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.

Open Live  Forex Trading Account 

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

 

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.

Open Live  Forex Trading Account 

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

 

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.

Open Live  Forex Trading Account 

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

 

How To Get The Hang of Using Stop Loss and Take Profit in Forex Trading

Hello and welcome to another edition of the bulls vs the bears. A thousand apologies for not updating the blog for so long. I experienced a few technical hitches with my blog right after uploading the first post. But thankfully that has been solved. Hopefully it wont happen again.

Now onward to today’s lesson. Today we ‘re going to learn how to get the hang of using stop loss and take profit orders  in forex trading. Basically I’m going to explain how to place a stop loss and a take profit when trading forex.  It is absolutely crucial that you know how to set a stop loss and take profit as a forex trader. IF you cant do this, you are doomed.

I get the question you need to be asking is:

What is Stop Loss and Take Profit?

Well stop loss is a simple order you send to your broker to limit your losses on an open trade. Think about this request as damage control to save your trading account from going up in smoke. On the other hand take profit is an order you send to your broker to close your trading position when price hits your profit target. Basically you want to head for the exits once you price hits your profit target. Let’s take a look at an illustration of stop loss and take profit loss in both buy and sell scenarios-starting with the buy scenario.

Ladies an gentlemen this is what the stop loss and take profit look like in a buy situation. With a buy trade the stop loss is placed just below the entry price. So that if price dips and hits your stop loss you incur a loss. The important point here is you decide how much money you can afford to lose and you are saving your account from going up in smoke.

The take profit is pretty obvious. As you can see  take profit is is placed above the entry price. Once price hits your take profit target, you make your profit and head for the exit.

Now let’s look at the stop loss/take profit in the sell scenario

Ladies and gentlemen, this is what  the stop loss/take profit in the buy trade looks like. Unlike the buy scenario, the stop loss is placed just above the entry place. While the the take profit is placed below the entry price. If the price rises and hits your stop loss you incur a loss. And just like the price scenario, the stop loss is there to save your account from going up in smoke.

The take profit is the complete opposite. When price drops and hits your take profit target, you make an instant profit-no questions asked. And when you make your profit, your profit is instantly recorded in your account. You don’t need to stick around to find out.

I guess the next question that is burning on everybody’s mind is:

How Do I Place Stop Loss and Take Profit Orders on MT4?

That’s fairly straight forward. First you open your order entry box  by pressing F9 or using the right click option. Next you select “Trading and “New Order.”

Immediately the MT4 dialog box pops on your screen as shown above. You then go ahead and fill the parameters for your stop loss and take profit orders.   If you want to sell, you click “Sell By Market.” And if you want buy you click”Buy by Market.”

Wanna learn more about stop loss and take profit? Look up How To Place A Stop Loss To A Tee and   A Few Rules On Taking Profits From Forex Trades

That’s a wrap for “How To Get The Hang of Using Stop Loss and Take Profit in Forex.”You’d be absolutely insane if you don’t  factor stop loss and take profit  in your trading decisions.  You need to treat forex trading as a business.

Every trade you enter has the potential of making you a profit or blowing your account into the ozone. With that in mind you need to weigh the risk of the trade as well as its potential reward. So if you want to be a profitable forex  trader, make use of your stop loss and take profit orders.

Til next time take care.

Open Live  Forex Trading Account 

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

The Most Effective Way To Prosper As A Forex Trader

Hello and welcome to the New Year’s edition of  the bulls vs the bears. This week we are going to find out the most effective way to prosper as a forex trader. If you don’t know by now forex trading is  about patience. You need to lie in wait like a crocodile and  allow the right trade to pop up on your screen.

This trading approach should be the cornerstone of your trading strategy. Come to think of it, it should be part and parcel of your trading edge. If you perfect it like the back of your hand, it should edge ever so closer to being a prosperous forex trader. I guess the burning question on everybody’s mind is:

What Is The Most Effective Way To Prosper As A Forex Trader?

Simple. Don’t jump head first  into the market. Instead lay low for a retrace, pull back or a complete break in the market. Now I can hear someone asking “How is laying low like a crocodile supposed to help me as a forex trader?” Well there are three ways laying low like a crocodile can help you as a forex trader.

1)Laying low like  a crocodile helps you get a tighter stop loss which then allows you breathing space to cash in on a trade by upping your risk reward. Not only that but allows you to increase and trade on a bigger position without risking much money.

2) Laying low also saves your stop loss from being blown to bits-Assuming your stop loss is put in a safer spot.  In so doing  You give your trade more oxygen to breath. So that instead of incurring a loss on a trade you are in a position to make a healthy profit on a trade. And you can afford to take significant risks based on your risk/ratio. It will most certainly do your trading account a whole lot of good.

3) Laying low also give you the option of holding out on trades you are not sure of and reluctant to take a chance on. In such a scenario, you can put in a stop loss. Better safe than sorry. Isn’t it? Even more important, you eliminate the  possibility of  a stop out(or your stop loss being smashed). That should afford you a good night sleep don’t you think?

