This is how you tradethis is not a signal but I'm showing you how I look and treat the chart...
I will publish more tut in the future hope you get benefit of it...
Trend Analysis
Master Trading with Heiken Ashi Candles in 11.32 minutes Let’s talk about how to DOMINATE the market using Heiken Ashi candles for perfect entries and exits! This is where your trading game levels up.
First, when those candles start turning smooth and green with no wicks at the bottom, that's your entry signal! It’s like the market saying, "Hop on, this train is about to take off!" You ride those green candles as long as they stay strong and wick-free at the bottom.
Now, here’s the key – watch for red candles starting to form with wicks on top! That’s your signal to EXIT! Don’t get greedy, secure those gains, and get out before the market turns against you.
With Heiken Ashi, you get smoother trends, cleaner signals, and better trades! Enter with confidence, exit with precision, and OWN the market!
That's it, fast and powerful! Now go crush those trades!
Calm in the Chaos: Handling Panic During Trading ChallengesPanic can manifest in trading when unexpected events occur, such as sudden news announcements or price reversals. During these moments, traders are often prone to making impulsive decisions, such as adjusting stop-loss orders, prematurely closing trades at a loss, or holding onto losing positions for too long. This kind of panic can severely impact one’s emotional and psychological well-being. While external factors can provoke these feelings, it is crucial for traders to learn how to manage their emotional responses.
📍 Strategies for Managing Panic in Trading
Although the following tips may seem obvious, they are frequently overlooked, particularly during moments of panic. Acknowledging their importance can help traders regain composure and make rational decisions.
1. Deep Breathing Techniques
Begin by taking a deep breath in through your nose, counting slowly to four. Hold your breath for a few seconds, then exhale slowly through your mouth while counting to four. Repeat this process several times until your breathing becomes more even and calm. By focusing on your breath, you can help your nervous system relax, allowing you space to regain clarity.
2. Distraction
Engaging in an alternate activity that requires concentration can be beneficial. Puzzles, reading, or even listening to calming music or nature sounds can divert your attention from the stressful situation at hand. Joining online forums for discussion can also serve as a useful escape, allowing you to clear your mind and gain perspective.
3. Rational Analysis
Take a moment to evaluate the situation by asking questions such as: “What specifically is causing my panic?” and “What are the real risks involved?” It may turn out that the circumstances aren't as dire as they appear. Create a list of potential solutions and their implications, providing a clearer view of your options. Writing down pros and cons can further aid in rationalizing your thoughts.
4. Set Realistic Goals
Establish clear and achievable objectives for each trading session. Avoid setting expectations for unrealistically high profits in a short timeframe. Recognize that losses are an inherent part of trading; anticipating them can make dealing with panic more manageable.
5. Incorporate Relaxation Techniques
Regular meditation, yoga, or stretching exercises can help alleviate physical tension and improve emotional control. Techniques such as aromatherapy or taking warm baths can also promote relaxation. For those experiencing chronic tension, these practices may offer lasting relief from panic attacks.
6. Cultivate Positive Thinking
Shift your mindset by replacing negative thoughts with affirmations. Instead of telling yourself, “I will lose everything,” reinforce the belief that “I can control my risks.” Recall past instances where you successfully managed stressful situations and celebrate small victories in your trading journey. Building self-esteem based on real accomplishments is essential, as both inflated and diminished self-worth can hinder decision-making.
7. Limit Exposure to News and Social Media
During periods of market panic, news and social media can be rife with negative information, exacerbating your anxiety. Consider avoiding these sources until you regain your composure.
8. Understand You're Not Alone
It's important to remember that all traders experience panic from time to time—it's a normal part of the trading landscape. Acknowledging this reality can help prevent panic from obstructing your capacity to make informed decisions.
📍 Conclusion
Maintaining composure in the face of panic is critical for effective trading. While it may feel easier to take no action during such times, doing so can adversely affect your mental health. Developing strategies to manage your emotions is essential not only for your trading success but also for your overall well-being. By practicing these techniques, traders can learn to navigate the high-stakes world of trading with greater confidence and resilience.
Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Thesis Generation for mutitimeframe SB Style Trading explainedIn this video, I guide you through the complete process of generating a trading thesis and selecting pairs for my shortlist. We'll begin with a theoretical explanation and then apply it to today's NAS situation. My analysis incorporates the Stacey Burke trading style alongside a mechanical multi-timeframe bias analysis. A consistent and clear analysis process, repeated daily, is crucial for continuous improvement. I hope you find this helpful!
All About the Flag Pattern (Beginner-Friendly)Hello everyone,
Today, I’ve prepared an educational guide on chart patterns, specifically focusing on the Flag Pattern.
This content is designed to be easy for beginners to follow, so I hope you find it engaging and informative. :)
Below is the outline I’ll be using for this post:
————
✔️ Outline
1. What is a Flag Pattern?
Definition
Key Components
Characteristics
2. Bullish Flag Pattern
Basic Characteristics
Examples
3. Bearish Flag Pattern
Basic Characteristics
Examples
————
1. What is a Flag Pattern?
1) Definition
A Flag Pattern forms during a brief consolidation phase after a strong price movement, often signaling the continuation of a trend. It typically appears when prices make a sharp move, either up or down, followed by a period of sideways or slightly counter-trend movement.
Flag Patterns can occur in both uptrends and downtrends, named for their resemblance to an actual flag. After a strong price move, the market consolidates briefly before continuing in the original trend direction.
2) Key Components
Flagpole: The initial strong price movement that sets the overall trend direction before the consolidation phase.
Flag: The consolidation period where prices move sideways or slightly counter to the trend, often forming a rectangle or parallelogram. This phase typically occurs with a decrease in trading volume.
Breakout: The moment when the price resumes its original trend direction. In an uptrend, this is an upward breakout, and in a downtrend, a downward breakout, confirming the continuation of the trend.
3) Characteristics
Duration: The Flag Pattern typically lasts longer than the Flagpole but varies depending on the timeframe.
Volume: Volume usually decreases during the Flag’s formation and increases once the breakout occurs.
Reliability: The Flag Pattern is considered a reliable indicator of trend continuation, making it a favorite among traders using trend-based strategies.
————
2. Bullish Flag Pattern
1) Basic Characteristics
A Bullish Flag forms after a strong upward price movement, signaling a temporary consolidation phase. During this consolidation, volume typically decreases, suggesting that the market is pausing rather than reversing. After this phase, the price often continues its upward trend, accompanied by an increase in volume. Bullish Flag Patterns also help relieve overbought conditions in technical indicators, providing the market with a chance to prepare for another move up.
