesn’t face the same challenges as one handling $100,000. For this reason, dollar-based performance tracking, specifically through “R,” provides a more accurate and relevant measure of trading effectiveness. What is “R” and Why Does It Matter? “R” is a measure of your risk-to-reward ratio across all trades. It reflects how much you make relative to how much you risk. For example: If you gain $100,000 in a year and lose $50,000, your R-value is 2R ($100,000 ÷ $50,000). A 2R track record means you’re making $2 for every $1 you lose, while a 3R track record means $3 for every $1 lost. A solid R-value is a strong indicator of trading proficiency. It provides a quick, meaningful snapshot of performance, and investors or prop firms evaluating your track record will prioritize this metric. A high R-value demonstrates effective risk management and profitability. Percent Risk vs. Fixed Dollar Risk Risking a percentage of your account, such as 2% per trade, is a popular strategy but isn’t ideal for short-term traders. While it works well for diversified portfolios or hedge funds managing multiple assets, short-term traders focusing on a few positions should prioritize fixed-dollar risk. Here’s why: Relevance: A 100% gain on a $300 account isn’t as significant as a 50% gain on a $10,000 account. Dollar gains give a clearer picture of actual performance. Leverage: Forex trading allows traders to control large positions with smaller deposits. A trader with $1,000 and one with $10,000 can both manage similar position sizes due to leverage, making percentage returns less relevant. The “Pillow Test”: Your ability to sleep at night often determines how much risk you’re truly comfortable with. For instance: With a $1,000 account, risking 2%—$20—might feel inconsequential, comparable to the price of two beers and a pizza in some countries. This could lead a trader to feel comfortable risking 5% or even 10%. However, with a $100,000 account, risking 10%—$10,000—might be enough to keep you awake at night. For most traders, myself included, this level of risk is intolerable. This example highlights the limitations of percentage-based models. They fail to account for individual perceptions of money and risk. Dollar-based risk management and the R-value system, by contrast, adapt to the trader's mindset and circumstances. Why Account Balances Can Be Misleading Account balances don’t necessarily reflect a trader’s true trading capital. Many professional traders keep a minimal amount in their trading accounts and maintain the rest in safer, in a bank account or even in long term investments. For example, a trader might control a 100k position with just $5000 in their trading account, but this does not mean that 5k is all their capital. This strategy minimizes risk while leveraging the power of Forex trading. Avoiding the Pitfall of Tying Up Capital There’s no need to keep all your trading capital in one account. Thanks to leverage, traders can manage large positions with smaller deposits. Successful traders often withdraw profits monthly, maintaining a predetermined account balance and reallocating funds to other investments or savings. This approach underscores the irrelevance of account size in tracking performance. What truly matters is your dollar risk per trade and your overall R-value. The Personal Nature of Risk Tolerance Every trader has a unique risk tolerance shaped by their experience, confidence, and financial situation. A seasoned trader comfortable with their edge might take larger risks than a beginner. This variability further emphasizes the importance of measuring performance through R-values. Instead of comparing percentages or pips, traders can focus on their individual risk-reward balance and optimize their strategy accordingly. Ultimately, risk tolerance is deeply personal. For some, losing a few hundred dollars on a small account feels negligible, but for others, the same few hundred, even if the account is considerably larger may become emotionally and psychologically taxing. This is why measuring returns in terms of dollars risked versus dollars gained is more practical and relevant. Calculating Your R-Value: A Practical Example Let’s break it down with a simple example: Number of trades: 20 Fixed risk per trade: (amount varies by trader) Winning trades: 9 (45%) Losing trades: 11 (55%) Gains: 33R Losses: 11R Overall R-value: 3R (33 ÷ 11) This means that for every dollar risked, the trader earned $3 on average. Notably, the trader had more losing trades than winning ones but still achieved profitability due to effective risk-reward management. Final Thoughts: The Power of “R” Measuring trading performance in terms of R provides a comprehensive and meaningful view of your effectiveness as a trader. It transcends the limitations of percentages and pips, accounts for individual differences in risk tolerance, and aligns with the realities of leveraged trading. By adopting this approach, traders can better track their progress, refine their strategies, and present a compelling case to potential investors or prop firms.
