Eurusd-4
Majors, Minors & Exotic Currency Pairs |Ben WrightSELF DEVELOPMENT/METHODOLOGY/PSYCHOLOGY
Majors, Minors & Exotic Currency Pairs | BEN WRIGHT
Currency Pairs
a) Popularity
A currency pair is the structure of the currencies, which are traded in the forex market.
According to the latest report of United Nations, there are 180 currencies around the world and
the illustrated currencies are the top 8 traded bills in Forex. The currency pairs are popular as
they are used for the diversification of the as multiple currencies are involved in it. It can also
work as a hedging tool to avoid the risk in the forex, which is generated due to the presence of
several transactions.
b) Groups
There are three types of currency pair groups present, which are major groups, minor groups and
exotic groups.
Major groups
Major currency pairs are those groups, which have US dollar on in its pair. They are also the
most traded currency pair in the FOREX. Some examples of major currency pairs are EUR/USD,
USD/JPY, and GBP/USD etc.
Minor Groups
Minor currency pairs are those, which do not contain the US dollar as the major currency. The
mostly traded minor currencies are UK pound, Euro and Japanese Yen. EUR/GBP, EUR/CHF
and EUR/CAD are some examples of minority groups.
Exotic Group
Exotic currency pairs are those, which have one major currency and one emerging currency.
These pairs are not traded frequently due to the presence of low liquidity in these markets. So me
popular exotic currency pairs are EUR/TRY, USD/SEK and USD/NOK.
c) Volatility
Volatility can be defined as the rapid change in the liability due to the presence of economic
conditions of the country. For example, the GBP/AUD is the highly volatile currency pair as the
economy of UK is a bit unstable after the Brexit. The least volatile currency pair is EUR/GBP as
the after effects of Brexit will take time to reach the International market.
HAPPY TRADING :)
"The best traders have no ego.You have to swallow your pride and get out of the losses" Tom Baldwin
The best Van Tharp's Quote!! Read all his books!SELF DEVELOPMENT/METHODOLOGY/PSYCHOLOGY
Van Tharp “When you understand what’s involved in winning, as do professional gamblers, you’ll tend to bet more during a winning streak and less during a losing streak. However, the average person does exactly the opposite: he or she bets more after a series of losses and less after a series of wins.”
Over the 18 years of trading the Futures/ Stocks and Currencies market, Van Tharp's books have help me immensely.
I suggest you read his books. Some of them are listed below;
Trade your way to financial freedom
Super Trader
Trading Beyond the Matrix
Safe Strategies for financial markets
Financial freedom through electronic day trading
I have a large collection of trading books. If anyone needs suggestions on great trading books i would be happy to send you a list :)
Scalping with Reversal StrategiesReversal strategies suggest that markets tend to revert, i.e. a negative movement will be followed by a positive movement, and vice versa. To examine whether markets tend to be trend revert or trend succeed (i.e. a positive movement is followed by a positive movement and a negative movement also by a negative one), we need to check historical prices for evidence of such behaviour. Then, we need to examine whether this behaviour is more likely to occur compared to a random selection, such as a coin toss.
To do this, we first need to understand the notion of probability. In general, probability is the possibility of an event occurring, expressed as a percentage of total possible events. For example, the probability of tossing a coin and getting heads is the possibility of that event, i.e. 1 out of the 2 possible outcomes (heads or tails). Thus, the overall probability is ½ or 50%. In a similar setting, the probability of getting the number 12 in the roulette is 1 out of a total of 36 outcomes, hence the probability is 1/36, i.e. about 3%.
An interesting complication of probabilities is that if they are independent, i.e. if the previous outcome does not affect the current outcome, such as in coin tossing, roulette, and the lottery, then we can simply multiply the events to get total probability. For example, the probability of getting two consecutive heads is ½ multiplied by ½ which gives us a total probability of ¼ or 25%. This is useful in understanding how often price movements can be viewed as random or as following a statistical pattern.
To elaborate on this, I have employed EURUSD data to examine whether there is evidence of a reversal activity in the pair. As the table below shows, there is evidence of such behaviour only in the 1-minute chart, where reversals are observed in the data. Otherwise, the percentage of trend reversals appears to be very close to 50%, i.e. being random.
EURUSD 1-minute 30-minute 60-minute 4-hour 1-day
Probability 42.1% 51.0% 50.6% 50.2% 51.5%
Random No Yes Yes Yes Yes
The same holds for the USA500 index as the table below shows, albeit it suggests that reversal strategies can be non-random at the 30-minute interval as well. However, despite their statistical appeal, these strategies are not as successful as expected. As the graph in the start of this post shows, the strategy can be successful during some periods while it can be terribly disastrous in others. For example, while it worked for the 1-minute chart in the EURUSD, at times very successful, reaching gains in excess of 3%, it dropped to just above 1% in the end.
EURUSD 1-minute 30-minute 60-minute 4-hour 1-day
Probability 39.6% 44.9% 48.0% 49.0% 51.1%
Random No No Yes Yes Yes
The USA500 1-minute and 30-minute charts record a similar response: the 30-minute chart, when the probability is closer to 50%, records much worse performance, while the 1-minute chart provides a good start but ends in disappointment.
So what does this tell us? Like all trading strategies, reversal strategies can be successful in some instances and unsuccessful in others. The analytics above suggest that reversal strategies are unsuccessful in longer horizons and hence there appears to be no reason to follow such a strategy. In contrast, 1-minute charts allow for a better implementation of such strategies, as historical data show. The success of the strategy appears to be more pronounced in the EURUSD case, albeit also having its ups and downs. Consequently, in addition to specifying a correct timeframe, traders need to be very careful in drafting their strategy and adjust it quickly to how the market reacts. Remember that no strategy is full-proof and fast adjustment is something which can make or break a trade.