2-1) Example 1
This chart from May 2023 shows a strong Flagpole followed by a long consolidation phase (Flag). The volume then increased as the price broke out, completing the Bullish Flag Pattern.
2-2) Example 2
In this chart from March 2021, we see a similar setup: a strong Flagpole, followed by a consolidation phase, leading to a breakout that continued the upward trend.
————
3. Bearish Flag Pattern
1) Basic Characteristics
The Bearish Flag Pattern is the inverse of the Bullish Flag. It follows a strong downward move (Flagpole) and is followed by a period of consolidation (Flag) with decreasing volume. Like its bullish counterpart, the Bearish Flag can relieve oversold conditions, leading to a continuation of the downtrend after a breakout.
2-1) Example 1
This chart from May 2022 displays a Bearish Flag Pattern: a strong downward Flagpole, followed by a Flag consolidation phase. After the consolidation, a breakout occurred, continuing the downtrend.
2-2) Example 2
This chart from February 2022 also illustrates a strong downward Flagpole, followed by a consolidation phase (Flag), leading to a breakout that completed the Bearish Flag Pattern.
This guide will help you better understand the Flag Pattern and how it can be used in your trading strategy effectively!
————
✔️ Conclusion
I hope the various Flag Patterns and market analysis techniques covered in this post prove helpful in your investment journey. Chart analysis is not merely a technical skill but also a deeper understanding of market psychology and movement. Flag Patterns, along with other chart patterns, visually reflect the psychological dynamics of the market. Mastering their use can greatly contribute to successful trading.
That being said, the crypto market is inherently unpredictable and fast-moving. While technical analysis is a valuable tool, it’s important to adopt a comprehensive approach that considers broader market trends and external factors. I encourage you to apply the insights gained from this post with a balanced and cautious perspective when making investment decisions.
New opportunities are constantly emerging, and those who are prepared to seize them will find success. The chart represents the market’s voice. Listening to it, interpreting it, and making informed decisions based on that interpretation is "the essence" of chart analysis.
I sincerely hope that, through continuous learning and experience, you’ll evolve into a more confident and successful investor.
USDJPY~Currency Carry Trade~Forex Fundamentals The upper pane is inverted USDJPY, ie JPYUSD.
THE lower pane is US10, or inverted US10Y.
When interest rate in US rises against/faster than/compared with interest rate in JP, the exchange rate of USJPY follows as well.
Investors will simply pull out the capitals from Japan and park them in US for better return. If you can rent out your resources at the price of 5%, why wasting them only earning 1%.
Capital tends to flow to the people/places/projects that can utilize it most.
Build Confidence with Heikin-Ashi Candle Patternow to Trade Using Heikin Ashi Candles on the NDX Chart
Heikin Ashi candles are a powerful tool for filtering out market noise and identifying trends more clearly than traditional candlesticks. By smoothing out price action, they allow traders to focus on the overall direction of the market, helping you make more informed trading decisions. Here’s a breakdown of how to use Heikin Ashi candles effectively, specifically on the NDX chart.
1. How to Read Heikin Ashi Candles
The primary difference between Heikin Ashi and traditional candlesticks is in how they are calculated. Heikin Ashi uses a modified formula that incorporates the open, close, high, and low prices of the previous candle, which results in a smoother appearance. This smoothing effect allows traders to more easily spot trends:
Bullish Trends: A series of green candles with no lower wicks typically indicates a strong uptrend. These are the times to consider long trades.
Bearish Trends: A series of red candles with no upper wicks signals a strong downtrend. These are great opportunities for short positions.
Consolidation: Mixed green and red candles with wicks on both ends often indicate consolidation or indecision in the market.
The Heikin Ashi chart reduces the noise from minor price fluctuations, allowing you to focus on the trend itself rather than the short-term volatility.
2. Entry and Exit Points
The beauty of Heikin Ashi candles lies in their ability to simplify entries and exits. Here’s how to use them:
Entry Points: You want to enter a trade when a new trend is confirmed. For a long position, wait for the first few green Heikin Ashi candles after a period of red ones, signaling a reversal to the upside. For a short position, look for a sequence of red candles after a bullish period has ended.
Exit Points: Exit your trade when you start seeing signs of reversal. For long trades, this would be the appearance of the first red Heikin Ashi candle after a series of green ones. For short trades, exit when the first green candle appears after a bearish sequence.
Waiting for these clear signals helps avoid premature exits and ensures that you’re riding the trend for as long as possible.
3. Key Support and Resistance Levels
Heikin Ashi works even better when combined with key support and resistance levels. On the NDX chart, identifying these levels provides context for your trades:
Support Levels: If the price is approaching a key support level, and you start to see bullish Heikin Ashi candles, it’s a potential buy signal.
Resistance Levels: If the price is approaching resistance and bearish Heikin Ashi candles begin forming, that could signal a good time to sell or short.
Using Heikin Ashi in conjunction with these levels increases the probability of success by ensuring you are trading within important zones where price action tends to react.
By mastering the use of Heikin Ashi candles and combining them with support and resistance, you can significantly improve your ability to spot and act on high-probability trading opportunities, especially on volatile instruments like NDX.
New Features For Dynamic Pivot Levels - Percentage indicatorIn our latest update, we’ve packed in some exciting new features and enhancements that will elevate your analysis experience to the next level:
Exciting New Features: We’ve added additional Exponential Moving Averages (EMAs), allowing you to track five different EMAs tailored to your needs. But that’s not all – we’ve introduced smiley indicators that give you instant feedback on whether the price is above or below the moving average. Now you can analyze with a clean, clutter-free chart!
Fibonacci Level Enhancements: We’ve upgraded the logic behind Fibonacci levels to give you more accurate insights. The improved Fibonacci calculations provide a clearer, more precise visual representation, helping you make better-informed decisions.
A Sleek, Streamlined User Interface: We know how important it is to work with a smart, efficient tool, so we’ve revamped the user interface! Settings are now neatly organized into categories, allowing you to quickly and easily customize everything you need. This makes your workflow smoother and faster.
This update doesn’t just bring new capabilities – it makes the tool more accessible and user-friendly than ever. It’s your key to staying focused on precision analysis, without the distractions!
Relative Strength (Not RSI)For a serious trader Relative Strength (Not RSI) is a very important component. A careful study of RS will tell you your are on which stage.
There are 4 stages in a stock's life Stage:
Stage 1 - This is the stage of consolidation, usually happens at bottom after a fall.
