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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Three Forex Trading Strategies You Can Take To The Bank

Hello and welcome to another edition of the bulls vs the bears. Today we’ll look at three forex trading strategies you can take to the bank. Sometimes you sit there thing about your trading strategies and a question pops in your head saying”Which three trading strategies would you I bank my money on to get me to the promised land?

This is pretty much what we are going to do. We are going to look at three trading strategies that, if we trade regularly will bring us a ton of profits. Even more important, they are strategies you should be able to recognize like the speed of light without thinking twice about it. So onward:

First Off:

Market Entry

One prerequisite for success  as a forex trader is to get your market entry right. The price action pattern must br so obvious that you can’t miss it. If you ‘re not sure of which price action pattern to choose, let me help you out.

You can get started with the  long-tailed pin bar pattern.  The long-tailed pin bar is a pin bar with a difference. Not to be confused with its sibling the pin bar, the long-tailed pin bar attracts a lot of attention with its conspicuously long tail. It looks so conspicuous that there is no way you can miss it. Now let’s take a look at an example using the USDCAD pair

Image result for long-tailed pin bar

Now this is what the long-tailed pin bars look like up close and personal at the end of the bullish trend just before the bears take over. The long tail  sticks out from the surrounding pin bars. It looks so obvious and conspicuous that there is no way you can miss this one.

It has a small, or skinny body and a longer wick ,hence the nickname, long tailed-pin bar(The ‘Small Body’label’ says it all).  When on a bullish trend the long tail of the pin bar  sticks out from the top  like a tower. However if it were on a bearish trend,the long tail will stick out from the bottom.You’d think it was doing a head stand.

Let’s look at another example of a long-tailed pin bar – this time a bullish long tail

Price Action Trading Strategy: How to use Pin Bars | Campforex.com

Here is a bullish long-tailed pin bar(as indicated by the blue arrow) formed at the bottom of the uptrend around the line of support.  The ,moment you see a long-tailed pin bar pop up on your screen just place your buy order at the tip of the tail. Do that and you should make yourself a decent profit.

Next let’s take a look at pin bars in the pull back strategy.

uptrend-pullback1.png

The pin bar in the pull back strategy offers numerous opportunities to enter trades. Notice  the clear entry Three Forex Trading Strategies You Can Take To The Bank in the uptrend withing the parallel channel. Pay close attention to the pullback within the pin bars. Their long tails are very much in evidence  When that happens you  make your entry.

So if you’re looking for a trading setup you can run with for the rest of your life  go with long -tailed pin bars and pin bars.

If you want to know more about long-tailed pin bars look up Long Tailed-Pin Bar – A Pin Bar With A Difference.

If you want to know more about pin bars  look up How to Prosper From Trading The Pin Bar

Next us is:

Money Management

Sure trade entries are important. But you’d be crazy to ignore the money management side of things. As a matter of money management is the most important aspect of forex trading.  Your future prosperity  rides on how well you manage your trades. Failure to take care of your trades could result in a huge crater in your account.

When  I talk about money management, I’m referring to  position sizing and risk reward.  You need to get these two component spot on if you want to thrive as a forex trader.

In case you have forgotten position is the number of lots you choose to trade. In other words position sizing is the size of the the position you choose to trade on the market. Now why is position sizing so crucial? Because this determines how much money you have chose to risk; the larger your position, the more money you are willing to risk. So keep note of that.

There is another reason why position sizing is  important. It’s has to do with properly adjusting your 1R risk per trade. It is absolutely crucial that you get this aspect right.  Failure to do that and your account becomes history.

Let’s take a look at at an illustration of position  sizing/risk reward in action using the EURUSD pair.

 

An Example of a Risk Reward Ratio

You see how the the risk reward ratio has been laid out at every key level. You have the stop loss placed at the first key level of support. As you can see, profit targets have been set with different ratio levels from R/R1:1 all the way up to R/R1:3.

The trick here is adjusting your risk per trade. You should give your trades enough oxygyen to withstand any sudden 360  U-turns by the market.

Now let’s  look at how to plot the risk reward ratio for a downtrend  using the Fibonacci tool using the USDSD(Singapore Dollar) pair. The neat thing thing about this tool is that it helps you predict how the price will go, and then exits the trade before price retraces.

Here is how it’s done:

  1. Identify a trending market
  2. Draw the Fibonacci extension tool from the swing high to swing low
  3. Set your target profits at the 127, 138, or 162 extension (depending on how conservative or aggressive you are)

Use the same set of rules for the uptrend.

