Wanna Get More Out of Trading Daily? Chart Frame…Try End Of Day Trades

Hello and welcome to another edition of the bulls vs the bears. Today my message is simple. If you want to get more out of trading the daily chart chart frame, try placing your trades at the end of the day. Your focus will be on closed candles not open ones.

Now I can hear somebody asking”How IS Trading At The End of The Day Going to Help Me?” It will definitely take your trading to another level. And it makes the trading process simple and straightforward. End of day trades accomplishes this feat several ways. First it cuts down your trading time which translates into a positive mindset. With this mindset you don’t need to stare at the screen all daya- a major addiction of a lot of traders. When you stare at the screen all day , you overthink , which makes you over-analyze and which eventually sends your money down the abyss.

Even more important end of day trading helps you with money management via the set and forget approach. With a solid money management plan you dont need to scratch your hair over your trades. Set your trades and get out of the way.

So what are we going to do? We are going to learn how to trade end of day session And how we are going to do this? By utilizing popular trading patterns that we have looked at before. We are going to look at how you can employ these patterns at the end of the day.

First up is

Inside Bar Pattern

The first pattern we are going to look at the inside bar pattern

bullish inside bars

This pattern looks perfect for an end of day trade. Doesn’t it? All you have to do is place your entry, take profit, and stop loss. And the market will do the rest. Just set and forget and go on vacation. By the time you get back you should see a handsome profit in your trading account.

Do you know what you just did. You solved the most difficult aspect of forex trading – trade management. Even more important, you took the emotions out of the process – a trade killer if you ask me.

Now let’s t look take another example of the inside bar using the GBPUSD pair

pinbar6

First thing we see here is the dreaded range that most traders don’t really care about. However, see the back-to back pin buy signals at the level of support. This is what you call confluence where you have multiple signals popping at the same time. This is perfect for an end of day trade.

With this trade you could make three times your risk. As I indicated earlier, just step away from your screen and let the market rack up the profits for you and out them on your bank account. This will open happen if you don’t over-think your trades, and you are not in a hurry to jump into the market.

And Finally

Fakey Pattern

Let’s look at another end of day trading example using the fakey pattern via the GBPUSD pair.

fakeywithpinbartrend

Here we see a fakey/pin bar combo forming in-line at the uptrend in the daily chart frame.. Place your take profit at the breakout of the inside bar or at the high of the pin bar and stop loss below the low of the mother bar. Do that and you make yourself a handsome profit.

The only hitch here is you have to wait ten days for this pattern to form. Sorry folks that;s the way the daily chart frame works. You need sit tight and watch things unfold.

That’s  a wrap for ”Wanna Get More Out of Trading Daily Chart Frame…Try End Of Day Trades. ” End of day trades will definitely do wonders for your forex trading account. But please don’t get the impression that end of day trades are a walk in the park. They are not. However, you’d be a whole better off trading end of day than spending your whole day searching for 15 minute scalps on the market. Who does that?

In utilizing end of day trades, you vanquish the small voice torturing you into taking those 15 minute scalps. You only take what the market offers you, depending on your trading edge of course. Even more important end of day trading teaches you self control. You don’t feel the urge to jump into the market just for the fun of it. I trade using the engulfed pattern. If it is not evident on the screen I don’t trade–Simple as that.

Take care til next time

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How To Profit From Trading Key Chart Levels

Hello and welcome to another edition of the bulls vs the bears. Today we are going to look at how to profit from trading key chart levels. Obviously when I say key chart levels I’m referring to support and resistance.

We are going to look at how to trade the price action occuring around the key chart levels. As you well know key chart levels show up in different scenarios. We will use these key chart levels together with basic price action strategies to create a high probability trading strategy.

First off:

How Do I Trade Support and Resistance in Trending Markets?

Trading the dominant trend is the most popular technique that traders like my self use to trade the markets. Any trader worth his salt will dedicate as much time to trend analysis and stick to simple price action strategies when trading the market that is trending. You look for price action signals forming near levels of support , a consequence of the ebb and flow of the market.