Nektarios Michail, PhD
Market Analyst
HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
13 tips for tradersI had this on my hard drive, I thought I would wipe the dust of it and write in in a clean manner in a post, helps me think more clearly.
I need, and everyone can benefit from (new intermediate advanced legend even), having all of this in their mind:
1) Advice that trading is 95% psychology ===> Throw it in trash container
Worse advice I have ever seen, or I totally missed something.
Anyway, simple proof that this is all a load of feces: 5% of the population are psycopaths (not the murdering kind) so if this was that important they would all driving roll royce's. Also I am not a psycho (I think) and I do not have much issues with this... I guess not beeing dumb enough to go ALL IN *100 helps.
Also... then, let's just let a bot do the trading.
Making lists like this learning more everyday and always evaluating our own performance and track record, filter what does not work in certain market conditions... This matters 10000000 times more than "muh feeling :'("
2) Look for ideas opposite to yours, especially beginners (less than 1000 hours trading/learning)
Watching what others are doing helps, and when you have an idea looking for views opposite to yours really helps.
Famous billionaires do this alot. Especially they surround themselves with people that view the world differently.
Of course, do not waste time arguing with bagholders, and sadly alot of ideas opposite to yours you might find are trolls drawing arrows pointing up to unrealistic targets, it could even convince you that the "opposition" are clowns and there is no way you could be wrong, so do not fall for that trap. Just because someone is stupid does not mean they are always wrong. Consider bad TA as 50/50.
3) Noobs want a sure thing. Good luck with that one.
4) "It is impossible or super hard to make money you are competing against the best" ==> Trashcan advice...
First, for lighting fast scalping they are using microwaves now... You are not going to win, sure.
But not only is the competition really not that good (maybe I am a little biased here idk), but you do not even have to compete with them. Big money buys, just follow the momentum, ride on their backs.
Forex is full of huge money (central banks, international companies buying a currency) they are not trying to rip traders off by hunting their stops, they actually need to exchange currencies, nothing more.
Beeing arrogant and thinking every one is a dumb ape but you is probably a big plus :)
All that matters are facts, "Is this pattern profitable?" "What is the winrate?" "What is the risk reward I get on average" "How long does the trade last?" "What are the fees?" "What are the odds of a massive selloff?".
5) "We dropped 90%, this HAS to be the bottom. How much further can we drop?"
We can drop another 90%. And another 90%. And another 90%. And so on.
I did not find any statistics but I am pretty sure that looking at ANYTHING that lost 90%, you would find that the vast majority of the time it was not "a huge opportunity" well it was, but not for buyers. Afaik some great traders made and make big money by shorting dead trash before it goes to zero. If a company is dead, how do shortsellers find buyers? Because to sell you need a buyer. Well, all the idiots that skipped math class and think "this is a great opportunity".
Quit trying to fool me, I am insanely bad at maths, how can you drop 90% if you alreayd dropped 90%? How many more times can we drop 90%? * points and laughs with his redneck friends that only have 5 great-grandparents *
x is a real positive number (R, +, .).
y is an integer.
x^1 > 0 since we have said that x is >0 and x^1 = x
Now, consider x^y > 0. If that is the case, x^(y+1) >= 0 since x^(y+1) = x^y * x and the product of 2 positive number is positive. And if the result was 0 then it would mean than 1 of the 2 numbers was 0 (I think I don't need to prove this) so it will be > 0.
There are plenty of stories of money managers that fell for "it CANNOT fall lower" and got destroyed. The internet is full of bagholders that get destroyed all the time with that insane logic. I do not even profit from this... Maybe I should rethink my whole strategy, when I see the sheer amount of bagholders with "buy the dip" mentality I could profit from...Might have been wasting my time this whole time when I could just short bagholder crypto's/stocks. Well maybe not crypto's as they are long sideways (complacency) lmao complacency @ -95% :D
6) "Soooo this means... y can be as high as we want it to, or in other words the number of times we can go down 90% before touching 0 is INFINITE."
I do not know what the "record" is. I know that some companies have started at 10000$ and more and did not disappear even when their price was at 10 cents, that is a drop of 90% 5 times in a row.
There are several examples, but 1 I see alot on social networks (lots of experts were recommanding to buy the dip "opportunity of a lifetime" when it dropped 90%)
Of course it made 5 90% drops in a row looking at bottoms, but if we look at bounces from the tops after it bounced, it is obviously going to be more than 5.
You just... cannot make this up..
And there are people defending it and claming they did the right thing when they "bought cheap" and are thinking of their yacht color etc. I cannot make this up.
7) Use excel. Have a process. This kind of stuff.
Here is what I have for 1 of my strategies, I just wrote it down yesterday, helps me think more clearly and stop thinking about it:
Pre-entry: Check previous occurrences on the chart, do some TA. Note where structures are.
Entry: Entry is on the level or if we're past it a little after previous low.
Target and stop loss: Initial target T1 is next structure, usually 1% for FX. Set stop loss to get a reward:risk of 2.
Trade management: Close half at my target 1, stay until final target as long as the price stays above 0,382 to 0.5 fib.
Here is an example of a winner I would have shorted following that strategy:
Another one:
8) Money is made missing out.
You make money when you miss out.