OANDA:XAUUSDEducation
by Mihai_Iacob
2
Your Real Chances of Succeeding as a Forex TraderYou’ve probably heard the claim that 95% of traders fail to make money in the markets. This statement is repeated endlessly across the internet, creating fear and doubt for many aspiring traders. However, this widely circulated myth is not backed by solid evidence or reliable statistics. In reality, it’s a generalized assumption based on flawed logic that discourages new traders from reaching their full potential. Let’s unpack this myth and explore your real chances of succeeding as a Forex trader with a logical, evidence-based discussion. By the end of this, you’ll feel more confident and ready to approach trading with the right mindset. Understanding Success in Forex Trading A critical question for any trader is: What are the chances of making consistent profits in Forex without being a full-time professional? It’s important to recognize that while some traders lose money, others consistently make profits. Consistency over the long term is what separates successful traders from the rest. However, being a “professional” trader is not a prerequisite for success. The myth that “95% of traders fail” doesn’t mean 95% never make money. Many traders are profitable part-time, focusing on steady growth rather than aiming for professional status right away. Focus on Realistic Goals One of the biggest mistakes new traders make is trying to become professional traders too quickly. This approach often leads to overtrading, excessive risk-taking, and emotional decision-making. Instead, your initial goal should be to make consistent profits on a monthly basis. Start by aiming for profitability each month. Once you achieve this, you can gradually raise your targets—weekly profitability, then scaling up your account and trading frequency. This progression not only builds your skills but also instills the discipline required for long-term success. Why Realistic Expectations Improve Your Trading Setting achievable goals gives you an emotional advantage. By not pressuring yourself to become a professional immediately, you reduce the likelihood of over-leveraging or overtrading. Without the emotional burden of relying on trading as your sole income source, you can focus on refining your strategies and improving your decision-making. When you detach emotionally from your trades and manage risk effectively, you put yourself in a better position to succeed. In fact, statistics show that the percentage of traders who make consistent monthly profits is likely closer to 20-30%, far higher than the often-cited 5%. The Power of Risk-Reward and Strategy To succeed in Forex trading, you need to understand risk-reward ratios and develop a high-probability trading edge. Let’s break this down: Risk-Reward Ratios A 1:1 risk-reward ratio requires a 50% win rate to break even. A 1:2 ratio only requires a 33% win rate to break even. A 1:3 ratio allows you to break even with just a 25% win rate. The higher your risk-reward ratio, the fewer trades you need to win to stay profitable. This highlights the importance of letting your winning trades outpace your losing ones. High-Probability Trading Edge A sound strategy, like price action trading, increases your chances of making profitable trades. Random entries will likely result in break-even performance, but combining a solid strategy with effective risk-reward management shifts the odds in your favor. Steps to Improve Your Odds of Success To increase your chances of becoming a successful trader: Master Risk Management: Understand how to manage your capital effectively to minimize losses. Learn a Proven Strategy: Focus on mastering a high-probability trading strategy, such as price action. Set Realistic Goals: Aim for consistent monthly profits rather than rushing to become a professional. Trade Part-Time First: Start small and trade part-time. Over time, scale up as your skills and account balance grow. Focus on Quality, Not Quantity: Trade less but aim for higher-quality setups. Final Thoughts Becoming a profitable trader is not unattainable. By setting realistic goals and avoiding the pressure to go full-time too quickly, you greatly increase your chances of success. Start by mastering a strategy like price action trading and combine it with disciplined money management. Success in Forex trading comes from within—it’s about controlling emotions, managing risks, and having a solid plan. If you focus on trading part-time with consistency, you’ll be surprised at how quickly your trading can turn profitable. Take it step by step, and remember: the journey to success in Forex trading is a marathon, not a sprint.
