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SHORT:USD/JPY : Trades with modest losses, downside seems limited

 

TRADE THE OBVIOUS

I hope you have learnt how powerful price action trading can be. Now, not all trading setups you see will become winners. But here’s the thing…if your losses are small but your profits are large, you will always be in be out in front. That’s why trading risk management is important. When you are watching the chart for trading setups, you need to see and trade the obvious. What do I mean by that? Well, if there is an obvious pattern on the chart and you can see it clearly, then you should know that there are thousands of traders out there are watching the exact same thing as you are doing…because it’s so obvious. Things like: Trendlines or channels or bullish pin bar forming on a major support level, if you can see that, there are many that will be seeing the same thing. All these traders will be waiting to see what happens at these levels and say if a bullish hammer forms on a major support level, then guess what will happen next? The most likely outcome of that is that as soon as the high of the hammer candlestick is broken, the price will shoot up! […]


HOW TO TRADE CONFLUENCE WITH PRICE ACTION

What is confluence? Well, let’s find out here in this following example… What if you were watching the market and then you saw that price is heading to a resistance level and then you checked your Fibonacci retracement and it’s almost like a coincidence that the resistance levels are also at 61.8 Fibonacci level as well. And there’s even more…the overall trend is also down. So you have 3 things lining up for you, here they are again: the overall trend is down you have a resistance level that price is coming to and you notice that the price is also heading up to the fib level is 61.8 which coincides with the resistance level. What I’ve described above is an example of confluence. A confluence is a point/level in the market where two or more levels intersect each other (or come together) and they form a flash point or hot point or confluent point. Here’s An Example Of How I Trade With Confluence Let me give a real example of a trade that I took as I was writing this. This is the daily chart for AUDUSD. Have a good and close look at it. Here’s why I took […]


HOW TO TRADE MOVING AVERAGES WITH PRICE ACTION

When you use price action trading with one other indicator or a combination of indicators which are incorporated into your trading system then that’s what I call Not-So-Pure Price Action Trading. (Call it whatever you like, if you think I’m wrong, I really don’t care). Many new traders that find it difficult to define the structure of a trending market, therefore they rely on moving averages for trend detection or identification. The only thing I see useful in moving averages is for dynamic support and resistance levels. I will explain this concept shortly. As a matter of fact, moving averages do a terrible job of predicting trends in that they only do that after that trend has already started already and the price has moved a great deal already. So price action is telling you that you are now potentially in a downtrend but moving average is saying “not yet”. So you have two conflicting signals. And by the time moving average confirms what the price action has indicated, price has already made plenty of moves downward already as shown by this chart on the left. So which are you really going to pick? Depend on moving average to tell […]


HOW TO TRADE TRENDLINES WITH PRICE ACTION

When the market is heading down, it forms downswings and upswings as it continually moves lower. Similarly, when the market is in an uptrend, it will form upswings and downswings as it continues to move up. The peaks that are formed by the upswings and the troughs that are formed by the downswings can be used to draw trendlines. And you need a minimum of 2 peaks to draw a downward trendline for a market that is in a downtrend and you need 2 troughs to draw an upward trendline for a market that is in an uptrend. How To Draw Downtrend Trendlines Now, for a market in a downtrend, you can connect the peaks with a line and that forms you downward trendline. What you are waiting for is for the price to come back up and touch that trendline and when it does, this could mean that a downswing will start and it may be the best time to enter a short trade. The use of bearish reversal candlesticks as trade confirmation is highly recommended with this trading method. How To Draw Upward Trendlines When the market is in an uptrend, connect 2 troughs and you have an […]


TEN (10) PROFITABLE CANDLESTICK PATTERNS EVERY TRADER NEEDS TO KNOW

There are lots of candlesticks, but out of all of them only 9 that you really need to know. Why? Because there are very popular are really powerful so why waste time with the rest? When these candlesticks format support and resistance levels or Fibonacci levels they are great trade entry signals.   #1: The Doji Candlestick Patterns.  The Doji candlesticks are single (individual) candlestick patterns. There are 4 types of Doji candlesticks as shown below: The Doji cross can be both considered a bullish or bearish signal depending on where it forms. The Gravestone Doji is considered a bearish reversal candlestick when formed in an uptrend or in a resistance level. The Dragonfly Doji is considered a bullish candlestick pattern when formed in a downtrend or in a support level. The long-legged Doji shows a period of indecision by bulls and bears and depending on where it forms (uptrend/resistance level=bearish signal, downtrend/support level=bullish signal) it can be considered a bearish or bullish signal. #2: The Engulfing  Candlestick Patterns The engulfing patterns are 2 candlestick patterns.  For a bullish engulfing pattern, you will see that the first candle is bearishly followed by the second candle which is very bullish and this 2nd candle completely […]