Let me type this a second time:
YOU
MAKE
MONEY
WHEN
YOU
MISS
OUT
"You missed out" that sentence... wow.
I do not know about others, but when I miss out a move, I like it, I am happy now, I really am. Because I know I am filtering all the bad trades. If even some good ones get caught, then I must be doing a good strict job right?
Let's check the Bitcoin chart real quick. Here are a few moves I missed out:
a- False break
b- Buy the dip
c- Big money is stepping in
- Yes, people really thought a major bull market was starting. Easy to say how foolish that was in hindsight, but back then I was pretty lonely saying that was a bull trap. Even got banned from TV for calling it a bull trap.
9) Do you want to have a life? Or be exceptional at one thing?
Having a life translates too: beeing basic sheeple that tries to mirror the people around him to avoid feeling different, does not have it in him to do whatever he wants but a slave to what others think of him/her, and has a boring depressing life he hates and should hate. Be a sheep or be a winner, your choice.
10) Day trading is bad, you can only make money bla bla bla.
The only reason why daytrading is less profitable than say swing trading is spreads. I do not have the exact numbers here, but a broker analysed the millions of trades his clients took, and the majority of losers... Their losses equaled the fees... You aiming for an intraday 0.3% move and the spread is 0.02%? That is 6.6% of your profit. It can add up really fast. You need a large edge and alot of "margin" as in much more profit than losses to not get hit by fees. I was daytrading a couple of months ago, I filtered so much I had 3 trades a week. And all winners. 3. In a week. "More is better". There is NO WAY that someone making 10+ trades a day is only taking really awesome trades and not giving up alot of his profit to his broker, unless he is trading crypto on Gdax/Bitmex but crypto trading is dead now.
I did it all, and it all works, from scalping for a few seconds to holding for 2-3 months. But you have to spend a little while writing down what you want to do, make sure the fees are small compared to the profit you realistically aim for.
11) Become a specialist.
Find 1 strategy and spend all your time on that.
Or find 1 market... but that one... Nah find 2 markets... What will you do when your market is sideways/dead?
I have 1 single strategy, I am learning about other ones at the moment but I only really have one.
12) If you are new... go for a SIMPLE strategy, do not try to reinvent trading and be greedy.
These are the strategies I am looking at:
- My strategy is picking tops and bottoms where reversals happen (advanced, I would not recommend to most :p)
- I am learning about hidden divergence (trend continuation) (intermediary difficulty)
- I am interesting also in continuation inside bars when there is strong momentum (beginner friendly)
Actually my strategy has to be one of the hardest there is. I use divergence as a filter + additional reason to go against the trend. I have become an amateur-expert at reversals.
I know, this is terrible, every one says not to go for this, but it worked for me till now. I still can use ALOT more experience. Maybe one day I will call myself an expert.
This strategy, if I am correct, is where greedy noobs get slaughtered. It is not easy, it is so dangerous. Sure you look at the chart and think "oh these divergences pop out, I could easilly buy here and sell here".
Or "This was a clear bottom/reversal I could easily buy here". Nope. Sorry. You could not.
What I started with was basic trendlines. I would look for anything bullish and buy when the trendline is touched, then sell when it goes ballistic, if it drops below the line I AM OUT. I was not very excited about making money when I started, but I really really did not want to lose any. I think this is the approach people should have (right?).
Here is an example of a trade I took a year ago before I got bored and switched to another non recommended highly dangerous strategy :D
13) Trading is easy, but it takes time, and all these other qualities you have heard about.
Take something simple: Support and resistance. Pretty basic. Just horizontal lines.
Well, I think I am someone smart, I am a very fast learner, and I do not exagerate when I say I spent THOUSANDS of hours analysing support and resistance. Plus at least several hundred looking at RSI divergence alone. Plus hundreds looking at market life/cycles. Plus hundreds looking at different market conditions. Plus hundreds looking at moving averages. In total I am at 5k in a year.
To become an engineer, you will need 5 years (is this the same in all countries? Can't be much different). You get 200 class days a year, 8 hours a day + 1 for homework (well maybe some people need more idk OR skip all lessons skip homework and rush rush before exams works too I guess) so that's 1800 hours a year or 9000 total. Of course you learn alot of useless stuff, but when you start working you have to learn your new craft anyway.
Would you let an 18 yo surgeon on his year 1 operate on you? Would you expect him to reinvent surgery? Yes actually, but not in the good way :D
Now trading does not require 10 years of studies (hey especially if you full specialize on 1 thing and 1 thing only), but I think you will need a couple thousand years under your belt to really know what you are doing.
If you are lucky and have the qualities of a good trader in you as you start, and go for that 1 simple strategy and nothing else and respect all the rules (easy as you already have all the qualities) you could start making money pretty quick but not too quick (you have all of the qualities = you don't risk too much when you don't know what you are doing), you might get hit when a bull market turns to bear, but you will not get hit hard as you have all the qualities a trader needs. Otherwise, it will take time (or beginner luck), and in both cases before being really good you will need a couple thousands hours under your belt.
So, the best advice you could get: if you do not like this, forget about it. Do not force yourself. The power of greed is not going to turn you into a millionaire even if you really really want to. It will turn you into a hobo thought, for sure.
[DXY] Correlation with other pairsHi guys !
This is an other simple chart to explain the correlation between DXY and other pairs. As you know, the best exemple is with EURUSD. When EURUSD goes up, DXY goes down, and when DXY goes up, EURUSD goes down. This is because in the DXY (Dollar Index), there is more than 50 % EURUSD.