Education
by Mihai_Iacob
US30 sell opportunityAt US30 Empire, we believe the US30 (Dow Jones) is primed for a drop based on several key technical indicators. Here’s why: 1. Stochastic Oscillator in Overbought Territory: The stochastic oscillator, a momentum indicator, is signaling that US30 is in an overbought zone. This suggests that the index may have risen too far, too fast, and is due for a correction. Historically, when the stochastic hits these levels, we see a pullback in price. 2. Trend Lines Indicate Resistance: Our trend lines, drawn from key highs and lows, show that the US30 is approaching a major resistance level. This resistance aligns with the index being at its highest price ever. Typically, markets struggle to break through strong resistance without a significant retracement first. 3. Pivot Points Signaling Reversal: Based on pivot point analysis, the US30 is sitting at a major pivot level. This level often acts as a turning point in price movement, and combined with other indicators, it suggests the potential for a reversal. 4. Support and Resistance Levels: The US30 is currently testing long-standing resistance levels. As price fails to break through, this creates a barrier that historically leads to a downside correction. These resistance levels, matched with the overbought stochastic, signal that sellers may soon take control. Overall, the combination of overbought stochastic levels, trend line resistance, pivot points, and price reaching historical highs makes a compelling case for the US30 to drop from here.
BLACKBULL:US30Short
by US30EMPIRE
THE KOG REPORTTHE KOG REPORT: In last week’s KOG Report we plotted the potential range and play pre-event (FOMC) giving the resistance level above which we said would present the opportunity to short if targeted and held. This gave traders a fantastic trade into that range low where we gave the targets 2565 and 2555, which were both achieved. We then update traders with the FOMC KOG Report and again gave the levels for the short if resistance was targeted, which worked well. We had identified the same order region which is where price tapped and bounced, giving traders that long we suggested to break above the 2600 level to complete KOGs weekly bias level targets. Once that trade was taken, we decided to call it a week and wait for the close, giving us another fantastic week in Camelot, not only on Gold but also the other pairs we trade and apply the algo to. So, what can we expect in the week ahead? For this week we will say play caution on going long unless we get a pullback! Ideally, we want to see price attempt that 2630-35 region, with the extension of 2640, and if we see signs of a reversal there, we feel an opportunity to short the market is available, initially into the 2610 region and below that 2595 as shown with the red arrows on the chart. We need to monitor this move carefully as there are initial signs we may see a deep pull back next week, so please monitor the levels and watch the red boxes for the breaks! On the flip, if we do start the week with a move downside, we will be looking at the 2610 level first for a RIP, and if achieved and defended we feel the long trade is available into that 2635 region where again we will look for signs of a reversal. In summary, unless we break above the 2640 level we want price to give us better opportunities as the last thing we want to do is start taking losses, even small ones while price is still finding it’s feet up here. Hope that is clear for everyone! KOG’s bias for the week: Bullish above 2595 with targets above 2630, 2635 and extension level 2640 Bearish on break of 2595 with target below 2570 RED BOXES: Look for red box breaks above 2626 to confirm move higher Look for red box breaks below 2613 to confirm lower As usual, please look out for the red boxes, KOG’s bias of the day and the updated analysis which is posted for the wider community. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
4
Forex Portfolio Selection Using Currency Strength Index (CSI)Hello Traders, Today, I’ll share my portfolio selection approach in forex trading. This method helps identify the best forex pairs to trade based on their relative strength. The simplest and most effective strategy is to use the Currency Strength Index (CSI), combining the H4, Daily (D1), and Weekly (W1) cumulative strength. By analyzing this data, we can identify the strongest and weakest currencies at any given time. Once we have this information, the next step is to pair the strongest currencies with the weakest. Here are today’s portfolio selections: BUY Pairs: GBPUSD, GBPCAD, GBPNZD SELL Pairs: USDJPY, CADJPY, NZDJPY, USDCHF, CADCHF, NZDCHF The key benefits of this portfolio selection process are: A focused view on the most profitable currency pairs An objective approach to trading decisions Clear direction on which way to trade (buy or sell) Like, comment by letting me know what you think and follow me for more trading education. Happy trading!