Let’s take a look at the graphic below

Forex Support and Resistance | Support holds at 1.4700

Here we see 4 months of price action data Notice how the key of support has been drawn. also look at how the various price action strategies have been set up via the inside bar pin bar, and fakey setups. You don’t need to use any fancy robots-just pure price action.

If you want to freshen up on trending markets look up Trade Trend with Price Action Analysis as the Weapon of Choice

Next up is:

How Do I Trade Support and Resistance in Range-Bound Markets?

Unfortunate markets don’t trend all the time. And when that happens go in consolidation. This means that the big players are taking a breather planning their next move. This is manifested in the manner the market move sideways. and when the market move sideways, it means the market is range-bound. Let’s look at a range bound market through the eyes of the USD/CHF pair.

Range-Breakout-Trading-Example

Here we see the USD/CHF pair from 23RD January to August 1. Notice the period of consolidation from May to September. Two things happen in this pic. First a long-tailed pin bar formed showing a strong rejection inside of the range. Next we see a break of the pin bar which, of course sparks an upward break by the bears.

Be careful with trading ranges though. Ranges can be very unpredictable. If you don’t play your cards right you risk blowing a hole in your trading account. But if you keep a close look at the peripheries , you could catch some serious price signals at the key levels of support or resistance of the range.

If you want to know more about trading ranges, look up Forex Market Goes Sideways

Next up is:

How Do I Trade From Swing Points In Trending Markets?

In case some of you don’t know by now swing points are the highs and lows formed by the market. Look out for these as they make for great support and resistance. The good thing about swing points is that they dont require mutiple rejections of price to be considered a bona fide support or resistance level. Instead, the swing in the opposite direction is enough to create a key support or resistance level.

When you see price getting price etching towards a swing point , look out for possible price action setups around that point. Let me you in on two secrets. First a swing high acts as support in an uptrend while a swing low as resistance in a low trend. Let’s look at the illustration below.

GBPJPY-Daily chart lower

Right in front of us is an illstration of swing points using the GBPJPY pair. Here we see price finding support around 17 July. This swing point is absolutely crucial as we see price action swirling around it at both support and resistance levels.

If you want to know more about swing points look up Let’s Do A Little Swing Trading

Next up is:

How Do I Trade Dynamic Support and Resistance in Trending Markets?

For those of you who don’t know dynamic support and resistance leves are levels where the market finds support without having to be at a horizontal support or resistance. I alway price changes at the speed of light at tehse levels because of the evolving nature of the market.

The best way to trend dynamic asupport and resistance levels in trending markets is exponential averages (EMA’sfor short). It’s the best method for analyzing and identifying dynamic support and resistance levels.

Why? Because they do a great job of catching crazy momentum switches in price action, while at the same time keeping an eye on long term price movements. Let’s take a good look at the 1 hr chart using the 20 EMA via the EURUSD pair

dynamic support and resistance forex market 2ndskiesforex

Notice the numerous times the price action touche the 20 EMA(The bluish line. This opens the way to numerous trade setups that you can chew on. If you want to know more about dynamic support and resistance levels, look up How To Locate Dynamic Support and Resistance Levels

How Do I Trade Event Area Support and Resistance Levels?

In case you guys have forgotten, an event area is a price level or zone where a price action signal forms followed by a humongous directional move or “event.” Let’s see how event areas are traded in the pic below

Event zone

As you can see, the white arrows pointing downwards suggests price retracement after price bounced off the resistance ;levels. However take a close look at the huge upwards arrow at the line of resistance. Here we see a humongous break by the bulls at this level. And when you see such a pattern it’s time to make so much needed doe.

Even more important, keep an eye on this price signal for future entries when it touches this key level again. You dont want to miss out on another opportunity to ring in the cash.

For more information on price event areas look up A Closer Look at Price Event Zones and Support and Resistance Levels

That’s  a wrap for ”How To Profit From Trading Key Chart Levels ” As you can see, learning how to trade key levels is not that scary. All you have to do is analyze the market and gain enough lough as to how to identify key market levels and price action match ups.