The U.S. Dollar Index is calculated with this formula:
USDX = 50.14348112 × EURUSD ^(-0.576) × USDJPY ^(0.136) × GBPUSD ^(-0.119) × USDCAD ^(0.091) × USDSEK ^(0.042) × USDCHF ^(0.036)
Thanks for your time guys !
Indicator Review : MACDTechnical indicator: The MACD
What does it represent?
The MACD (Moving Average Convergence Divergence) indicator is one of the trend indicators. The MACD corresponds to the difference between two exponential moving averages of different periods (the most common are 12 and 26 days)
It is a complementary tool to moving averages that allows you to anticipate sales and purchase signals via the study of the crossover between the MACD curve and the signal line or discrepancies
How to use it?
Two ways to use it:
Study of crossings:
When the MACD line crosses the signal line upward, it is a buy signal. Conversely, when the MACD line crosses the signal line downward, it is a sales signal.
Study of divergences:
Deviations is another type of signal that can be detected using MACD curves. These signals, historically very powerful, make it possible to detect a possible significant reversal of the trend. A divergence is a technical term that describes the price of an asset that follows a trend opposite to that of an indicator.
In conclusion, the MACD it one of the most widely used trends indicators but it isn't self sufficient, you have to pair it with other such as CCI.
EUR/USD case study: How to interpret volume profile structuresIn the following chart, we provide a case study of the EUR/USD based on the volume profile structures created.
We can classify these structures as single distribution or multiple distribution structures.
As part of the multiple distributions, we can break it down into:
L or P shapes, long or short, with the price close also a key determiner to understand what side is trapped.
When combining the above elements, it helps to formulate an action plan for the next day.
We just published a tutorial on how to interpret these structures via our medium page (link in our profile below).
If you'd like to find out more, drop us a comment.
EUR/USD case study: The magic of the 100% target projection Would you like to trade with better precision and understand what are the areas in the chart where the smart money tends to take profits?
In this case study, we unveil one of the overlooked yet most useful tools you will ever come across. By drawing a 100% fibonacci projection, you can anticipate the reversals in price, due to:
- The side in control of the cycle takes profits off the table.
- Counter-trend positions are added by contrarian players.
- These are the areas where limit orders are found by market-makers.
As an example, we have picked the most recent activity in the EUR/USD, to guarantee that we don't cherry-pick the most convenient time to run this case study. Out of the 9 projections drawn in the span of 10 days, the results are as follow:
- In 7 occasions, the 100% projection represented the exact level where price turned around or paused before the resumption of the trend.
- In 1 instance, the 100% proj failed to be reached by a few pips (Oct 16)
- In the latest 100% proj on Oct 19, it was the only time that the 100% proj was shrugged off and price continued.
The way to draw the projection is by dragging the fibonacci tool from the latest swing up to the breaking point. You will be amazed at the accuracy rate of the 100% projection acting as a wall in response to the above reasons. Note, when fundamental-led interferences, the pricing of the pair will tend to disrespect these lines. The higher the potential volatility of the event, the less relevant these drawings are, with one required t perform the same exercise from higher timeframes.
Get to practice this exercise on your favorite pairs. The more you do, the better you will get at picking your profits (full or partial).
Trade safe!
Education: Change of trend !Prior analysis
Definition trend and change of trend ( Trend reversal)
Downtrend - Definition
A downtrend comprises a repeating sequence of:
1) A downward extension
2) A swing low
3) An upward pullback
4) A swing high
A downtrend ends when price breaks the swing high which leads to the lowest swing low of the trend
Uptrend - Definition
An uptrend comprises a repeating sequence of:
1) An upward extension
2) A swing high
3) A downward pullback
4) A swing low
An uptrend ends when price breaks the swing low which leads to the highest swing high of the trend
Please support the setup with your likes, comments and by following on TradingView.
Thanks
Education: Change of trend !Prior analysis
Definition trend and change of trend ( Trend reversal)
Downtrend - Definition
A downtrend comprises a repeating sequence of:
1) A downward extension
2) A swing low
3) An upward pullback
4) A swing high
A downtrend ends when price breaks the swing high which leads to the lowest swing low of the trend
Uptrend - Definition
An uptrend comprises a repeating sequence of:
1) An upward extension
2) A swing high
3) A downward pullback
4) A swing low
An uptrend ends when price breaks the swing low which leads to the highest swing high of the trend
Please support the setup with your likes, comments and by following on TradingView.
Thanks
EUR/USD: Lesson on reading tick volume & types of accelerationWhat if you could add a ‘non-lagging’ indicator that would allow you to make better-informed decisions as a trader? That’s where tick volume, which measures the number of times the price ticks up and down, comes into play.
Did you know that tick volume activity and actual traded volume in spot forex exhibit a relationship that is extremely high? All it takes is to find a broker such as Global Prime Forex with sufficient depth of liquidity and learn how to properly interpret these volume patterns that occur over and over.
First, let’s briefly touch on why is volume such a powerful piece of information. The answer lies in the influence it has to move prices and similarly because it communicates the involvements of the big or smart money. Volume is the fuel to cause new cycles and tells us the degree of commitment that it exists to endorse a certain buy or sell-side campaign.
By understanding the bias of big players, we can piggyback their market bias. Let’s now back up with empirical evidence why tick volume matters.
In a landmark research paper published back in 2011 by Caspar Marney, veteran forex trader, who served tenures at banks such as UBS or HSBC, debunked the myth of the limited usefulness of tick volume in spot forex. Caspar, after a thorough study, concluded the existence of striking high levels of accuracy between tick activity and actual traded volume, which vindicates the importance of tick data and hence the relevance of this tutorial.