And Finally:

Daily Time Frames and High Probability

Probability the most profitable of the three trading strategies is daily time frames and high probability. Not only are you focus on trading the daily frames but you are looking  to trade high probability setups. With these setups, you are not looking trade 100 trades every week. But rather you are looking for a few profit blockbusters that can bring you huge profits in the long term.

Even more important, these setups help you to  keep your emotions in check. And you shed the habit of over-trading – The biggest killer of most traders  trading accounts.

Now let’s take a look at a daily time frame chart in action

Daily Pin Bar Forex Trading Strategy

 

Now notice the pin bar  entries at the key level of support. You can enter this trade. Let it run for a few weeks, go on vacation and come back to see a huge profit nicely tucked in your trading account.

Daily trading saves you from staring at your screen all day  scavenging for trades. And it tames your massive impulses when you feel a strong urge to stare at your screen all day. Even more important you have a better chance at prosperity long term. It’s a no-brainer.

 

That’s a wrap for “Three Forex Trading Strategies You Can Take To The Bank.”  The aforementioned strategies are the best ways to approach your trading day in day out. These strategies have proved to be reliable over the years and will serve you well for years to come.

Til next time take care.

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What Separates Price Action Event Zones From Support and Resistance Levels?

Hello and welcome to another edition of the bulls vs the bears. Today we are going to find out what separates price action event zones from support and resistance levels. Now you need to know price action even zones and support/resistance levels like the back of your hand. Now do I really have to go into what support and resistance levels are? I;m sure most of you know what these two levels are. If not, click here.

For your information, price event areas have been part of forex trading jargon for a quite while. It’s only recently that it’s being introduced into the forex trading main stream. So to avoid further confusion, I’m going to define what these two tools are. And then I’m going to dig deep into what separates these two wonderful tools.

First off:

What’s A Price Action Event Area?

Well, a price action event area is a critical horizontal area on a price chart where a price signal formed. In this same price action event area, you’ll also find a major trend move(uptrend or downtrend)  or sideways range taken shape. These event areas are popularly know as hotspots on the price charts. You should watch these hotspots like a hawk in case in case they retrace(or pull back). If price happens to to touch these event zones, you can be sure the major players will start considering their options. Now let’s take a look at a price event area through the eyes of a pin bar signal.

Event zone

Ladies and gentlemen.  Laying in front of you is an illustration of the price event area  through the eyes of a pin bar buy signal. The grey shaded ares represent both support and resistant areas.  The arrows pointing downwards suggest price retracing after price bounced off both support and resistance levels. Now take look at the bulls blasting through the level of resistance thanks to a pin bar formation at the level of support.

Keep a close watch on the  arrows pointing downwards  at the line of resistance. The line of support converts into a line of resistance, and the bulls break through this key level and head for the mountains on the back of another pin bar formation. And when this happens, just rack up all the profits along this trail. Understand one thing about price event areas. When you miss out on a price signal, don’t panic. Just wait for price to retrace in the same event area and then you make your move.

Next up is:

Support and Resistance Areas

I’m sure most of you know by now that support and resistance areas are static horizontal levels that are drawn across the price chart. Let’s take a look at support and resistance levels.

EURUSD Support Becomes Resistance

Ladies and gentlemen, this is an illustration of support/resistance levels, using the EURUSD pair. These are standard support and resistance levels drawn across highs and lows.

However, there are instances where the support and resistance lines are a more elaborate and longer in length than this example here, So don’t hit the panic button just yet. Now let’s look at support/resistance levels   a daily chart time frame, using the AUDUSD pair.

Image result for forex standard support and resistance levels on daily chart time frame

Ladies and gentlemen, here is another illustration of support/resistance levels using the daily chart time frame. Unlike the previous example, you don’t see any an event area in evidence on this chart. However, price event areas reflect a major price occurrence at the support/resistance levels. Plus, event areas carry a higher premium than support/resistance areas.

Now to the question du jour(of the day):

What  Separates Price Event Areas From Support and Resistance Areas?

This may sound crazy to some of you. But every even zone is a support resistance area, but not every support and resistance area is a price event zone. This begs the next question:

How Do I Tell The Difference?

You see in a price event zone, a price signal suggests a huge breakout from a consolidation area or key level. Let’s take a look at an illustration using the power of confluence.

Image result for forex price action signal in event zone

Ladies and gentlemen, right in front of you is an illustration of a price event area using the AUDUSD pair. The black circled numbers and the red arrows represent price signals long the key levels.

The price signals spark major breakouts at both support and resistance levels. And when  such an occurrence takes place, nobody has to tell you that you are looking at a price event area. If you want to find out more about multiple price signals look up Something Called Confluence.

Now let’s use the CADJPY pair to ascertain why support/resistance is not a price event area.