Stage 2 - This when stock breaks out from Stage 1 and price moves away from stage 1.
Stage 3 - This is again a consolidation phase but this will be at top or after stage 2.
Stage 4 - This is the break down of stage 3 and price falls quickly .
As a Trader we usually enter at Stage 2 to go long or Stage 4 to either book out our stock or to short a stock.
Relative Strength or RS is a stocks performance against bench mark index. This tool is freely available in TV community. Which is a great tool to take or avoid a trade.
In this case RS is in red or falling which means the stock is under performing bench mark index NIFTY500. Now look the chart, stock is in consolidation after a up move. So RS is advising us against any further buy a stock is underperforming even though moved up and rightly so the eventual broken down.
Mastering Trading ConfluenceIn the world of trading, success often hinges on making informed decisions based on reliable analysis. However, relying on a single indicator or tool can sometimes lead to false signals and missed opportunities. This is where the concept of trading confluence comes into play. Trading confluence refers to the alignment of multiple indicators, tools, or analysis techniques to confirm trading signals, thereby increasing the probability of a successful trade.
🔵𝚆𝙷𝙰𝚃 𝙸𝚂 𝚃𝚁𝙰𝙳𝙸𝙽𝙶 𝙲𝙾𝙽𝙵𝙻𝚄𝙴𝙽𝙲𝙴?
Confluence in trading is the process of combining different technical analysis tools to identify high-probability trading opportunities. Instead of relying on a single indicator, traders look for areas where multiple indicators or strategies align, providing a stronger signal for entering or exiting a trade. These tools might include price action analysis, moving averages, Fibonacci retracements, support and resistance levels, or even fundamental analysis. When several tools point to the same conclusion, the signal is considered more robust, reducing the likelihood of false positives and improving the chances of a successful trade.
🔵𝚆𝙷𝚈 𝙸𝚂 𝙲𝙾𝙽𝙵𝙻𝚄𝙴𝙽𝙲𝙴 𝙸𝙼𝙿𝙾𝚁𝚃𝙰𝙽𝚃?
The financial markets are complex, with numerous factors influencing price movements. Relying on a single indicator can lead to inconsistent results, as no indicator is infallible. By using confluence, traders can:
Increase Confidence in Trade Decisions : When multiple indicators confirm the same signal, it provides traders with greater confidence to act on that signal, knowing that it is backed by various forms of analysis.
Filter Out False Signals : Indicators sometimes produce false signals. By requiring alignment between different tools, confluence helps filter out these false positives, leading to more reliable trading decisions.
Enhance Risk Management : Confluence allows traders to pinpoint more precise entry and exit points, which can lead to tighter stop-loss levels and better risk-reward ratios. This, in turn, can improve overall portfolio performance.
🔵𝙷𝙾𝚆 𝚃𝙾 𝚄𝚂𝙴 𝙲𝙾𝙽𝙵𝙻𝚄𝙴𝙽𝙲𝙴 𝙸𝙽 𝚃𝚁𝙰𝙳𝙸𝙽𝙶
To effectively use confluence in your trading strategy, consider the following steps:
Select Complementary Indicators : Choose indicators that complement each other rather than those that replicate the same information. For example, combining a momentum indicator like the Relative Strength Index (RSI) with a trend-following indicator like a Moving Average can provide a more comprehensive view of market conditions.
Identify Key Levels : Look for confluence at key levels such as support and resistance zones, Fibonacci retracement levels, or pivot points. When price action aligns with these levels and is confirmed by multiple indicators, it suggests a higher probability trade setup.
Confluence of Chart Patterns and Oscillator
One powerful example of confluence is when a chart pattern like Equal Highs (EQH) aligns with a momentum indicator such as the Stochastic RSI. This combination provides more confidence in determining the trend direction.
When both the EQH pattern and Stochastic RSI align, such as when price hits equal highs while the Stochastic RSI shows overbought conditions, traders can have increased confidence in anticipating a trend reversal.
Combining Same-Type Indicators
- Using multiple trend-following indicators, such as the Aroon, Directional Movement Index (DMI), and the 50-period Simple Moving Average (SMA), can enhance your ability to identify strong trends and avoid false signals. These indicators complement each other by offering different perspectives on trend strength and direction.
- Combining multiple mean reversion indicators can provide stronger signals for potential price reversals. This approach helps in identifying overbought or oversold conditions with greater confidence. Here are some ways to create confluence using mean reversion indicators:
When multiple indicators align to show overbought or oversold conditions, it provides a stronger signal for a possible price reversal. However, it's important to remember that even with confluence, no indicator combination is foolproof, and proper risk management should always be employed.
Use Multiple Time Frames : Analyzing confluence across different time frames can provide additional confirmation. For instance, if a bullish signal is confirmed on both the daily and hourly charts, it strengthens the case for entering a long position.
Multiple timeframe analysis is a highly effective strategy in technical analysis, as it allows traders to see the broader picture of market trends and zoom into shorter-term price movements. One common approach is to apply a 50-period Simple Moving Average (SMA) across different timeframes, such as 3D, 1D, 12H, and 4H charts, to assess trend strength and direction.
By combining these timeframes with the 50-period SMA, traders can assess whether the trend is aligned across different perspectives. For example, if the price is above the 50-SMA on the 3D and 1D charts but below it on the 4H chart, it might signal a short-term pullback within a larger uptrend. This confluence of trend analysis across multiple timeframes provides a more robust trading strategy.
Combine Technical and Fundamental Analysis : While technical indicators are the primary tools for identifying confluence, integrating fundamental analysis (such as economic reports, earnings releases, or geopolitical events) can further validate your trading decisions.
Practice Patience and Discipline : Trading confluence requires patience. It’s important not to force trades when indicators are not in alignment. Waiting for confluence signals can prevent impulsive trades and improve your long-term success rate.
🔵𝙻𝙸𝙼𝙸𝚃𝙰𝚃𝙸𝙾𝙽𝚂 𝙾𝙵 𝚃𝚁𝙰𝙳𝙸𝙽𝙶 𝙲𝙾𝙽𝙵𝙻𝚄𝙴𝙽𝙲𝙴
While trading confluence can significantly enhance your trading strategy, it’s important to acknowledge its limitations:
Overfitting : Relying on too many indicators can lead to overfitting, where the analysis becomes too complex, and signals become rare or conflicting. It's essential to strike a balance and avoid excessive complexity.
Subjectivity : Confluence can be somewhat subjective, as traders might interpret the alignment of indicators differently. Developing a consistent and disciplined approach to identifying confluence is key.