I once read a great analogy for volumes, which I can’t credit to one particular individual as it was many years ago and I completely lost track. He would compare volume to the accelerator of a car, price movement to the actual car motion, while a universal level of resistance/support would be a ‘hill’.
If the car is expected to keep going up a steep hill, do you think gently pressing the gas pedal would do the job? The forward motion of the car going up the hill can’t possibly be long-lasting unless there is more power (gas) applied, correct? What if you were to press the accelerator to its maximum capacity yet the car motion is still stagnant going up the hill? That would be another clue, right? Do you start to see how the study of volume can be of real value to tells us a story about the intentions of market participants?
So, how can we tell if a price movement has the characteristic of being smart money-driven? To accomplish our objective, we will stick to our 3 elements, that is, the car (price), the gas (volume) and the hill* (key level). How price heads into major areas of interest will be absolutely key to make a well-informed call about the environment as traders we face.
Volume Sequence: Type Of Volume Acceleration
Depending on the type of trader you are, this is all you may need to get your entry confirmation. Other traders will need some extra info before pulling the trigger, and that’s fine too. It’s all about styles. I will be exploring both scenarios, that is, the two most basic yet most fundamental volume sequence to constantly be monitoring, while I will also provide different individual candle formations that add an extra input of potential confirmation.
Let’s dive into it. The first pattern to be aware of is what I personally refer to as false acceleration , even if it’s more commonly known as exhaustion sequence. If you observe price heading into a key decision point on lower or decreasing tick volume, we are likely to find ourselves in a context where a rejection of that level is likely. Remember, the car is trying to go up a hill with little gas being applied. It doesn’t bode well unless gas (volume) increases.
This type of acceleration in price without the backing of volume tends to be a false picture of the market intentions, and certainly not one that carries the interest of the smart money. The low tick volume is caused by the professional money staying away from participating in the move. The absence of this big money riding the move results on thinner market liquidity, which facilitates a larger price extension even of low volumes. Unless the ‘smart money’ takes part in the move, the hill will get too steep for the car to keep moving forward.
Opposite to the pattern above described, let’s now look at a price movement that does carry the participation of big players, and therefore a continuation of the directional bias should be expected. I call it smart acceleration . If the price moves towards a decision point or the level is broken amid higher or increasing tick volume, more often than not, it communicates that the bias has the backing of the institutional money. When this happens, a continuation of the developing trend is expected. Find an illustration of this pattern below.
EUR/USD: How To Trade Market StructuresEUR/USD: How To Trade Market StructuresAuthored by Ivan Delgado, Head of Market Research at Global Prime. This educational post has been exclusively adapted for tradingview users.
In this tutorial, I walk you through how to read these cycles, which go by the name of “market structure”. You will be provided a frame of reference for you to properly interpret the ever-evolving ebbs and flows under any market condition. You will be able to approach the charts in a mechanical way to constantly be in tune with the right context at play, which in its simplest form, comes down to trade trends or ranges.
Minimum Of Two Closes Beyond Last High/Low: To confirm that a bearish trend or down-cycle is evolving in a healthy manner, not only we need to see the low printed being lower than its previous low, but we also should expect at least two closes beyond that low or support area as further evidence that the market is accepting and building value. Failure to print at least two closes may be a precursor to what’s often referred as head-fake or false breakout, and while the move still holds its merit to qualify as a new low in the cycle, the quality of the leg is poor in nature.
Don’t Lose Sight Of The Forest For The Trees: While in this exercise we don't provide higher timeframe charts to keep it clean, you must, by all means, avoid the trap of being short-sighted by only sticking to one chart analysis. When conducting your market structure studies, it’s all about building a thesis about a particular direction by finding concurrence from higher time frames down to your trading time frame. We wouldn’t recommend using more than 3 charts as your reference or you may suffer from so-called “analysis paralysis”. What this means is that if you are going to find an entry trigger off the hourly, you should then understand what type of conditions are dominant in the immediately higher time frames. The most popular in this case would be the 4h and daily charts.
Developing Rules to Validate Swing Lows/Highs : This is a key point that often gets overlooked by market participants by letting too much guessing play a role. When analyzing the charts, how do we determine what constitutes a relevant swing high/low? We need to find a mechanical approach that will allow us to qualify what we understand by relevant swing highs or swing lows in the chart. As a general rule, if a swing low/high doesn’t make it to at least the 50% retracement of its previous swing, you probably want to disregard that price movement as not relevant enough to constitute a valid leg. After all, why would you want to consider a leg that originates from a low which doesn’t even make it to the 50% retracement as a point of interest relevant enough?
Trendlines: A Visual Representation Of The Cycles: This is another rule to incorporate. If on a downtrend we make a higher high as in the case of the EUR/USD, but this high fails to break the descending trendline, be extremely cautious as more often than not, it can easily lead to a quick reversal in line with the dominant cycle. The power of a trendline lies not only in its capacity to provide an entry trigger but as a blueprint to help you understand the type of dominant market flows and potential locations to engage upon your own models. In the chart, I've drawn the most obvious ones. Always pay special attention on a 3rd touch of a trendlines, which is the time when it tends to hold the most weight.