Once you have these two components you have a huge advantage over other traders. You can combine these two weapons to form a high probability trading strategy that you can apply to the ever changing market conditions week in week out. These sets do work out in your favor when you constantly seek them out these confluent key levels

Take care til next time

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MetaTrader 4 The Sequel – How To Place Trades in Price Action Trading

Hello people

Last time we learnt how to download and set up the Metatrader 4 platform for price action trading. Today we are going to do  Part II The Sequel, by far the most exciting part. We are finally going to learn how to place trades on the Metatrader 4 platform for price action trading. I’m sure most of you have been fantasizing about this part all week long. No need to wait any longer the moment has finally arrived.

I know  I said the last time that the Metatrading platform 4 platform is so user-friendly that anybody can use it. But at the same some people may be so intimidated by the numerous tabs and buttons splashed across the screen on the platform. But not to worry! If you are in that category of people, I will hold your hand right through this  post so you don’t fall. So onward:

How to Enter A Trade Via Market Execution

Image result for MT4 How To Enter A Trade Via Market Execution

  • First click on “New Order” .It’s right underneath the window label.

Image result for MT4 - select currency pair

  • Upon selecting your order, you select  the currency pair you want to trade from the menu at the top. Just click the arrow and make your selection.
  • Upon making your selection, you click on the menu label “Type” and select “Market Execution”
  • Next you indicate the size of the position you want to buy  by clicking on the menu labelled “Volume”. Keep in mind that one standard lot(1.0) is worth 100,000 units. So if you intend on buying 5,000 units select 0.5
  • If you have anything to say about your trade  just fill the ‘Comment’ column. But that’s optional.
  • Finally decide whether you want to buy or sell the currency pair.A dialogue box will then show up to inform you that your trade has been executed.

Next Up is:

Entering  A  Trade By Way of Pending Order

Image result for MT4 How To Enter A Trade Via Market Execution

Click on “New Order”Image result for MT4 - Entering Trade Through Pending Order

  • Next you choose your currency pair of choice from the topmost menu.
  • Your next task is ti select “Pending Order” from the menu labelled “Type”
  •  you  will want decide whether to buy or sel the currency pair in the order type drop down list.

Once you’ve made that decision, you will then be presented with 4 options:

And they are as follows:

Buy Limit – if you plan on going long at a level lower than market price

Sell Limit – if you plan on going short at a level higher than market price

Buy Stop – if you plan on going long at a level higher than market price

Sell Stop – if you plan on going short at a level lower than market price

  • Once you make your selection, fill in the price at which you want to make your appearance in the market.
  • After filling in the price, enter the size of your trading position in the volume field.
  • Next fill in your stop loss and take profit fields.
  • Keep in mind that you also have the option of setting an expiration date on your order. Better safe than sorry.
  • Once you have checked all the boxes,click the “Place”button to enter your trade
  • A dialogue box will then pop up to say “Voila! Your trade has been entered.”

If you’re not sure of your pending orders I suggest you read up on You Need To Protect Your Trading Position and Profits with Pending Orders

How To Modify Trades

CaptureSelect “Trade” tab at the bottom of the metatrader platform.  This contains all your trades including your entry prices, position sizes, stop losses,and profit targets.

However,if you want to add/modify your trades,here is what you do:

Image result for MT4 - Modifying Trades

  • Right click on the trade you want to modify and then select “Modify’ or “Delete.”
  • Next you fill the stop loss and take profit fields with your desired levels. And when you’re done, hit the “Modify” button.
  • A dialogue box then pops up to tell you that”Guess what,your adjustments have been Executed.”