Delayed Signals : Waiting for multiple indicators to align can sometimes result in missed opportunities, especially in fast-moving markets. Traders should be aware of the trade-off between signal reliability and timing.
🔵𝙲𝙾𝙽𝙲𝙻𝚄𝚂𝙸𝙾𝙽
Trading confluence is a powerful concept that can enhance the quality of your trading decisions by providing more reliable signals and reducing the risk of false positives. By combining complementary indicators, analyzing multiple time frames, and incorporating both technical and fundamental analysis, traders can increase their confidence and improve their overall performance. However, it’s important to remain mindful of the potential limitations and to apply confluence in a disciplined and balanced manner.
By mastering trading confluence, you’ll be better equipped to navigate the complexities of the market and make informed decisions that align with your trading goals.
dump and pump template after Non farm payrolls. level trading is a great idea for trading when you master it . enabling you to target specific parabolical movements where the market only moves in one direction . No stress trading.
Simple charts and methods can make money!It's a late summer Saturday afternoon and I am writing this so you don't have to! Lot's of people don't have time to watch the market all day and night. Here is a bare bones daily chart that you can easily construct from default configured Trading View community indicators and even more easily discern the correct market position. ONLY BE IN THE MARKET WHEN THE PRICE IS ABOVE OR BELOW BOTH INDICATORS. Configure TV Alerts from the SPX price cross of the indicators and be on your way. I position in pre and post SPX ETF markets off this chart Happy Trades! And now I'm going fishing. DAP
NIFTY50: Comparative study of all major Indices.f we consider 27th Oct 2023 as BASE LINE (i.e from where the Current Rally Starts)
Here are the comparison of major indices as now (Base line treat as 0%)
CAC (French Index): +35.07%
NASDAQ (US Tech Index): +32.02%
NIFTY50 (NSE India INDEX): +31.29%
SP500 (US large 500 Company index LIKE in NSE NIFTY500): +31.03%
DAX (GERMANY Index) : +24.61%
DJI (Dow Jones Industrial Avg USA Index) +24.46%
NIKKEI (Index of JAPAN): +15.19%
UK100 (Index from United Kingdom Previously Known as FTSE): +12.27%
HANSSENG (Index of HONGKONG): +0.26%
SSE (Shanghi Composite China): -8.35%
INDIAAN RUPEE Vs US Doller: +0.87%
INDIAAN RUPEE Vs EURO: +6.09% (Good for TCS Like Stocks)
US Doller Vs EURO (Currency of EUROPIAN Uniom): +4.69%
Conclution: 1. Indian Indices is farely valued compare to NASDAQ & S&P500
2. Moderate OVERSTRETCHED CCompare to DAX & DOW Jones.
Trade what you see, not what you think or hope!There’s no better time to post this educational article than right now. Despite constantly reminding myself to "trade what you see, not what you think or hope," two days ago I did the exact opposite. I ignored a clear double Pin Bar formation at a support level, which resulted in me taking a stop loss.
Ironically, I knew better.
But, as the saying goes, "Do as the preacher says, not as the preacher does."
Let’s dive deeper into this vital concept—how emotions and our tendency to predict or hope for the market’s next move can lead us astray, and why sticking to what the charts show is crucial for long-term trading success.
Trade What You See, Not What You Think or Hope
In trading, the temptation to predict the market’s movement based on gut feeling, emotions, or even hope is always present. Whether you’re new to trading or experienced, this temptation can lead you to stray from your strategy, often with disastrous results.
Successful traders have mastered the discipline of relying on objective data—what they see on the charts—and they minimize the influence of personal bias or emotional decision-making. In this section, we will cover why trading what you see is essential, the pitfalls of emotional trading, and strategies to remain focused.
1. The Pitfall of Predicting the Market
One of the biggest mistakes traders make is attempting to outsmart the market by predicting its next move based on feelings or speculation. It's a lot like gambling. For instance, after a loss, traders may try to "get back" at the market by forcing trades or doubling down, just as a gambler would after a bad hand. This reactive behavior is the opposite of trading based on logic and a structured plan.
In fact, reacting emotionally after a loss or even after a win (due to overconfidence) creates patterns of erratic trading. Instead, traders should stick to price action setups and predefined trading strategies.
2. Objectivity Over Emotion
Trading involves acknowledging that the market doesn’t care about your emotional state. It’s not personal. And yet, so many traders get emotionally attached to their trades, thinking they can make the market to move in their favor. Instead, your goal should be to detach emotionally from individual trades and focus on the larger picture: is the setup you are seeing aligned with your strategy?
No matter how perfect a setup looks, you should never become overly confident or emotionally invested in a trade. Always maintain your risk management, even if you are sure this trade is a “winner.”
3. Emotions Can Be Deceptive
Your mind can play tricks on you, especially when you're hoping for a specific outcome. Often, traders get caught up in their ideas of where they "want" the price to go, or what they "think" the market "should" do. This can cloud judgment and lead to chasing trades, forcing setups where none exist.
Price action on the chart is objective. It doesn’t care about your opinions. By focusing on clean price action patterns and setups, you will avoid being misled by your own expectations.
4. Stick to Your Trading Plan
One of the most effective ways to ensure you're trading based on what you see is to stick to your trading plan. Every trade should be in line with the rules you’ve set in advance, whether that’s for entering, exiting, or managing risk. Deviating from your plan because of a gut feeling can quickly turn a good strategy into a string of bad decisions.
Ask yourself:
Is there a clear setup here, or am I just trying to make one up?
Does this trade align with my strategy and risk management rules?
5. Trust What the Charts Show You
The key takeaway is that no matter how tempting it is to speculate or act on emotions, the price action is your guide. Trust what the charts show you, even if it contradicts what you “feel” should happen. For instance, ignoring a perfect Pin Bar setup because you “hope” for a retracement can result in missed opportunities or losses.
Ultimately, price action trading boils down to looking at what the chart is telling you and not what you want it to say.
Have a nice weekend!
Mihai Iacob
Learn 7 Types of Liquidity Zones in Trading
In the today's article, we will discuss 7 main types of liquidity zones every trader must know.
Just a quick reminder that a liquidity zone is a specific area on a price chart where a huge amount of trading orders concentrate.
Read carefully, because your ability to recognize and distinguish them is essential for profitable trading.
1. Fibonacci Zones
The zones based on Fibonacci levels can concentrate the market liquidity.
Classic Fibonacci retracement levels: 0,382; 0,5; 0,618; 0.786
and Fibonacci Extension levels: 1,272; 1,414; 1,618 attract market participants and the liquidity.