Transitions: From Trends To Ranges: We’ve come to the point in the market structure where the dominant flows start drying up due to increased profit-taking, change in ebbs and flows due to removals of liquidity, intervention by market-makers, economic data-driven moves, etc. While in a down-cycle, the interpretation of the chart is straightforward, when is it that we can say with certainty that we’ve transitioned from a trend into a consolidation? In the case of the EUR/USD hourly chart, firstly, we must see a failed test of a valid low (Oct 5th). Secondly, a recovery above the 50% fib retracement of the most recent swing high would confirm that we have entered a consolidation phase, which would last until the most recent valid high or low is broken, with at least two closes above/below the level. In this context, don’t forget that the consolidation is within the context of a down-cycle not only in the higher time frames but also on the hourly. Until buyers manage to break and hold above the latest valid swing high, which doesn’t occur, the risk remains to the downside.
Magnitude Of The Cycle: Another major clue that will help us determine the health of the cycle is the type of progress made by the dominant side in control of the cycle. In this section of the analysis, we need to ask the following question: Are the new legs in the cycle increasing or decreasing in magnitude? The latest swing lows in EUR/USD, if we were to measure its extension from the last high to the newly established low, saw a slide worth 128 pips vs the previous leg down, which only achieved a move of 120 pips. This carries an important message: The most recent flows communicate that sellers are increasing its commitment on each new cycle low (greater supply imbalances), therefore, this is yet another clue that the risk should stay skewed to the downside.
Velocity Of The Cycle: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg. In the illustration, you can see how it took 21 hourly bars to achieve 120 pips vs 18 bars to net 128 pips. Bottom line: Before the rebound seen yesterday, the cycle continues to prosper in a healthy manner.
Levels : You shoud mark lines of support and resistance based on higher timeframes. They should be obvious to spot. The considerations to be given when selecting these areas include the number of times the area has been tested (minimum of 2 times), type of reaction away from this area (the stronger the more relevant), time frame (the higher the timeframe the more significant the level is).
Projection: Targets In A New Cycle: By far, the most accurate measure I have found to set targets (partial or full take profits) when trading cycles is to measure the 100% fibonacci projection from the most recent valid swing high to its low. Note, there will be enough cases when events outside one’s control will cause prices to fluctuate erratically and not achieve these targets. Don’t forget to also factor in potential hurdles in the form of higher time frame support/resistance areas. You should see these levels as simple guides but far from certain outcomes. If the cycle continues in the expected direction, you will start to appreciate the power and usefulness of these targets to consider taking profits or trailing stops in hope of an ever larger yield in your trade. In the case of the EUR/USD, notice how downward targets (on a sequence of 100% fib proj) were reached almost to the pip of the way down? With the price having reached its 400% fib proj, it suggests a potential recovery near term.
How To Trade Market Cycles: The real power lies in the congruence of factors from a top-down approach, aiming to have as many aligning in your favor as possible. In the example of the EUR/USD exercise, the recent down cycle in the hourly had the backing of the H4 and daily cycles as well, which undoubtedly reinforces the chances of picking the right direction to trade. Now, does this mean that the bearish market structure in the hourly will be respected? Not at all. Remember that each individual trade is just a random event within the context of an exploitable edge. However, by conducting the proper market structure analysis, you do obtain that edge in terms of the location to engage that can offer a relatively low-risk entry for a potentially much larger yield.
So, how can you go about trading these cycles? First and foremost, assuming you are trading off the hourly chart, you want to make sure to trade also in line with at least the immediately higher timeframe cycle (H4), and ideally both (daily and H4). You also want to double-check that the hourly market structure is trending as per the rules of two closes beyond the last valid swing low/high to confirm a new leg in the cycle. It’s important that you then check the absence of nearby cluster levels from higher time frames or economic data releases that may disturb the structure. Next is to make sure that the price remains guided by a descending or ascending trendline. Lastly, and this point is key, pay attention to both the magnitude and the speed on the creation of a new cycle.
As a general rule, regardless of the type of cycle, I personally don’t see enough risk-reward value if one engages ahead of a 50% fib retracement. If we are in a healthy cycle with lower lows, decent magnitude moves and no obstruction of higher timeframe levels, it makes the 50% fib retracement a great location to start looking for trades based on your ideal entry technique. Some traders may prefer to set limit orders at this levels with a stop a few pips away from the most recent high/low (this approach would make the most sense if the underlying trendline is still respected). Others may prefer a confirmation trigger such as the break of a trendline, a particular pattern (pennant, triangle) or a specific price action formation such as engulfing bars, pin bars.
Whichever way you approach your trades, it should nonetheless be from having an inner peace of mind that the area you are looking to trade from holds value on the basis of decent risk-reward prospects. Alternatively, and this is subject to one’s discretion, I personally remain more cautious to enter at the 50% fib retrac and tend to wait for either the 78.6% fib retrac or a test of the previous valid swing low/high in the case that we had a break but we never confirmed the cycle by having two closes past the level. If the cycle is confirmed but the magnitude is nowhere close to what would qualify as healthy, be more cautious trading around the 50% (wait for trigger). Personally, a great pattern I've spotted over the years for a potentially large risk-reward is to be on the lookout to trade a retracement to at least the 78.6% Fibonacci within the context of a strong and healthy cycle. This trades tend to offer the most bang for your buck, even if you must be patient for them to come about.
How To Trade Ranges: When the price starts trading confined in a box or consolidation phase, we know this is a period of reassessment before the next directional move. Unless a breakout occurs, the only area where you really want to engage as part of a range include the upper or lower edge. A useful exercise to conduct every time the price fluctuates within a range is to draw a 50% fib retracement, and start to observe what side of the range the price spends the most time at. Is is the lower half or the higher half? The side where price usually spends the most time tends to be the most vulnerable for a price breakout. See when the EUR/USD entered a range between Sept 21–28? Notice how the attempts to trade above the 50% fib retracement of the range were consistently rejected while price would accept below?