And Finally:

How to Close Open Trades

Image result for MT4 - How to close open trade

  • Right click the  trade that you want close
  • If you want to close the entire position, select the yellow button below the “Buy” and “Sell” options.
  • After hitting the close button, you should see a change in your profit balance, reflecting  your profit or loss you made on your closed trade.
That’s  a wrap for ”MetaTrader 4 The Sequel – How To Place Trades in Price Action Trading.”  And sadly we’ve come to the end of th two part series on the Metatrader 4 platform. Yea,I know that  all good things must come to an end. but you can practice what you’ve learnt on a free demo account.This way, you’ll be better prepared when you decide to trade live.

Til next time take care.

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How To Find The Perfect High Probability Trade

Hello and welcome to another edition of the bulls vs the bears.  I know  a while back we touched on How To Spot High Probability Trades and Run All  The Way to the Bank. But how about we learn how to find the perfect high probability trade?  For those who have no idea what I’m talking about, I suggest you read the post I just mentioned before you join today’s class.

You absolutely want to create an edge when you enter a trade  on the market. I can hear somebody  muttering under his breath saying “Hmmm…How do I do this?” Just pick a trade that has a high probability of giving you a decent profit. The moment you see an obvious pattern your brain should scream ‘BULL’S EYE.” That’s what I call your trading edge. That candlestick pattern should be so obvious that you dont need to think twice about entering the trade. If the conditions aren’t present just dont trade.

So basically  we are going to learn various ways fo finding the perfect high probability trade So first off:

You Need to know How to use Support and Resistance Levels

One way of finding the perfect high probability trade is   knowing how to analyze support and resistance levels. Let me give you a simple tip for trading support and resistance levels.  If a resistance level holds, it means the bears are overwhelming the bulls. And if the reverse happens, the bulls have the bears number.

If you  see an obvious resistance level, it can only mean one thing. That the bears are  looking to go short(or put in orders to sell).  And if there is a reverse scenario at the level of support nobody has to tell you that the bulls have put in their market orders to go long. Neither level can   break until one party overruns the other. So for level of resistance to  be breached the the bulls must destroy the bears. And for the reverse to happen at the line of support the bears must clear out the bulls. Let’s take a look at an example

bulls and bears buyers and sellers

Here the bears are resisting the bulls with all their might. The yellow marking suggests that the level or resistance is holding nicely.Once that happens the bulls run out of gas and the bears will take over proceeding and head for the bottom of the hill.

Next up:

Mark Important Levels

Sure you need to know how to trade support and resistance levels. But you should mark the most important levels.Why? Because everybody is watching those levels like hawks. So you need to sharpen your tools in this regard. Please do not make the mistake of  going intraday (looking at 1hr 4 hr time frames) or else you will be trading from a position of weakness.

One thing you need to understand is that high probability trades are long term trades. You’re talking about entering trades that will last for days, weeks, sometimes months, not to mention rake in huge profits as well. . You’d be better off looking at the daily, weekly or monthly time frames. Let’s look at an illustration of  Gold facing facing resistance at the resistance level

gold support resistance

The yellow markings represent the the important levels that I mentioned earlier. You need to be aware of these areas as they are going to be closely watched by other traders also. The red arrows point to to these marked areas. Just make sure when marking important levels, that these  are the levels you want to locate your trades. You do not want to mark multiple levels just for the fun of it. Mark the levels you want to place your trades and once you mark those levels you place your  take profit and stop loss orders.

That’s a wrap for “How To Find The Perfect High Probability Trade.” High probability trading is more than just entering trades. You need a flawless mindset and meticulous preparation. Not only will this strategy save you precious time, but you can easily recognize these trades because you know they are from daily levels.

As they say price action always rules. Just find trades that increase your chances of making pofits and your  trade will be all the confirmation you need.  The best place to put this into practice is your demo account. It’s the best lab there is as far as putting this strategy into practice goes.  You then start looking for high probability signals at the key levels.

Til next time take care.

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How To Cultivate The Right Mindset For Forex Trading

Hello and welcome to another edition of the bull vs the bears. Today We are going to talk about having the right mindset for forex trading.  Inn short we will be looking into the psychology of forex trading.

