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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! […]


REASONS TO USE MULTI-TIMEFRAME ANALYSIS AND TRADING

There are 2 main reasons why I use multi-timeframe trading: For getting better trade entries For reducing stop loss distance so I have a better risk: reward ratio which means I can also increase the number of contracts I trade without risking more of my trading account…so if my trade direction is right, I make a lot more money! Now, I will explain both in detail… How To Get Better Trade Entries And So Reduce Your Stop Loss Distance With Multi-Timeframe Analysis And Trading If you are trading strictly using the large timeframes like the daily chart, your stop loss distance will be huge and the issue with that is your risk: reward ratio can be reduced (not necessarily all the time): The risk to Reward Ratio Explained Simply put, investing money into the investment markets has a high degree of risk, and if you’re going to take the risk, the amount of money you stand to gain needs to be big. If somebody you marginally trust asks for a $50 loan and offers to pay you $60 in two weeks, it might not be worth the risk, but what if they offered to pay you $100? The risk of […]


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 […]


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 […]


REVERSALS & CONTINUATION,MARKET SWINGS

A reversal is a term used to describe when a trend reverses direction. For example, the market has been in an uptrend and when the price hits a major resistance level, it reversed and formed a downtrend. That’s what reversal means. Now, where can reversals happen? The following are the major areas where price reversals do happen: Support levels Resistance levels Fibonacci levels Here’s an example of price reversing form a support level and went up and then later broke it and went down. Now that broken support level acts as resistance level when the price came for a re-test of the level and sent the price tumbling down: So the big question is: how to spot trend continuity and execute trades at the right time? The secret is in the identification of specific chart patterns as well as very specific candlesticks patterns and you will discover more on the Chart Patterns and Candlestick Patterns section of this course. Top 3 reasons why it is so important for you knowing reversal points/levels as well as understanding trend continuity patterns and signals: You don’t want to be buying near or at a resistance level (which is a reversal point). You don’t […]


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 […]


PRICE ACTION(introduction)

INTRODUCTION TO PRICE ACTION To really understand price action means you need to study what happened in the past. Then observe what is happening in the present and then predict where the market will go next. “Regardless of what you may think, all traders are forecasters, just like the weatherman.” The weatherman knows where the wind is blowing from, sees the high and low-pressure systems forming over the land, knows the temperature variation, cold front, hot front…you know what I’m talking about, right? Then what does he do? He will say something like “tomorrow, the weather in Edinburg will be mostly cloudy, slight chance of a shower and possibly sunny in the afternoon.” How does he know that? Well, from studying the past data and seeing what the current weather situation is at the moment (and these days, their prediction is more reliable due to advanced computer models and weather satellites in space). So traders are like that… If we get the direction wrong, we lose money, we get it right, we make money. Simple as that. So everything you are going to read here is about trying to get that direction right before you place a trade. Before you […]


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 […]


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