Image result for why support/resistance levels are not price event zones

If you look at the price chart you’ll see that there is no sustained consolidation before the breakout. Even worse, there is no evidence of a price signal triggering the breakouts in either the support or resistance levels. Even worse, we don’t see any price signal triggering a breakout  at neither the support nor the the resistance levels. S you  see why I say the support and resistance levels

That’s a wrap for “A Closer Look At Price Action Event Zones And Support & Resistance Levels.” As you can see price action event zones and Support/resistant levels help you understand the  overall dynamics of the formation of a trade. This give and go between the price signal/entry and the market conditions give rise to the high probability opportunities. Til next time  take care.

Til next time take care.

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How To Find The Best Trade Entry For Maximum Profits

Hello and welcome to another edition of the bulls vs the bears. Today we are going to find out how to find the best trade entry for maximum profits. Basically we are looking for lower risk and higher reward. Ask most people what their ideal low low risk and high reward is and they’ll say”A massive stop loss and massive profits.” But then somebody will retort saying”Yea. That’s easy for you to say.”

Sure these sublime trade situations are hard to find. They are like shooting stars. You find them today , and that’s it. But I’m hear to tell you that it’s possible to spot these sublime sightings. You just need to do a little digging. So without wasting much time, I’m going to show you two ways you can spot the best trade entry. And then I’ll show you a few illustrations of how to spot these trades.

Look For Obvious Price Signals

Look Obvious price signals. These signals should so obvious that  you can’t miss them. T  Most will tell you that the best time frame to spot these price signals is the daily chart frame. Because that is where all the excitement is. Do this over and over again, and you will get the hang of it.

Next up

Look for Factors of Confluence That Confirm The Price Signal

The next step is to look for factors of confluence that confirm the price signal. Basically you spot the signal, and then go back to another time frame and check to see if  the signal aligns with other key levels or has formed thanks to a pullback within a  trend, or that there is another factor of confluence in the chart.

Basically you want to find as much supporting evidence if you want to find the perfect trading point. Because the last thing you want to o do is to increase the risk:reward potential  just to satisfy your restless urge. Just stay within your trading plan and you should be good to go. Like I said last time, greed kills.

I will let you in on a little secret. You may not find the perfect entry out there, but you can definitely find trades that carry a lot of confluence(or weight) behind them.

Now that we’ve gotten the meat out of the way, Let’s get into some examples

Trader Jack_Le — Trading Ideas & Charts — TradingView

 

First is a clear example of a pin bar sell signal at the line of resistance. Pay close attention to the way the pin bar’s tail sticks out at the top. This obviously suggests a major price reversal, and it also tells you that price might be dropping pretty soon. This is pretty obvious it’s ridiculous.

Now next look at the illustration of confluence in the next pic

Using-Pin-Bar-Price-Action-Trade-Forex-Confluence

 

Right in front of us are three factors of confluence ina EURAUD graphic. This was a consequence of two zones acting as both support and resistance. If you ask me they give enough grounds to warrant a trade entry. Once again, see the way pin bar tail jut out at each of the three zones. That’s because of major pullbacks in each of the three areas.

Now these price signals are so obvious you can miss them. And when you get the entry right, expect to see a spectacular downward slalom run, as is the case at the line of resistance. See  the way the  bears just barge  through the resistance barrier like it’s stolen something from them. And when that happens it can only mean one thing – humongous profits.

Now let’s look at another example illustrating an entry tweak and potential risk rewards

How To Find The Best Entry Points For Your Forex Trades | Forex Filli

Ladies and gentlemen, we are going to look try to tweak our entry and improve on the risk reward potential on the trade. It’s going to be tough entering on the 50% retrace as price has barely touched the the first level of support at the bottom. The good news is you can still enter on the retrace of the pin(as indicated by the red arrow on the “Buy Entry”) and place your stop above the pin high(as indicated by the red diagonal line). Do this and you have yourself a strong stop loss and a decent profit.

We can see the same pattern at the RR2(Risk Reward) level. Stop loss is placed above the pin bar and entry is made just around the the third line of support. This sets the stage for a huge profit binge.

Finally let’s look at a bearish pin bar illustration whose profit potential is not so obvious

The Pin Bar Price Action Signal - Forex Price Action Trading ...

Here you see a long – tailed pin  bar followed by a strong bearish pattern. These   bars formed after price broke and closed under this level previously. Now it wont be so obvious  since they don’t immediately scream “SELL US.” But the strong momentum behind the sell off should pretty much tell you it’s time to put in your sell order.