If anybody ever tells you that prosperity in the forex market depends on your forex strategy , Ask that person” What have you been smoking?” Yes a solid forex strategy helps but that’s partly the story. you see success as a forex trader largely depends on having the correct trading mindset, your thought process and the way you respond to the movement of the forex markets. If  you go about chasing after the hottest trading bot or fancy indicator you are going to be sorely disappointed You should rather be focusing on cultivating a positive mindset and managing your trades and emotions properly. If you fail to do these two things you will just be chasing the shadows of the market and you will hemorrhage  a ton of money too.

The first question we need to ask ourself is:

Why Do Most Forex Traders Lose Money?

The answer is very simple. Most forex traders have this weird fantasy of making millions overnight.T  Consequently they  lose  all their money, leaving a nuclear-sized crater in their trading accounts. This mindset comes about as a result of unbearable pressure the put on themselves to  make these huge profits. And when you start out trading this way, you react with your emotions instead of thinking logically. Naturally youb end up blowing your trading account.

The next question you need to ask yourself is

What Emotions Should You Avoid While Trading?

Here are some toxic emotions you need to avoid like  the plague while trading.

First off:

Greed

If you act like a greedy price you will in all likelihood lose your money. The greed comes in when you don’t take your profits  Don’t make th costly mistake of not taking the profits because you think  the trade is going to run forever in your favor. The forex market  can do a 360 on you at any time. That’s why   the take profit option is there for you to make the exit when you price hits your target.

Another habit you should avoid is adding to your trading position simply because the market has moved in your favor. You only add to your trading position if it’s founded on price action logic. Anything else is just pure greed. Of course risking too much on one trade is also born out of greed. Too much greed will most certainly blow up your account.

Next up is :

Fear

Fear can hit you two ways. First it can hit you if you are just entering the forex market for the first time and have not yet developed a trading strategy on which you place your trades. Even worse, fear can also grip you when you lose successive trades or when you  sustain a loss so large that you suffer a humongous emotional breakdown, h

Now I can hear someone asking”How do I overcome those demons lingering in my head?”First of make sure  you decide how much you can afford to part company with in the event that you lose a trade. This is very important because the losses are going to happen. Just make sure you get that through your head. Once you get that sorted out you are able to move on when you lose a trade. There is one thing you need to understand about fear. Fear causes you to miss out on great trading opportunities. If  you want to take advantage of these trading opportunities, get rid of those demons in your head.

Revenge

How many times have you said to yourself”I’m going to get back at you guys for blowing up my trade?” Listen,  don’t blame it on the forex market. The thing is there are no guarantees that every trade that you enter in will be a winning trade. This why you need to develop a trading edge. If your trading edge doesn’t exist don’t trade. It’s a simple formula most traders just don’t seem to apply. Now don’t ask me why because I have no idea either.

Also revenge is also borne out of a need to jump back into the market to make  for what you lost on the market. Of course this will result into a loss more humongous than the previous loss, a loss largely based on emotional rather than logical trading.

Next up is:

Euphoria

Dont get me wrong! I have nothing against Euphoria. In fact euphoria is a good thing. But it can also work against you especially when you make a huge profit or you chalk consecutive winning trades. Overconfidence kicks in and all of a sudden you become swollen headed , thinking that you are the biggest thing since corn bread. Then all of a sudden, you experience back to back losses  and you are like “Hey what’s going on here.”

Of course you are tempted to jump  back into the market to make up for your losses(See a pattern developing here?). That’s your emotions going into whiplash mode after suffering those humongous  losses. You are so overconfident you fail to see the red flags  teling you that any trade can be lost. Like I mentioned earlier if you have your high probability trading edge, you should be able to make a fair amount of profit in the long term. Just make sure you apply discipline and patience. To borrow a line of a m song by legendary R&B group Midnight Star, Don’t force it. Just chill out and let it flow.

Now that we’ve gotten the emotional cancers out of the way, it’s off to the question of the day. Which is

How Do I cultivate The Right Trading Mindset?