HOW TO TRADE SUPPORT, RESISTANCE LEVELS & PRICE CHANNELS

Nothing is more noticeable on any chart that supports and resistance levels. These levels stand out and are so easy for everyone to see! Why? Because they are so obvious. As a matter of fact, support and resistance trading is the core of price action trading. The key to successful price action trading lies in finding effective support and resistance levels on your charts. Now, in here, I talk about 3 types of support and resistance levels and they are: 1.The normal horizontal support and resistance levels that you are probably most familiar about. 2. Broken support levels become resistance levels and broken resistance levels become support levels. 3.Dynamic Support and Resistance Levels Now, let’s look at each in much more detail. Horizontal Support and Resistance Levels These are fairly easy to spot on your charts. They look like peaks and troughs. The chart below is an example and shows you to trade them: How To Find Horizontal Support And Resistance Levels On Your Chart If the price has been going down for some time and hits a price level and bounces up from there, that’s called a support level. Price goes up, hits a price level or zone where […]


TRENDS

When you have price moving across time due to supply and demand, then this creates trends. This section is a discussion about trends, how they form and how many types of trends and what kind of structure trends have. It is important for you to understand the structure of trends so you will not depend on any indicator to tell you if the trend is up or down because understanding what a trend is, the structure of a trend, what signals to look to tell you that a new trend may be starting and previous one ending is one key knowledge you require as a price action trader. And you only need to use price action to tell you if a trend is up, down or sideways. As I’ve mentioned above, there are 3 types of trends. In simple terms, a trend is when the price is either moving up, down or sideways. So when the price is moving up, it’s called an uptrend. When the price is moving down, it’s called downtrend. When the price is moving sideways, it’s called and sideways Now each of these 3 trend types has certain price structure about them that tells you whether […]


Horizontal Price Channel Forex Trading Strategy

The Horizontal Price Channel Forex Trading Strategy is a trading strategy that is based on a price structure called a trading channel and it is used by all levels of traders-including beginning Forex traders. To form a horizontal price channel, price action changes from a trending market into a market that is consolidating sideways. Price action begins to plot an obvious support level and a resistance level. Given that markets spend most of their time consolidating (called a trading range) in a horizontal price channel, learning to trade price channels is a great addition to the toolbox of any trader – swing trader, day trader, and even position traders. Keep in mind that on the trading time frame a trend may not be evident, horizontal price channels, as price traders from support to resistance and back again, can set up great trending trades on lower time frames. This is one reason why every trader should consider a multiple time frame trading approaches. What is A Horizontal Price Channel Traders should know what a trending market looks like – the price action pattern of higher highs and higher lows for an uptrend – reverse that for a downtrend. A horizontal price […]


London Breakout Forex Trading Strategy

The London breakout Forex trading strategy is used to trade the London Forex session during the first few hrs (1-3 hrs) when the Forex market opens in London. Indicators: You do not necessarily need any indicators for The London Day Break Trading Strategy but this Forex trading session mt4 indicator may be helpful. You also must be able to draw horizontal lines on your Forex chart. And that is a very easy thing to do and you can learn all about horizontal support and resistance here. Time frame: 1 hr Currency Pairs: Only GBPUSD Risk: Set your risk per trade anywhere from 1% to 2% of your trading account. WHY TRADE THE LONDON SESSION BREAKOUT? The London trading session is the biggest Forex market mover as much of the trading volume for currency trading is during this session. What that means is that: whatever the trend direction of GBPUSD during the first 1-3 hrs of London forex session in determines what the trend would be for the remainder of the London fx session. What this means also is that this trend may continue through to the US trading session. The volumes of trades and the amount of money that moves […]


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