That’s a wrap for “How To Find The Best Trade Entry For Maximum Profits.” The main thing you should take away from this lesson the best trades form, backed by supporting factors better known as factors of confluence. With a little practice and knowledge of what you are looking for, this will be a cake walk for you.

Just look out for an intersection of a signal and  a key level. Or it could even be the intersection of a key  level and  a trend. Just trade like a  sharp shooter and wait for the right pieces to fit. Once the flash bulb in your head  goes off,  just pull the trigger and enter your trade.

Til next time take care.

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If you’re looking to open a live trading account sign up with EasyMarkets

 

How to Manage Forex Trades The Right Way

Hello and welcome to another edition of the bulls vs the bears. Today we are going to look at how to manage forex trades the right way. Basically we are going to look at “Forex  Trade Management 101.”

Forex Trade Management has become the elephant in the room as far as forex traders are concerned. It’s not something traders like talking about. Now don’t ask me why. I have no idea. But I’ll tell you this. Fore trade management is absolutely essential for any forex trader. It’s the difference between exponential growth and your trading account taking a humongous hit.

Once your trade entry goes live, you have to  to play manager.  Unfortunately a lot of traders simply ignore this simple admonition. And when you do that it’s only a matter of time before you hit the self-destruct button. What looks like a winnable trade setup could turn into a losing cause if you manage your trade properly. It’s the nature of the beast.

So without wasting much time we are going to learn a few  forex trade management tips you can put to use in future trades.

Make Sure You Take 100% of  Your Winnings

You want to make sure you take  100% of your winnings.  Some of  you are “Of course I’ll take the profits. Why would I leave them on the table?”. Point  taken. However, you need to  take these all your winnings to cover your losses in future trades in case the market does an unexpected 360 on you. And so, you must be consistently making winning trades. Or else, you will find yourself in a hole on your trades.

Let’s say you lose a trade at 3% risk. With multiple profits from previous winnings, you can use them to absorb your  losses. Someone is probably asking”How do we do that? By using the breakeven option. If used properly, you can generate even bigger profits.  I hear somebody asking this question”What happens if I take 50% at the first profit target? I move my stop loss to break even, only to be stopped at break even?

Let’s look at this illustration in the graphic below

breakeven Forex trading

Ladies and gentlemen this is a classic illustration of a breakeven situation. As  I stated, 50% profit is  taken at  target one. But the rest of the trading position gets  stopped out at break even point. If  let’s say 3% was risked for the trade  you’ll end up with 1.5 % profit.

On the surface of things someone may say”That’s not too bad. However, things become a little hairy when you make a loss on the very next trade and lose another 3%. Next thing you know, you are  hemorrhaging money. That’s why it’s absolutely crucial that you make full profits regularly on your trades so you can absorb huge losses from these trades. Even more important, it helps in your overall risk reward strategy.

Next  We’ll learn how to manage trades the right way using a sell position and a buy position. Let’s start with: the

Stop Loss in Buy Position

Make sure your stop loss is at the tip of the downtrend. If you want to move your stop loss further up, make sure the pattern is higher than the current stop loss. You absolutely must not move your stop loss when you are in a buy position. Let’s look at an illustration

Ladies and gentlemen, this is the uptrend for the Eur/USD pair. As you can see the initial stop loss is placed at the tip of the down pattern along the line of support,. Now let’s look at the next chart to see the break even situation

 

This time the stop loss has moved higher up at break even point around the line of

resistance. Once either the profit target or stop loss is hit, the trade is completed and

the profit or loss will reflect in your account balance.

Last but not least is:

Stop Loss in Sell Position

If you find yourself in a sell position, you move your stop loss to the tip of every new pattern. If you want to move your stop loss to breakeven make double sure that the pattern is lower than the stop loss. Let’s take a look at the illustrations below.

 

 

This is an illustration of the breakeven situation using the the same EUR/USD pair. As you can see the stop loss has been placed at the tip of the pattern at the line of resistance. Now let’s look at the break even situation.

As you can see  the stop loss has  been relocated to the  new breakeven point at the line of support. And just like the buy scenario, once the profit target or stop loss is hit, you will make a profit or incur a loss. Of course, either of these scenarios will reflect in your trading account.

For information on trade management, look up What Next After Entering A Forex Trade?

That’s a wrap for “How To Manage Forex Trades The Right Way.” It’s absolutely crucial that you have a trade management policy when you trade. Failure to do that could bring you eternal misery, not to mention, a nuclear-sized crater in your trading account. If you utilize your breakeven policy properly you could make yourself a handsome profit and save yourself a humongous headache.

Til next time take care.

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If you’re looking to open a live trading account sign up with EasyMarkets