The first thing you need to do is:

Know Your Trading Edge and Master It

You need to know your trading edge like the back of your hand. Your trading edge is your set of conditions that have to be present on the market for you to part with your money. That gives you that mental edge over the other traders. You can’t be sitting there waiting for the market to part the the Red sea before you make your entry.

Here is a very simple  piece of advice a veteran trader gave me  a few months ago.  She simply said “If your trading edge is not present on the market don’t trade.” It’s as simple as that.

Next up is:

Manage Your Risk Properly

If you value your cash you’d do well to manage your risk properly. If you do not control your risk on all your trades emotions take over your brain. And when that happens you know disaster starts knocking on your door. What’s so scary about emotional trading is that you are don’t even realize your emotions are kicking in. It’s like  an adrenaline flood. You’re just gambling instead of making use of  a well thought out trading strategy.

So how do you avoid trading emotionally? Only risk money you can afford to part company with per each trade.  Go into the trade with the mindset that you could lose on a given trade given what you know about the forex market. When  you get that sorted in your mind you won’t cry over spilt milk that often.

Next up is

Do Not Over-Trade

I cannnot stress this enough. over-trading will most certainly destroy your trading account. Like I mentioned a few minutes ago, only trade when your trading edge is present. Don’t trade when you feel like it or when you are only 50% sure your trading edge is present on the market. If your mind starts wavering, the market will most certainly make you pay for your uncertainty.

Once your emotions kick in they are hard to stop. It’s like an onrushing flood. Just apply  logic and your emotions will leave you alone.

Get Yourself Organized

If you want to prosper as a forex trader you absolutely have to get yourself organized. You need to develop a trading plan and apply religiously. Treat t forex trading as a business instead of a Las Vegas Casino. There should be a method to every trade that you place on the market. Even more important, stay calm. Don’t get carried away with your emotions.  Every trade must be thought out before you make your entry. Once you accomplish that, the demons will stay out of your way.

That’s  a wrap for ”How To Cultivate The Right Mindset For Forex Trading .”  You absolutely need  a solid mindset to succeed as a forex trader. You cannot approach forex trading with a gambler’s mentality or else you’ll lose heavily. Forex trading is a business just like any other enterprise. You must be calculating in all your trades. You must  be purposeful with every trade rather letting the  chips fall where they may. It could be the difference between prosperity and poverty.

Til next time take care

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Five Support and Resistance Types You Absolutely Must Know

Hello and welcome to another episode of the the bulls vs the bears. I know we’ve already covered  support and resistance levels in the past. But today we are going to look at five support and resistance types you absolutely must know .The forex market can be every unpredictable. It goes up and down, and sometimes it veers sideways.

Some of you may think ‘ hmmm..support and resistance is too complicated. Well support and resistance levels is the backbone of price action analysis.. And they help form the basis for understanding the forex market. Through price action trading, support and resistance levels help us decide where we are going to place our stop loss and take profit targets. More importantly, support markets helps us understand three things:What;s happening on the market, what has happened on the market, and what is going to happen on the market.

So what are we going to do?We are going to look at how to use the seven support and resistance levels.

First off:

Swings Highs and Lows

One support and resistance level that you absolutely must know  is the traditional swing highs and lows.  You find these levels by zooming in to a longer time frame such as the weekly chart or even monthly chart.  It’s been said you get a broader view of the market and the flash points within the market. What you want to do is simply identify obvious levels where price either reverse higher or lower or lower and draw horizontal lines at them.

Mind you, these lines don’t have to be perfect. They may either intersect candlesticks or be mere event zones.  You absolutely have to do this when analyzing any chart. That should be the first step on your analysis itinerary. Let’s take a look at an illustration using the GBP/USD pair

This is the bird’s eye view that I was referring to. See the entire cocktail here – support and resistance levels, trends, and sideway markets. They immediately jump out at you in this time frame. You cant miss them.