Above, you can see an example of a liquidity zone based on 0,618 retracement level.
The reaction of the price to that Fib.level clearly indicate the concentration of liquidity around that.
Also, there are specific areas on a price chart where Fibonacci levels of different impulse legs will match.
Such zones will be called Fibonacci confluence zones.
Fibonacci confluence zones will be more significant Fibonacci based liquidity zones.
Above, is the example of a confluence zone that is based on 0,618 and 0,5 retracement levels of 2 impulses.
The underlined area is a perfect example of a significant liquidity zone that serves as the magnet for the price.
2. Psychological Zones
Psychological zones, based on psychological price levels and round numbers , quite often concentrate the market liquidity.
Look at a psychological level on WTI Crude Oil. 80.0 level composes a significant liquidity zones that proved its significance by multiple tests and strong bullish and bearish reactions to that.
3. Volume Based Zones
The analysis of market volumes with different technical indicators can show the liquidity zones where high trading volumes concentrate.
One of such indicators is Volume Profile.
On the right side, Volume Profile indicate the concentration of trading volumes on different price levels.
Volume spikes will show us the liquidity zones.
4. Historic Zones
Historic liquidity zones will be the areas on a price chart based on historically significant price levels.
Market participants pay close attention to the price levels that were respected by the market in the past. For that reason, such levels attract the market liquidity.
Above, you can see a historically significant price level on Silver.
It will compose an important liquidity zone.
5. Trend Lined Based Zones
Quite often, historically significant falling or rising trend lines can compose the liquidity zones.
Above is the example of an important rising trend line on GBPJPY pair.
Because of its historical significance, it will attract the market liquidity.
Trend lined based liquidity zone will be also called a floating liquidity area because it moves with time.
6. Technical Indicators Based Zones
Popular technical indicators may attract the market liquidity.
For example, universally applied Moving Average can concentrate huge trading volumes.
In the example above, a floating area around a commonly applied Simple Moving Average with 50 length, acts as a significant liquidity zone on EURJPY.
7. Confluence Zones
Confluence zones are the liquidity zones based on a confluence of liquidity zones of different types.
For example, a match between historic zones, Fibonacci zones and volume based zones.
Such liquidity zones are considered to be the most significant.
Look at the underlined liquidity zone on US100 index.
It is based on a historical price action, psychological level 17000, significant volume concentration indicated by volume indicator and 618 Fibonacci retracement.
Always remember a simple rule: the more different liquidity zone types match within a single area, the more significant is the confluence zone.
Your ability to recognize the significant liquidity zones is essential for predicting the market movements and recognition of important reversal areas.
Liquidity zones are the integral element of various trading strategies. Its identification and recognition is a core stone of technical analysis.
Study that with care and learn by heart all the liquidity types that we discussed today.
❤️Please, support my work with like, thank you!❤️
GOLDEN ZONE TRADINGFibonacci retracements and extensions are technical analysis tools that use the Fibonacci sequence to identify potential support and resistance levels in financial markets. They are based on the mathematical concept that the ratio between any two consecutive numbers in the Fibonacci sequence approaches the golden ratio (approximately 1.618) as the numbers get larger.
Fibonacci Retracements:
Calculate levels: Fibonacci retracements are calculated by dividing the price difference between a high and a low by the Fibonacci ratios (0.000%, 23.6%, 38.2%, 50.0%, 61.8%, 100.0%).
Identify support and resistance: The resulting levels are plotted on the chart to identify potential support and resistance areas.
Trading strategy: Traders can use Fibonacci retracements to enter trades at support levels and exit trades at resistance levels.
Fibonacci Extensions:
Calculate levels: Fibonacci extensions are calculated by extending the price movement beyond a high or low by the Fibonacci ratios (1.618, 2.618, 4.236).
Identify potential targets: The resulting levels are plotted on the chart to identify potential price targets for a move.
Trading strategy: Traders can use Fibonacci extensions to set profit targets for their trades.
Golden Zone Trading:
The term "golden zone" is often used in conjunction with Fibonacci retracements and extensions. It refers to the area between the 38.2% and 61.8% retracement levels, which is considered to be a high-probability zone for price reversals or continuations.
Trading Strategies:
Buy at 38.2% retracement: If the price retraces to the 38.2% level and shows signs of bullish reversal (e.g., a higher low), traders can consider buying with a target at the 61.8% extension level.
Sell at 61.8% retracement: If the price retraces to the 61.8% level and shows signs of bearish reversal (e.g., a lower high), traders can consider selling with a target at the 61.8% extension level on the downside.
Use in combination with other indicators: Fibonacci retracements and extensions can be used in combination with other technical indicators (e.g., moving averages, RSI) to improve the accuracy of trading signals.
Important Considerations:
Subjectivity: Fibonacci analysis is a subjective tool, and the exact levels used may vary among traders.
Market conditions: The effectiveness of Fibonacci tools can vary depending on market conditions and the specific asset being traded.
Risk management: As with any trading strategy, it is important to use proper risk management techniques to protect your capital.
Additional Tips:
Practice: The best way to learn how to use Fibonacci tools effectively is to practice on historical data.
Combine with other analysis: Consider using Fibonacci tools in combination with other forms of technical analysis, such as chart patterns or support and resistance levels.
Be patient: Trading using Fibonacci tools often requires patience, as it may take time for price to reach the desired levels.
Remember: While Fibonacci retracements and extensions can be a valuable tool for traders, they are not infallible. It is important to use them in conjunction with other forms of analysis and to always practice good risk management.
Two Roads to Profit. A Comparison of ICT/SMC and Advanced VSAHello traders and investors!
When we start engaging in trading and investing, we get acquainted with various methods of forecasting price movements. Gradually, if we have enough persistence, strength, and patience, we choose our own path to profitable trades. Among the most popular approaches, we can highlight the use of various oscillators and channels, Dow Theory, Elliott Waves, Fibonacci levels, supply and demand, Volume Spread Analysis (VSA), market auction theory, and the Inner Circle Trader/Smart Money Concept (ICT/SMC). Many traders combine elements from different approaches into their trading system.
I personally prefer a concept I call Advanced VSA. It’s a comprehensive set of tools that combines ideas from VSA, Dow Theory, and Supply and Demand analysis. The name "Advanced VSA" perfectly captures the essence of the method, as it is fundamentally based on analyzing volume and price spread.