Education
by Charts247TradingAcademy
THE KOG REPORTTHE KOG REPORT In last week’s KOG Report we said we would be looking for more downside movement on Gold and gave the weekly bias level of 2335 with targets below 2310 and below that 2395. We also informed traders to watch out for the extension of the move into that 2340 which is where we ideally wanted to short the market for the bigger capture. We suggested early longs into the levels above, and once there we confirmed the move not only did we get the long trades, we got the opportunity to take that short trade all the way back down to complete the bias level targets. It’s at this lower level we suggested taking the early long back up, again netting a fantastic return, following Excalibur all the way to where we closed the month. During the week, we also update traders on the intra-day movement highlighting the levels to look for RIPs and opportunities to capture the counter movement, which also worked extremely well completing a fantastic week for the free analysis, but a phenomenal week on Gold targets in Camelot. Well done to our community and team for another great month of completed targets. So, what can we expect in the week ahead? We’ll start by saying it’s the first week of a month and quarter, so best practice would be letting the market settle for the new month, especially the first few days. We also have a lot of news this week which is guaranteed to drive the markets to extreme levels aggressively, coupled with choppy price action. New traders really should be sitting out with the attitude that cash in your account is a position in the market, a very strategic one! Although we ended the month with a bullish daily, we’re not seeing any confirmed movement to complete the upside levels as yet! So, we’ll begin the week with caution and look at the immediate levels of support sitting around the 2313 and above that 2317 levels. If we begin the week with an attack on those levels and face strong support, it’s here we may get an opportunity to long back up into that 2330 -35 region with the extension of the move again the 2345-50 price point, which for this week is our bearish below level. This level above if targeted is important, as breaking above here will take us back up to target that 2270-75 region, which believe it or not, is still in this range! It is however these higher levels we want to be monitoring closely for signs of rejection, and if we get them we feel there is an opportunity to short again from higher up into the lower levels as suggested on the chart. We have our active targets and the prices we’re looking for but would suggest level to level trading for this week at least, with tight stops! We’re going to keep it simple this week and say that’s the main move we’re looking for unless we break below 2316-20 and hold, in which case the plan completes before we get any more opportunities to add to shorts from higher again. KOG’s Bias for the week: Bearish below 2345-50 with targets below 2310 and below that 2290 Bullish on break of 2345 with targets above 2360 and above that 2370 We’ve added the key levels on the charts for you this week with the text, “Bearish below, Bullish above etc” which we hope will help you stay in the right direction and manage your trades. As usual, we will update you with our plans and wish you a successful week ahead. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
8
KOG - Trading the Range!RANGE BOX: When the price is in a ranging market look for date of when the price was last in its range. Example above shows we had the range, a breakout above and then a break back inside the range. Draw a box around the range and then identify the buy area and the sell area. This stops you from trading in the middle of the range and getting chopped up by the market. Always wait for the lower levels to buy and the higher levels to sell. If either level breaks wait for the support or resistance to turn into support or resistance. This give you an indication of potential further movement in the direction of the breakout. Within the range you will find trends, smaller support and resistance levels and chart patterns. This will further help you to trade within that range of scalp in between levels. Identifying these levels and patterns also give you a view of potential future movement. Again, this helps towards making sure you don’t get caught trading in the middle and getting caught the wrong of the market. Now we’ve updated the range to present day and it gives us a clearer picture of what the market has been trying to do since October 2021. We can the H&S back in November which as yet hasn’t been tested, with patterns like this they don’t always get a retest but on most occasion the price will come back to test it. This tells us that if we break above the range high again there is potential for the price to test that 1860 at some point. We can also see that there is a double top recently which caused the price to break back inside the range. Again, on most occasions its likely the price will want