Now let’s take a look at the daily  chart(or time frame) to get a clearer picture

Here you see short term levels that you don’t see in the weekly chart. As you can see price finds support at 1.4000 level. Take a look at the two  huge  bullish candlesticks.  The first one has a huge shadow and the second one resembles a very bullish reverse candle. The buyers keep pushing for the hills.  The previous day’s candle looks huge to set a strong tone in the day’s trade.

The buyers now have the option of taking a breather(consolidate ) and  create another huge candle and go long in this trade. This should cause price to surge further upwards and hit the resistance barrier around the 1.27500 level. So as you can see there are shor term levels in the daily chart that you don’t see in the weekly chart.

Next up is:

Swing Point Level In Trends

Swing point levels in trends reminds me of this popular forex saying. And it goes like this?”Old support becomes new support, and old resistance becomes new resistance.”  This phrase refers to the scenario where the market creates higher highs and higher lows or lower highs and lower lows.

If  I were you, I’d take note of the formation of these landmarks.  Some one is probably asking “Why should I do that?” Well the market breaks up or down through these levels, that will be your cue  trade temporary retracements also known as pullbacks back to these levels. With pullbacks you are dealing with temporary reversal of the prevailing trend, whether it’s charging up or nosediving down. When you see these landmarks form, get your trade ready.

Now let’s take a look at this phenomenon using the GBP/USD PAIR.

Identify-Pullback-Reversal-Area

This is the classic illustration of the swing phenomenon we were talking about. You have resistance turning into support. Here GBPUSD pair twice run into strong resistance along the 1.750 mark twice. Once price breaks through this level we see the first pullback along the level of support.

Also these old support and resistance levels provide the perfect opportunity to place your limit orders on either side of the trend. You could place a  buy limit order above the old resistance to align yourself in the direction of the breakout with a handsome risk to reward ratio so long as the pullback does not penetrate below the pivot line.

Next up is:

Swing Point Levels in Containment and Risk Management

Swing point levels are very useful as far as containment and risk management goes.  You can look to buy or sell at swing points even if they are not part of  a trend. One such instance is when the market goes into consolidation or the market goes sideways.Just use your most recent swing high or low as your entry point.

Let’s look at an an illustration of swing point levels using the EURUSD pair

Swing point levels as containment and risk management

The image  above shows a sideways market stuck between the support and resistance  levels. This happens after price broke through the support(formerly resistance) at the bottom end of the chart. The additional support level in the middle of the range . Look to buy at the level of support and sell at the level of resistance wherever you see those swing points. And you use these swing points as your profit targets.

Next up is:

Dynamic Support and Resistance Levels

Dynamic support and resistance levels are probably the most exciting patterns of all the support and resistance levels.  They can pull back and find support or resistance without the need to stay horizontalThey change from period to period. I have this saying that dynamic support and resistance levels travel at the speed of light in that changes on the charts happen at lightning speed.

One tool that epitomizes dynamic support and resistance levels is the one and only moving averages. They help smooth out price fluctuations by helping you distinguish between price noise and actual trend direction When we mention moving average we are referring to the average price of a currency pair for a specific number of periods.  Let’s see what dynamic support and resistance levels look like

price movements

See those squiggly lines? They reflect  the moving averages. They reflect specific periods on the charts, One popular tool used to measure moving averages is exponential moving average(EMA for short. This moving average focuses on the most recent trading data.

See those three EMA tolls in different colors in the bottom right corner? They are three of the most popular EMA’s for measuring moving averages. 200 EMA looks at trading data covering 200 days, 100 EMA  looks at 100 days of trading while 50 EMA touches on  50 days of trading data.

Now the 200 EMA is considered the most popular moving average. I can hear somebody asking “Why should I care?” Well they say the 200 EMA is where all the action is as far as trading activity is. And the small red circles reflect the way price reacts when the EMA’s  approaches it. Sometimes price may steer clear of the 200 EMA. And when that happens it’s best to switch to a higher time frame to get a clear picture of where the price is in relation to the 200 EMA.