Recently, the ICT/SMC concept has been gaining more and more popularity. Today, I want to explore the similarities and differences between ICT/SMC and Advanced VSA. If there are any inaccuracies in my explanation of ICT/SMC basics, feel free to correct me in the comments. Perhaps after reading this article, you’ll be able to decide which approach resonates more with you and which one you believe will help you in your trading. I hope this will be helpful. Let’s dive in!
Basic Differences
Before diving into the technical details, let's first clarify the key differences between these concepts.
Who Controls Price Movements
The ICT/SMC concept assumes that price movements are controlled by large players, such as market makers, who direct prices in the desired direction. This is similar to a model where one "center of power" determines the market's direction.
In contrast, Advanced VSA is based on the idea that two forces influence price — the Buyer and the Seller. All analysis revolves around the interaction between these two sides, creating a more balanced model where both forces are equally important.
Traded Volume
The ICT/SMC concept does not use traded volume as a part of its analysis.
In Advanced VSA, volume is an important factor. It is considered an integral part of the data that helps to understand market processes and the actions of participants.
Now let’s move on to a detailed comparison of the elements of these concepts.
What They Have in Common
Both concepts teach traders to identify price ranges on the chart where a large player (Market Maker in ICT/SMC) or a Buyer (in Advanced VSA) shows interest in buying, and ranges where the Market Maker or Seller is interested in selling. When the price returns to these ranges, traders can execute buys or sells. We can call these price ranges contextual areas for buying and selling.
Neither concept relies on technical indicators. Instead, they focus on the following key terms for identifying the trade direction and the trade entry point:
Trend
Trend break/half-trend
Trend confirmation
Accumulation/Distribution/Sideways movement/Flat
Contextual areas for buying and selling
The first four terms help determine the direction of the trade, while the fifth helps identify the entry point and the likely target of the trade.
Both methods suggest using higher timeframes to find contextual areas and lower timeframes to find entry points within those areas.
What Are the Differences
The differences between the concepts lie in the interpretation of key terms. For the first four terms (trend, trend break, trend confirmation, accumulation/distribution/Sideways movement), the distinctions are minor and relate mostly to specific interpretations. However, the main differences arise in the rules for identifying contextual areas of interest (buyer, seller, or market maker). Let's look at these differences in more detail.
Difference 1: Use of Volume
In ICT/SMC, contextual areas of interest are determined solely based on price action and candlestick patterns, without taking traded volume into account.
In contrast, Advanced VSA sees volume as an integral part of the analysis. contextual areas of interest are identified by both traded volume and price behavior (candlestick patterns). If there was interest from a buyer, seller in a specific price range, leading to a price change, it's logical to assume that the volume traded in that range should be higher than in previous periods over a similar timeframe.
To illustrate the importance of using all available data for analysis, consider an analogy with choosing the best time for a seaside vacation. If the decision is based only on water and air temperature, while ignoring factors like wind or rainfall, the choice may be misguided. For example, choosing April for its comfortable temperature might result in encountering constant rain and high waves.
Thus, in Advanced VSA, volume plays a crucial role, whereas it is absent in ICT/SMC.
Difference 2: Types of Contextual Areas of Interest
In ICT/SMC, the following types of contextual areas of interest are used: order block, breaker, mitigation block, and rejection block. All of these areas are formed by a specific arrangement of candles on the chart.
In contrast, Advanced VSA operates with a different set of contextual areas of interest: effort, zone, and range (sideways movement). Effort refers to a single candle or bar that indicates significant market activity. Zone is formed by a sequence of candles or bars, taking into account their traded volumes. Range (sideways movement) is defined by a series of consecutive candles/bars where price fluctuates within a limited range, interacting alternately with the upper and lower boundaries of the range. It's only possible to identify which party (buyer, seller, or market maker) controls the range after the price breaks out and confirms the move.
If the volumes align with Advanced VSA's criteria, order blocks and mitigation blocks in ICT/SMC can be considered as zones in Advanced VSA. So, not all order blocks and mitigation blocks will be considered zones in Advanced VSA. The breaker will be discussed separately, and there is no equivalent to the rejection block in Advanced VSA.
Difference 3. Price Attraction Points
In ICT/SMC, concepts such as fair value gap, liquidity void, and liquidity are used to describe price attraction points.
In Advanced VSA, the terms fair value gap and liquidity void are not utilized. Most of the time, these ICT/SMC elements correspond to price interest points in Advanced VSA, such as effort. The term liquidity has the same meaning.
Difference 4. Importance of Levels
In Advanced VSA, levels play an important role in identifying trade opportunities. To understand the significance of levels, let’s first recall the concepts of trend and range (sideways movement). In both ICT/SMC and Advanced VSA, a trend is broken down into components, often referred to as impulses or expansion moves. A range, on the other hand, is characterized by its boundaries and the vectors of price movement between those boundaries.
In Advanced VSA, important trading signals include the defense of a broken level or a price retracement to a level followed by its defense.
In Advanced VSA, the defense of a broken level or the cancellation of a breakout (where the price returns back behind the broken level) followed by a defense of that level is considered a signal for identifying trades. This method helps traders spot potential entry points where either buyers or sellers to protect a key price level, giving more confidence in the direction of the market. The most important levels include the base of the last impulse, the boundaries of a range, and the test level of a zone.
In ICT/SMC, there are no direct equivalents of these elements when it comes to searching for trades. However, breakers and sometimes mitigation blocks serve similar purposes to the levels in Advanced VSA, but the approaches differ. In ICT/SMC, trades are typically executed within the breaker or mitigation block, whereas in Advanced VSA, trades are found when a level is defended: buy trades above the level (supported by buyers), and sell trades below the level (supported by sellers).
Additionally, Advanced VSA allows for trading within ranges, moving from one boundary to the other, as long as the boundaries are defended.
Summary
Despite the shared terms and similar approaches, there are significant differences between the two concepts:
Number of forces influencing price movement: In ICT/SMC, it is believed that price is controlled by a single force, the Market Maker (MM). In contrast, Advanced VSA considers the interaction of two forces—buyers and sellers—as driving price movements.
Use of volume in analysis: ICT/SMC does not take traded volume into account during analysis, while in Advanced VSA, volume is a crucial element for identifying market forces and areas of interest.
Use of levels for trade entries: In ICT/SMC, levels do not play an important role, whereas in Advanced VSA, levels one of the possible places for identifying potential trade setups.
Good luck with your trading and investing!
The Art of Candlestick Trading: How to Spot Market Turns EarlyBuckle up, TradingViewers! It's time to unravel the ancient secrets of candlestick patterns. Originating from an 18th-century Japanese rice trader, these patterns aren't simply red and green elements on your trading charts—they are the Rosetta Stone of market sentiment, offering insights into the highs and lows and the middle ground of buyers and sellers’ dealmaking.