Conclusion: By now you’ve hopefully come to grips about the importance to keep your charts neat and clean, away from unnecessary indicators while embracing the power of reading market structures in a proper way. You have also gained enough knowledge to ultimately, through your own analysis based on a rules-based approach, find these low-risk areas to enter trades. While some degree of subjectivity will always be required, this tutorial offers you a roadmap from which to find the order within the chaos. You must become the primary conductor of your own orchestra as the forex symphony keeps playing. The right interpretation of market cycles will allow you to make sense of the music being played at all possible levels.
What Support Looks Like When It BreaksLooking at the m15 chart only can lead you to have the correct idea but in the wrong place.
By looking at high time frame charts you get a better picture of when a trend is in place, when a trend is no longer working or when there is no trend and we're in a range.
On the attached charts a daily time frame (top left) has a defined up trend and at 1.6700 the trend line and price meet for the 3rd time of Sept 27th. Here traders wanting to keep adding to long trade would initiate a long trade.
However by the close of the daily candle that idea is no longer valid, as the trend line did not hold as support.
Moving down through the smaller time frames we see that the days leading up to the 27th September have been consolidated into small daily moves. There is a clear line of support under these days that is clearly broken on the H1 chart etc. This equates to the time when the Daily candle approaches the rising trend line.
What we see happen next is that the broken daily horizontal support is now acting as horizontal resistance and price is trapped between this new horizontal resistance and the rising daily up trend.
When the horizontal resistance holds and the daily rising trend line are broke on the H1 candles traders waited for a quick retest and then went short. Accelerating the move.
EUR/USD: How To Trade Off Liquidity Post A Structure BreakoutIf you are a discretionary trader, this chart illustration will hopefully enhance your understanding of what to consider key areas in a chart where opportunities may arise. They go by the name "liquidity areas/levels".
Understanding the levels where you want to engage in buy/sell action is absolutely critical. After all, the ABCs of technical analysis orbits around finding these key levels.
One of the typical pitfalls aspiring traders fall victims of is the failure to select the right price location with the prospects of enough risk-reward, and most importantly, do it in a consistent manner.
Let’s look into a simple yet very effective strategy based on trading off liquidity levels for a 2:1 risk reward with a stop half the size of the previous swing low/high that led to the break of the structure.
But first, what are liquidity Levels?
These are levels where decisions will be made as they serve as a historical reference. Similarly, these areas will always attract interest as that’s where pockets of liquidity via the placement of stop loss orders reside, hence why in the institutional world levels of support and resistance are often referred as liquidity levels. The formation of a swing high or a swing low in the chart comes as a result of an imbalance of supply/demand.
As a rule of thumb, unless the rejection makes it to a 50% retracement of the previous high/low, be in high alert of a low quality liquidity level; the more vigorous the rejection of a level, the more chances it has of holding on a retest, especially if the rejection has led to a new cycle high or low. Other factors such as confluence, market conditions (risk on/off), market structure, economic data, will play a role in determining if the area will hold or fold.
Other nuances one must be aware of when trading levels of liquidity include factoring in the time. If the separation between the creation of the liquidity area and the first retest comes after an excessive number of days/weeks, the level may not hold the same weight as it used to as the market context evolves and orders pulled. At the same time, if you find two or more liquidity levels nearby, market participants will tend to place their stop loss orders at the most extreme level amid the clustering of multiple levels of interest.
To properly illustrate a level of liquidity where an opportunity to buy or sell may be present, simply draw a horizontal line from the latest wick or swing high/low.
In this EURUSD hourly chart, I randomly selected over a month of trading the EURUSD, with a blue line drawn if the liquidity level led to a break of the market structure (via higher highs or lower lows) or a red line if the retest of the liquidity level occurs amid a failure of a break in market structure. By the end of the exercise, it should be abundantly clear how engaging in buy/sell trades prior to a break of the market structure carries much greater chances of success.
What TimeFrame do traders look at most? What should they look @?I am still working on my first strategy (been for weeks now) and have several more after this, but from what I saw the 4-HR and 1-HR chart seem to provide the best signals. Also, all my strategies are based on the daily chart (if I see these factors align on daily then I look for signals on H-1 H-4 charts such as macd divergence or something).
So are these timeframes the ones people look at the most? I will look at trading views ideas to find out!
28 09 2018
Daily ideas 13 pages: 234
15 min ==> 18 ideas
30 min ==> 11 ideas
60 min ==> 46 ideas
120 min ==> 13 ideas
240 min ==> 65 ideas
480 min ==> 5 ideas
720 min ==> 4 ideas
1D ==> 56 ideas
3D ==> 4 ideas
1W ==> 12 ideas
Total = 234. H4 = 27.7%. H1 = 20%. Covered > 70% with just D1 H4 H1.
Ideas per ticker:
BTC--- = 76 ideas (and all the top ones)
XRP--- = 23 ideas
EURUSD = 15 ideas
Gold = 13 ideas ("Gold," + "XAUUSD,")
ETH--- = 12 ideas
GBPUSD = 9 ideas
USDJPY = 9 ideas
LTC--- = 9 ideas
Total for those: 166
All the rest no one cares about: 68.
USD in the name = idk around 200 :D
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Popular all time:
Top ideas = Bitcoin November 2017 to mid-2018 (not a bubble)
All time top idea noncrypto views: EURUSD 10935 views.