to test the pattern or neckline at some point. This gives us an indication of potential movement in the direction of the double top and if we break the double top (we fail a triple top) then there is a chance we could go further up based on support below to test the shoulder of the H&S from Oct. We then add our every day analysis, support and resistance levels and smaller timeframes to further confirm movement and potential challenges on different price regions. If we now look at the bottom of the chart we have one significant area of interest. That’s the buy area we have been using to take the long trades within the range. We can see its given us a triple bottom in this region where we have seen rejection in price. This area has worked well for Bulls but now we will need to be cautious if the price comes down to challenge this area again. Based on what we mentioned above with patterns its likely the price will want to come down to test this level again at some point. Keeping that in mind we also have to be cautious here as the level has been rejected 3 times forming the triple bottom. The is huge potential now for the next test on this level to break this level aggressively which could take us down towards the lower key support of 1730-20. Hope this helps traders, its more an educational post rather than our analysis but please do back test it and see how it works for you. Any questions please do ask, we try our best to answer everyone. See you tomorrow for the KOG report. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
37
NASDAQ Next week expectation #NAS100 Next week..! The price reaches the highest level. And this should be retested. Because 13th of June reaches this price and falls down to 19,479 level. But in a low time frame still running between the Accending channels. But the movement is bearish Because 2 times it is tested with treeline. However once the market opens if the current 4H candle end below 19670 can go for sell to 19352 level. And the buy area located at 18753 - 18933 according to 4H timeframe *My trading plan. Trade at your own risk good luck
OANDA:NAS100USDShort
by chamitha45
5
THE KOG REPORTTHE KOG REPORT: In last week’s KOG Report we said we would be looking for price to attempt the push up, go into resistance where we wanted to short the market into the order region, and then look for the long trade back up from there on the RIP into the levels above. This went extremely well giving us a pin point move from level to level. During the week we updated the idea, which was already going to plan with a new bullish bias level and trade the new Excalibur activations upside into just below where we are now. Plan worked well again giving an almost pip to pip, level to level reaction from our levels and following our bias and analysis posted pre-hand. Well done to those that followed not only gold but the numerous other pairs we trade in Camelot which also gave us fantastic results for the week. So, what can we expect in the week ahead? This week we would say caution on long trades unless we get a pullback into key level support where we feel it’s worth a test, unless the higher levels aren’t taken on or during the early sessions of the week. We have an order region sitting above 2425-35 which is a large region, and if we see price attempt and give us a clean reversal there, we feel an opportunity to short the market is available for traders back down into the 2400 and below that 2385 price region which is where they may want to start to accumulate again. The issue we have here is that 2445-65 level which is a clean region of liquidity if they want to take it and stretch the sellers even more, so here we will caution again, as that level is the extension of the move, be prepared! So, in practice what do we do? Because we’re back in uncharted territory again, we’ll have to treat this as level to level play, we’ll look lower in the highlight region to go long, unless broken, and if they continue to take us up, we’ll trade it level to level looking for the ultimate short trade following our trusted guide. KOG’s Bias for the week: Bullish above 2395 with targets above 2430-35 and above that 2447 Bearish on break of 2395 with targets below 2375 It’s going to be a difficult week with potential of gaps on opening due to a Powell speech later, be fore market open! There is a lot of geopolitical news driving the markets and fear is present, although it’s looking like we’re going higher we would say caution over the week as a sudden turn will be extreme! Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
FX:XAUUSD
by KnightsofGold
10