If you’re ready to crack the code of the market from a technical standpoint and go inside the minds of bulls and bears, let’s light this candle!
Understanding the Basics: The Candlestick Construction
First things first, let’s get the basics hammered out. A candlestick (or Candle in your TradingView Supercharts panel) displays four key pieces of information: the open, close, high, and low prices for a particular trading period. It might be 1 minute, 4 hours, a day or a week — candlesticks are available on every time frame. Here’s the breakdown:
The Body : This is the chunky part of the candle. If the close is above the open, the body is usually colored in white or green, representing a bullish session. If the close is below the open, the color is usually black or red, indicating a bearish session.
The Wicks (or Shadows) : These are the thin lines poking out of the body, showing the high and low prices during the session. They tell tales of price extremes and rejections.
Understanding the interplay between the body and the wicks will give you insight into market dynamics. It’s like watching a mini-drama play out over the trading day.
Key Candlestick Patterns and What They Mean
Now onto the fun part — candlestick formations and patterns may help you spot market turns (or continuations) early in the cycle.
The Doji : This little guy is like the market’s way of throwing up its hands and declaring a truce between buyers and sellers. The open and close are virtually the same, painting a cross or plus sign shape. It signals indecision, which could mean a reversal or a continuation, depending on the context. See a Doji after a long uptrend? Might be time to brace for a downturn.
The Hammer and the Hanging Man : These candles have small bodies, little to no upper wick, and long lower wicks. A Hammer usually forms during a downtrend, suggesting a potential reversal to the upside. The Hanging Man, its evil twin, appears during an uptrend and warns of a potential drop.
Bullish and Bearish Engulfing: These are the bullies of candlestick patterns. A Bullish Engulfing pattern happens when a small bearish candle is followed by a large bullish candle that completely engulfs the prior candle's body — suggesting a strong turn to the bulls. Bearish Engulfing is the opposite, with a small bullish candle followed by a big bearish one, hinting that bears might be taking control of the wheel.
The Morning Star and the Evening Star : These are three-candle patterns signaling major shifts. The Morning Star — a bullish reversal pattern — consists of a bearish candle, a small-bodied middle candle, and a long bullish candle. Think the dawn of new bullish momentum. The Evening Star, the bearish counterpart, indicates the onset of bearish momentum, as if the sun is setting on bullish prices.
The Shooting Star and the Inverted Hammer : Last but not least, these candles indicate rejection of higher prices (Shooting Star) or lower prices (Inverted Hammer). Both feature small bodies, long upper wicks, and little to no lower wick. They flag price exhaustion and potential reversals.
Trading Candlestick Patterns: Tips for Profitable Entries
Context is King : Always interpret candlestick patterns within the larger market context. A Bullish Engulfing pattern at a key support level is more likely to pan out than one in no-man’s-land.
Volume Validates : A candlestick pattern with high trading volume gives a stronger signal. It’s like the market shouting, “Hey, I really mean this move!”
Confirm with Other Indicators : Don’t rely solely on candlesticks, though. Use them in conjunction with other technical tools like RSI, MACD, or moving averages to confirm signals.
Wrapping It Up
Candlestick patterns give you a sense for the market’s pulse and offer insights into its moment-to-moment sentiment — is it overreacting or staying too tight-lipped. Mastering candlesticks can elevate your trading by helping you spot trend reversals and continuations. These patterns aren’t foolproof — they are powerful tools in your trading toolkit but require additional work, knowledge and context to give them a higher probability of confirmation.
It’s time to light up those charts and let the candlesticks illuminate your trading path to some good profits!
The BEST Shortcut to Consistent Trades: Multi-Timeframe Magic!Here’s a **top-down analysis** of the **XAUUSD (Gold Spot)** based on the charts and liquidity zones (LQZ) , starting from the **higher timeframes** to the **lower timeframes**. This approach helps to align trade decisions with the broader market context.
1. Weekly Timeframe:
- Weekly Flag Trendline: The price is testing the upper boundary of a long-term flag pattern. This flag could be seen as a **continuation pattern** in a larger bullish market structure.
- Scenario: A breakout above this weekly flag would suggest the resumption of the broader **uptrend**, targeting significant levels around **$2,600 and higher**.
- Bearish Risk: A strong rejection from this trendline could signal a larger pullback, potentially targeting support around **$2,470** (Daily LQZ) or lower.
2. Daily Timeframe:
- Trend: The daily structure shows price building towards testing resistance at the **4-hour LQZ** of **$2,532.144**. If momentum continues, a breakout could confirm a larger bullish push.
- Daily LQZ: Located at **$2,470.804**, this is a critical support level. A break below it would signal a change in the market structure towards more bearish conditions.
3. 4-Hour Timeframe:
- **4-Hour LQZ**: Key resistance at **$2,532.144**. If this is breached, it confirms a breakout of the flag on higher timeframes, leading to a stronger bullish move. A failure to break this level could trigger a reversal back to lower support zones.
- Pattern: The current price action is consolidating near the top of the wedge, indicating indecision but with potential to resolve upwards if the breakout sustains.
4. 1-Hour Timeframe:
- Support: **1-hour LQZ** at **$2,513.704** acts as immediate support. It’s vital to monitor how price reacts around this area. A hold above this level suggests bulls remain in control.
- Entry Considerations: Watch for a clean breakout above the **weekly flag trendline** with price closing above the **4-hour LQZ** and respecting the **1-hour LQZ** during pullbacks. A break of this support may invalidate the bullish scenario, leading to downside risks.
Key Scenarios:
1. Bullish (Preferred):
- A breakout above the weekly flag pattern, supported by a breakout of the **4-hour LQZ** at **$2,532.144**, would signal a continuation of the bullish trend.
- Target higher levels around **$2,560** initially, with potential further upside towards **$2,600** if momentum remains strong.
2. Bearish (Risk Scenario):
- A failure to break the **4-hour LQZ** or a rejection at the weekly flag trendline, coupled with a break below the **1-hour LQZ** at **$2,513.704**, could lead to a move lower.
- Targets for shorts would include the **Daily LQZ** at **$2,470.804**, with further downside to **$2,420** and **$2,402** if bearish momentum builds.
Confluence Factors:
- The alignment between the **weekly flag breakout** and price respecting **lower timeframe LQZ** levels will be crucial for confirming a sustained trend.
- Conversely, any rejection and failure to hold these levels could shift bias towards downside risks.