For more information on moving averages look up We’re Moving  Averages Part I and  II

Next up is

Trading Range Support and Resistance Levels

Trading range(or sideway markets) support and resistance levels offer numerous high probability trades if you keep your eyes open for these opportunities. The trading range is just price bouncing between two paralle levels on the markets. Just keep an eye out for the trading range and then look out for price signals at those levels.

This is a much better option than just buying on a support breakout or sell on a resistance breakout. Because the last thing you want is to suffer continuos whiplash trying to buy or sell at these breakout levels. Just get confirmation through the signals that a breakout has taken place before you start trading them. Let’s take a look at what life on a trading range support and resistance levels look like

typical trade in a ranging market

Here we have a ranging market with four sell opportunities at resistance level and two buy opportunities at the support level. Just place your stop loss orders just above the resistance level and below the level of support. Please don;t even try going long at resistance or short at the support. You’ll burn your trading account that way.

Notice the way price has broken through the lower support line and the upper resistance line. This creates false breakout signals only to return to the trading range. All this action is in the 5 minute time frame, and you want to forget that in a hurry. Focus on the long term time frames such as the h4 or daily.

For more information on trading ranges look up Forex Market Goes Sideways

That’s a wrap for “ Six Support and Resistance Types You Absolutely Must Know.” I hope  you ‘ve understood how the above types of support and resistance levels work. Basically you use support and resistance levels to do the following: as indications of the state of the market, decide which levels to buy or sell from,  how to define risk, and as a basis to understand what the market has done, what it’s doing, and what it’s about to do next.

When you combine a clear understanding of support and resistance levels together with price action and market trends you have what is known as T.L.S – Trend, Level, and Support.

Til next time take care.

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You Need A Forex Trading Plan

Believe it or not, you do need a forex trading plan if want to succeed as a forex trader. The process of developing a trading plan revolves around creating a trading strategy (We’ll get to that at another time) and will serve as a template as to what you need to each time you decide to enter a trade on the market. .Having a trading plan also helps you keep your discipline and patience as a trader over the long term. So now that we’ve cleared the air, let’s dig into how to develop a trading plan.

Develop A Routine and Check List
If you want to have consistency in your trades, you need to develop a routine. And a checklist Failure to develop these two features could have you running around like a chicken with its head cut off as you search for trade sups. Also Cultivate discipline in your routine, and while you’re it, look out only for the most profitable trade setups…It’s a waste of time searching for trades that don’t exist.

Along With developing your routine you most definitely need to develop a checklist featuring things that you look for in the market and what you want to see before entering a trade. If you are able to tick all the boxes, it means it’s time to enter the trade. If not, then you hold your horses, until the conditions are favorable for entering a trade. Or, to make life less complicated for you, you could turn your checklist into a trading plan. This makes for a smooth format, allowing you to recognize potential trades that appear on the charts.

Create Trading Guide Lines
As part of your trading plan, you should create written trading  guidelines, describing what you plan on doing in the markets. Also create visuals as a way of reminding yourself what your trade set ups should look like. Once you stick to following your guidelines and visuals, these two elements will be etched in your mind such that they’ll help you l recognize trading opportunities more quickly and build your confidence as a trader.

Plan your Trades In Advance
Plan your trades in advance as this will help you make profits in the long term. By planning your trades in advance you’re not easily swayed by market variables. In so doing, you’re guided by your objectivity rather than your emotions as a forex trader.

Be Patient
Who ever said patience is a virtue was onto something. That person is absolutely spot on because you need to be patient to be a successful trader. You can’t be gambling as if you’re rolling the dice in a Las Vegas casino. You need to know what you’re looking for and wait for the right trade set ups appear before you execute a trade. Having a patient posture helps cut down on losing trades which come about as a consequence of emotional trading. If you don’t wait for the rig trade set up you end up emptying your trade account. Instead of trading, you’ll be gambling.
Make patience the centerpiece of your trading plan. This way you’re reminded of the importance of holding your horses and waiting for the right trade setup.

That’s a wrap for” You Need a Forex Trading Plan.” If you have any questions or a comment, drop it in the comment box. Till next time, take care.

 

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