Powerful Fibonacci Trading Strategy For Beginners I am going to reveal a powerful fibonacci trading strategy that I learned many years ago. It combines structure analysis, fibonacci retracement and extension levels and candlestick analysis. Step 1 Find a trending market - the market that is trading in a bullish or in a bearish trend on a daily time frame. AUDUSD is trading in a bullish trend on a daily. Step 2 Execute structure analysis - identify key horizontal and vertical structures on a daily time frame. Take a look at key structures that I spotted on AUDUSD. Step 3 Draw fibonacci retracement levels. Here are the important ratios you should look for: 382, 50, 618, 786. In a bearish trend, draw fibonacci retracement levels from the high of the trend to current low based on wicks. In a bullish trend, You should apply fibonacci retracement from the low of the trend to a current high based on wicks. Take a look how I draw the retracement levels, I took the low of the trend and the high of the trend. Step 4 Find confluence. Look for fibonacci numbers that match - lie within key structures that you identified. Support 1 matches with 382 retracement. Support 2 matches with 786 retracement. Remove other ratios from the chart. Step 5 Wait for a test of one of the fibonacci levels that match with key structure The price perfectly tested 382 retracement level. Step 6 Wait for a confirmation on a 4h time frame. Our confirmation will be a formation of an engulfing candle - a strong candle that completely engulfs the entire range of a previous candle with its body. In a bearish trend, we will look for a formation of a bearish engulfing candle. Bearish engulfing candle indicates a strong selling pressure and the strength of the sellers. In a bullish trend, we will look for a bullish engulfing candle. It indicates a strong buying reaction and imbalance. Have a look at a bullish engulfing candle that was formed on AUDUSD on a 4H time frame after a test of 382 retracement. Step 7 Open a trading position, set stop loss and choose the target. After you spotted an engulfing candle, open a trading position. Open short after a formation of a bearish engulfing candle and open long after a formation of a bullish engulfing candle. If you sell, your safest stop loss will be 1.272 extension of the last bullish impulse on a 4H. If you buy, your stop loss will be 1.272 extension of the last bearish impulse on a 4H. In our example, our stop loss will be 1.272 extension of a bearish impulse leg on a 4H time frame. The extension is based on high and low of the impulse. If you short, your take profit will be the closest key structure support on a daily. If you buy, your take profit will be the closes key structure resistance on a daily. Here is our take profit level. Being applied properly, the strategy should generate 60%+ winning rate. Always remember to check your reward to risk ratio before you open the trade. It should be at least 1.1/1. Also, before you place a trade, always make sure that you trade WITH the trend and take only trend-following trades. The strategy works perfectly on Forex, Gold, Silver, Oil, Indexes. Good luck in your trading. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
30
KOG - Identify your zones!Identifying the correct zones and regions for your trading: Many of our followers will know that not only do we have Excalibur targets, we give the exact levels and price points that we want the price to achieve. What we also do, is show you the boxes (zones) on the chart for the wider community, to help steer you in the right direction. Price action plays a huge part in this and it’s something all traders should learn, however, zones are effective, not only in trading the right way, but knowing when you’re in the wrong way! Price is a series of test on levels. It creates trends or ranges but will always do the same thing. Once we understand this, we know it's not the market that is the problem, it’s us, the trader. If we learn it's behaviour all we then need to do is make sure our money and risk management is up to scratch. It's never 100%, but if we test a level, it breaks, structure suggests it's going against us, don't hold on to hope, or add more in the direction you intended. Cut the damn thing like it's a poison to your account. You need to treat this as a business, no matter what your account size. Every day there are large institutions who want to take your money away from you, you’re in this market to take from them and give them as little as possible. You should have a risk model in place, am I going to risk a certain percentage of my account? Am I going to stick to a stop loss of a certain number of pips? Am I going to have a risk reward that makes sense? Your stop loss and risk management plan are your best friend in this market, it allows you to limit the losses and live to trade another day. The market will give you clues as to what it’s going to do, breaks, tests, and retests. We can plan the move before it happens this way, we know if it breaks a level, that level turns into support or resistance then it’s going to go and test the next level. Remember: The market will always give you a chance to get out of a trade if it’s going against you, as traders our ego's take over and we hold on to hope. If you're in a whipsaw and choppy market and in the wrong direction, your safest option, even if it ends up going your way in the end is to get out of it and limit your losses. You can always find another entry point for