Now let’s look at a few  pictorial examples.

pic.1

 

Ladies and gentlemen, here is a classic example for waiting for the  right trade using the EUR/USD pair. Here you are entering a trade you are absolutely sure about. As you can see waiting for the right trade  increases the risk reward on the trade. The 3:1 risk ratio at the  resistance level illustrates my point here. Notice the placement of the stop loss 50 pips below the entry price. This increases the likelihood of a huge risk reward.

 

Now on to the next graphic

03-Using-Pin-Bar-Price-Action-Trade-Forex-Confluence-1024x480 (1).png

This is a classic illustration of entering a trade on a hot trend.  Here you see pin bar signals forming after pullback at support and resistance levels. It’s what you call confluence of factors. After pullback then the uptrend continues. This will be the perfect opportunity to make your move,

 

That’s a wrap for The Most Effective Way To Prosper As A Forex Trader”.” Yes it’s possible to profit from breakouts and breakouts. The whole  idea behind being effective trading is to get a hot entry and to get safer stop losses. This helps you escape market uncertainty and gives your trades more  time to rack up the profits.

Even more important, your trades have to be part of your trading plan. It must be part of your trading armor. You can’t go to war devoid of weapons. Can you?

Til next time take care.

Open Live  Forex Trading Account 

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

 

How To Trade Breakouts Via Rectangle Chart Patterns

Hello and welcome to another edition of the bulls vs the bears. Last time we touched on How to Trade Cash In On Wedge Chart Patterns.  This week we are going to touch on how to trade breakouts via rectangle chart patterns

. First we’ll define what a rectangle chart patter is. Then we get into the really exciting stuff. We’ll look at two types of rectangle chart patterns and how to trade them.

So First off:

What Is A Rectangle Chart Pattern?

Well, a rectangle chart pattern comes into play when price is bound by parallel support and resistance levels. A rectangle chart pattern takes shape after a period of consolidation between the bulls(buyers) and the bears(sellers). In case you’ve forgotten what consolidation is about, this is where buyers and sellers reach a stalemate after trading uppercuts with each other.

Price then takes a crack at(or tests)  support and resistance levels several in a desperate attempt to break out and head for the hills or the slope(depending on whether the bulls or the bears are in charge.. Fortunately price breaks out of prison and heads wherever direction the wind  decides to blow it. That of course depends on when whether the bulls or the bears are in charge.

Let’s look at an illustration of the price action on the rectangle chart

Rectangle with support and resistance

As you can see price is sandwiched by  support and resistance levels running parallel to each other.  Now all you have to do is hold your horses and wait for one of these levels to go on the break and tag along for the ride.

Now shall we look at the two types of rectangle chart patterns that I told you about.

Starting with:

Bearish Rectangle

A bearish triangle  takes shape during the downtrend when price consolidates for a while. Of course during the consolidation period, the bulls and the bears trade uppercuts in an attempt to get the upper hand.

But of course  the fight ends in a stalemate. This causes the bears  to  take a breather and revise their notes before deciding where else to drive the price. Let’s take a look at the price action with the bears

Bearish rectangle after a downtrend

The bears break out at the bottom of the rectangle chart and go at full speed down the slope. If you are smart, you’d put in a sell order just below the level of support and rack up some sweet profits along the way.

Now let’s see how it pans out in the  price action breakoutBearish rectangle pattern and breakdown

Now price, led by the bears surge beyond the level of support. The surge of the bears is the same size as the rectangle pattern,which is illustrated by the blue upward arrow. It is also where you set your take profit target.

Notice how the bears surge past the take profit target. That’s a queue for you to amass more profits along the way.

Last but not least is:

Bullish Rectangle Chart Pattern

The bullish rectangle chart pattern shows up in the uptrend. Now just like the bearish pattern, price goes into consolidation. And just like the bearish pattern, the bulls try to knock out the bears but to no avail. So the bulls take a breather to decide on where else to drive price.

I can hear someone saying”Which direction is price heading to?” Well, there is only one way to find out.

Bullish rectangle after an uptrend

And as you can see, price is heading in one direction -upwards according to the blue arrow.  Now let’s see by how much the bulls headed upwards

Forex bullish rectangle pattern and breakout

Well the bulls, accompanied by price have broken through the rectangle by a country mile  and are heading  for the hills. However the height of the bulls surge is similar to that of the rectangle chart pattern-  as the blue upward arrow  suggests.

So if you want to make some money just place your buy order(or long order) just above the level of resistance. It would be worth a lot of cash and your while at the same time.

 

That’s a wrap for “How To Trade Breakouts Via Rectangle Chart Patterns.”  We started by saying the rectangle chart pattern comes about when price is stuck between support and resistance levels.  And during that formation price goes into consolidation where the bulls(sellers) and the  bears(sellers) take turns throwing left hooks but neither side lands the knockout punch. They then take a breather to decide  where to drive price to next.

We also did say that there were two types of rectangular patterns. There first was a bearish rectangle pattern which occurs during the bearish trend  where price consolidates while the bears catch their breath. The same situation happens in the bullish trend where price also consolidates with the bulls also catching their breath and deciding what to do next.

Next time  we will look at how to trade bearish and bullish pennants

Til next time take care

Open Live  Forex Trading Account 

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