31th top idea for Bitcoin at the bottom of page 2: 75140 views (not a bubble)
BITCOIN BITCOIN BITCOIN BITCOIN AAA MAKE IT STOP.
All time top idea for Bitcoin number of views: You don't even want to know.
Of the 2 first pages (top 37 ideas):
Number of ideas that are not Bitcoin ==> 6/37
Number of ideas that are not Crypto ==> 2/37 EURUSD + Gold
TWO. And one of them just got alot of likes but not that many views.
T.W.O. Out of sqkn,fkqsin,f 37. 2 2 2 2 2 2.
NOT A BUBBLE! Clear proof this is the revolution right. It is only the beginning? The whole planet is looking at crypto.
Number of people interested only in crypto / number of (real?) traders (using approximate number of views) = 100.000 * 37 / 80.000 = 46 to 1.
Oh ye that does not look at all like a bubble. Hordes of cryptoer outnumbering traders that do not care what chart they trade as long as it moves 46 to 1.
Keep in mind crypto is sideways 90% of the time. Seems legit.
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Ok so for finding out the used timeframe I will have to filter... I am not trying to figure what novices and noob authors with troll ideas that get hundred of thousands of views use for Bitcoin.
Forex filter let's go. So this will just shows what the POPULAR authors use. Not your common folk eager to give me his money :D
Top 10 pages of most popular all time ideas for FX. 18/ page. 180 total.
60 ==> 52. 29%
240 ==> 80. 45%
D1 ==> 41. 23%
Covers 96%. 15 min charts rarely make it to most popular all time obviously.
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Newest currencies only (28 09): top 20 pages. 360 ideas.
60 ==> 107. 29.5%
240 ==> 132. 36.5%
D1 ==> 64. 18%
Covers 84%
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Newest currencies pages 21 to 40. 360 ideas.
60 ==> 100. 27.5%
240 ==> 129. 36%
D1 ==> 79. 22%
Covers 85.5%
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We pretty consistent. Going to make these stats again next week.
So was I right about these TimeFrames? Yes. Yes I was :D
So it all makes sense. The Timeframes coving 85% are the ones giving all the right signals, while other TF just give false signals all the time!
Conclusion: do NOT go against the herd. The more people look at something, the stronger it will be. Do not try looking for hidden secrets (well... not by themselves). Do not try to fight the capital (or magical :p) markets.
Go for the obvious supports, trendlines, and oscillators every one is looking at, and on the popular timeframes.
Love the market, respect it, and the market will love you back ;)
EURUSD and invisible power behind price changesHi
Swing Analysis according to G.W.T. are the best in predicting next swing direction. Price by its self will show us where need to go. Going from Daily trough H4 down to one-hour chart you can very easy see how clear and simple is to predict direction of the next swing and trend direction.
Also pay attention to Momentum – power behind price movements.
No momentum no price change.
Daily Chart:
H4 chart:
Cheers,
Jim
Definition trend and change of trend ( Trend reversal)Definition trend and change of trend ( Trend reversal)
Downtrend - Definition
A downtrend comprises a repeating sequence of:
1) A downward extension
2) A swing low
3) An upward pullback
4) A swing high
A downtrend ends when price breaks the swing high which leads to the lowest swing low of the trend
Uptrend - Definition
An uptrend comprises a repeating sequence of:
1) An upward extension
2) A swing high
3) A downward pullback
4) A swing low
An uptrend ends when price breaks the swing low which leads to the highest swing high of the trend
Please support the setup with your likes, comments and by following on TradingView.
Thanks
Definition trend and change of trend ( Trend reversal) !Definition trend and change of trend ( Trend reversal)
Downtrend - Definition
A downtrend comprises a repeating sequence of:
1) A downward extension
2) A swing low
3) An upward pullback
4) A swing high
A downtrend ends when price breaks the swing high which leads to the lowest swing low of the trend
Uptrend - Definition
An uptrend comprises a repeating sequence of:
1) An upward extension
2) A swing high
3) A downward pullback
4) A swing low
An uptrend ends when price breaks the swing low which leads to the highest swing high of the trend
Please support the setup with your likes, comments and by following on TradingView.
Thanks
Boomerang EffectBased on the market behaviour that:-
"prices tend to return"
"Same Seiden's Supply and Demand concept",
"Banks always split their orders hence price tend to go back so banks can put their orders again"
hence the concept "Boomerang Effect".
Some traders mark big candles as a "leading indicator" that price tends to return to that price, think of a magnetic effect. I personally use a candle that closes above/below the Bollinger Bands (20, std dev 2.0). When a candle closes above/below, I mark that specific candle's Open Price (almost copying the Sam Seiden's method marking the Supply/Demand level).
The chart above is just an example. If you just scan around the charts to the major pairs, it does occur so many times (the boomerang effect). Does it happen 100% of the time? Of course not! Reason? Banks never split their orders all the time. The price fluctuates because it is moved by people, it is real, it is a living thing the market. There are times when they just do not want to buy again at the same price especially if it is deemed too expensive.
Tell me what you think? What kind of strategy you can incoporate this.
Discusstion: Head-and-Shoulders BottomsDiscusstion: Head-and-Shoulders Bottoms
Identification Characteristics
Trading Tactics
Prior analysis
Prior Education
Discussion-Three-Falling-Peaks-Pattern.
Discussion: Triangles, Symmetrical!
Sideways Trend !
Break support/Resistance, give confirmation?
Support and Resistance, A way to draw a horizontal line !