a better risk reward. Ego is one of the biggest killers of accounts and works both ways. Hold on to a failing plan it will humble you. Show the market you’re too confident, it will humble you! Know when to trade, know when not to trade, know when you’re in the wrong way and accept defeat! The example on the chart is showing you a simple 4H timeframe, with the zones in place. We know price will play zones and levels, it has to test these almost to see if it likes that price point or not. It will either break or reject the level. If it breaks, you will usually see a forceful break, then the retest of the level which turns previous support/resistance into new support/resistance, or it will reject, in which case you will usually find the reversal. When trading with a bias or a target in mind, the market will use these zones (levels) to work within and as traders, we should know that if a level is hit, that’s our target reached, or, if it’s broken, that’s sign that we should either start thinking about managing the trade or getting out of it. In order to plot the levels, you will need to zoom out of the chart. Similar to the ‘Simple trading strategy’ we have shared in the past, you will use the peaks and troughs dragged across to present day, to identify your zones. Why? You may ask! Because the market is historical, the levels are the levels, and “levels don’t lie”. Concern: What many traders do, and it’s not their fault, it’s just a lack of education and trading experience, is hold on to trades with huge drawdown. They will place a trade in one direction, price goes against them, instead of implementing a stop loss, they will convince themselves the market will come back to this price, so instead “I’ll turn that into a swing trade”. This is the wrong way to think about the market, especially if you’re an intra-day trader, which most of us are. Shown on the chart, you can see, the level breaks, the level is retested, the retest in confirmed and the price moves away from the level. Once, the retest if confirmed, that’s the market telling you the trader, listen, you’re potentially in the wrong way, and we’re going to test another level higher/lower, so prepare yourself. This is a really simple way, together with a risk model in place, to limit losses and maintain a healthy account. Please try it and let us know! As always, trade safe. KOG
FX:XAUUSDEducation
by KnightsofGold
7
KOG - Simple Trading Strategy Simple Trading Strategy - Generate your own take profit targets. Today we're going to share with you a simple yet effective trading strategy that can be used on any instrument. Like any other trading strategy its not 100%, but, you can see from that illustration how effective it can be in keeping you in the right direction on a pair. You can add Moving averages to this as well as which ever indicators you prefer to use and fine tune the strategy to make it work for you. We must stress, with this strategy you have to have a confident ability in charting and have an understanding of support and resistance levels as well as key zones and regions of liquidity. The bonus with the strategy is it can be applied to all time frames, it can be used to swing trade on longer time frames and to scalp on short time frames. So when we publish our daily morning reviews with our levels and say "LEVEL TO LEVEL" trading, this strategy gives you an idea of what we're suggesting. Also, when we share our 15M levels and zones you can apply this strategy to trade your way up or down to the target. So lets begin: 1) Start with the 4H chart 2) Look for price action where the price was previously in the same range 3) Use the highs and the lows of swings to plot your support and resistance lines 4) Switch to the 1hr chart 5) You are looking for candle body closes above or below the support or resistance lines. The bigger the candle body close the more accurate the target above is. We can use this strategy to take numerous trades in up and down until the target level is reached. This strategy also helps you with your entries and exits. Once you plot the lines and see the price is in between two lines of support and resistance, you will know not to enter a trade. Wait for the pull back on the smaller timeframe or for your chosen indicator to give you the signal!! NOTE: • Lines can never be accurate but try to get them as precise as possible • You must update your lines daily as support and resistance levels change • You must have a risk strategy in place. On most occasions there will be a pullback or retracement on price which can put you in drawdown. • Money and risk management are priority when using this strategy. • Nothing is 100% but once you add the Excalibur target to the chart you have clearer idea of direction. ALWAYS REMEMBER: MAs and indicators are lagging, when using this strategy try to keep it simple and clean. Basic support and resistance levels along with a decent candle body close. Try it, backtest it, apply it. Let us know your findings. As always, trade safe. KOG
FX:XAUUSDEducation
by KnightsofGold
30