Conclusion:
This **top-down analysis** favors a **bullish breakout**, but careful monitoring is required at critical resistance levels. Risk should be managed tightly around the **1-hour and 4-hour LQZs** to confirm trend direction.
Understanding Order Block Trading StrategyOrder block trading is a technical analysis strategy that identifies potential support or resistance levels based on the accumulation or distribution of orders within a specific price range. These areas are often referred to as "order blocks."
Key Concepts:
Order Block: A price range where a significant number of buy or sell orders have been placed.
Support: A price level where demand is strong enough to prevent the price from falling further.
Resistance: A price level where supply is strong enough to prevent the price from rising further.
Identifying Order Blocks:
Price Action: Look for areas where the price has consolidated or paused for a significant period, indicating a potential accumulation or distribution of orders.
Volume: Analyze the volume profile to confirm the presence of an order block. High volume during consolidation can indicate a larger accumulation or distribution.
Structure: Consider the overall market structure and trend direction. Order blocks are more likely to be effective in a trending market.
Trading Strategies:
Buying at Support: If the price approaches a confirmed support level (an order block where accumulation has occurred), consider buying with the expectation that the price will bounce off the support.
Selling at Resistance: If the price approaches a confirmed resistance level (an order block where distribution has occurred), consider selling with the expectation that the price will reverse downward.
Using Order Blocks as Targets: Once a trade is initiated, use the order block as a potential profit target. If the price reaches the order block level, consider taking profits.
Stop-Loss Placement: Place a stop-loss below the support level for long positions and above the resistance level for short positions to manage risk.
Example:
In this example, the shaded area represents an order block where a significant number of buy orders were likely placed. If the price approaches this level from below, traders might consider buying with the expectation that the price will bounce off the support.
Note: Order block trading is not a foolproof strategy and requires practice and experience to master. It's essential to combine this technique with other forms of technical analysis and risk management strategies.
Drop Base Drop Pattern: A Technical Analysis PerspectiveDefinition:
The Drop Base Drop pattern is a technical chart pattern that indicates a potential continuation of a downtrend. It consists of a sharp decline in price, followed by a period of consolidation or sideways movement (the base), and then a resumption of the downtrend.
Formation:
First Drop: A significant price decline.
Base Formation: A period of consolidation or sideways movement, often below the 0.5 Fibonacci retracement level of the previous decline.
Second Drop: A continuation of the downtrend, breaking below the base's low.
Trading Implications:
Sell Signal: If the Drop Base Drop forms below the 0.5 Fibonacci retracement level in a downtrend, it suggests a potential continuation of the bearish trend.
Risk Management: Employ stop-loss orders to mitigate potential losses.
Confirmation: Seek additional technical indicators or chart patterns to reinforce the bearish signal.
Key Considerations:
False Breakouts: Be cautious of false breakouts, where the price temporarily breaks below the base's low but then reverses.
Market Conditions: The effectiveness of the pattern may vary depending on overall market conditions and the specific characteristics of the underlying asset.
Individual Stocks: The pattern's reliability can differ between stocks. Analyze multiple timeframes and technical indicators for a more comprehensive assessment.
Conclusion:
The Drop Base Drop pattern can be a valuable tool for identifying potential downtrend continuations. However, it's essential to use it in conjunction with other technical analysis techniques and risk management strategies.
The SAFEST Entry Technique - 18 Period Moving Average MethodA great deal of viewers have contacted me asking how I "time" the market. In other words, once I've identified a market as "set up" (via COT strategy or Valuation Strategy), how do I get into a trade.
This video is the first in a series that will outline the entry techniques that I use.
18 PERIOD MOVING AVERAGE ENTRY METHOD:
By far, this method is the safest change of trend confirmation that you will find. There are other entry techniques that will get you into the market sooner, sure. But those other entry techniques come with greater risk, and could be called "bottom picking" to some degree.
The 18 Period MA Entry Method is simple.
STEP 1: Plot the 18 period SMA on your chart based on the closing price.
STEP 2: For LONGS , you need to see two full range candles form ABOVE the MA. From there, mark out the highest high of those 2 candles. When price trades up into that high, the trend has officially changed to bullish. For SHORTS , you need to see to full range candles form BELOW the MA. From there, mark out the lowest low of those 2 candles. When price trades down into that low, the trend has officially changed to bearish.
CAVEAT: We do not count inside bars (bars that form within the range of the previous candle). If you see inside bars, skip them and continue your 2 bar count.
STEP 3: Enter at market when high/low is breached. Risk management is something I will review in another video, but generally, I add/subtract 120%-150% of the 3 bar ATR.
CLARIFICATION: To be clear, this entry technique should not be traded blindly. You need to have a REASON to take the trade (for example, COT strategy suggests a market is setup for a trade, or the Valuation/Ducks in a Barrel setup suggests a market is setup for a trade).
CREDIT: I credit Larry Williams, Tom DeMark, Brian Schad & Jake Bernstein for their influence in these ideas.
If you have any questions about this entry technique, feel free to shoot me a message.
Good Luck & Good Trading.
Trading EURUSD | Judas Swing Strategy 05/09/2024At 08:25 EST, we were at our trading desk, eager for opportunities the trading session might offer. We began our session by marking out our trading zones.
After an hour and a half, we observed a sweep of liquidity at the high of the zone, signaling potential selling opportunities in this trading session. Shortly after the liquidity sweep, there was a structural break to the downside, bolstering our confidence in the emerging setup. The next step was to wait for a retracement into the freshly formed Fair Value Gap (FVG).
We have finally seen price trade back into the Fair Value Gap (FVG). After the closure of the candle that retraced into the FVG, we can execute our trade since all the criteria on our checklist for trade entry have been fulfilled.
This trade experienced a drawdown for just five minutes before price began to move favorably in our anticipated direction. Patience is key as we await the trade's result. Whether it results in a win or a loss, we are prepared for either outcome since we have risked only 1% of our account, targeting a 2% return.
Upon reviewing the position, we found it had returned to our entry point. At such a juncture, traders who have risked more than they can afford may panic. However, our comprehensive backtesting data on this strategy reinforces our confidence in the strategy, risk management approach and the importance of trusting the process.
We were unlucky this time as the trade hit our stop loss and we lost 1% on this trade. The Judas Swing strategy is a simple strategy any trader can add to their arsenal. A trader simply needs to be present between 08:30 and 11:00 EST to look for trading setups. While not the "holy grail", this strategy boasts a win rate of approximately 50% and a risk-reward ratio of 1:2
