TRADE REVIEW ANALYSISIn this video, i share the thought process that led to an 80pip winning trade on GU after the previous analysis. i also shared what to look out for on GU for the coming sessions
Learntotrade
Quarter Theory: Intraday Trading Mastery - Part 1 IntroGreetings Traders!
In today’s video, we’ll be introducing Quarter Theory Intraday Trading Mastery, a model grounded in the algorithmic nature of price delivery within the markets. We’ll explore candle anatomy and learn how to predict candle behavior on lower timeframes to capitalize on intraday trading opportunities. This model will also help us identify the optimal trading sessions and execute trades with high probability, all while effectively acting on market bias.
This video will focus primarily on the foundational content, with practical examples to follow in the next video. In the meantime, I encourage you to practice these concepts on your own to deepen your understanding.
This video is part of our ongoing High Probability Trading Zones playlist on YouTube. If you haven’t watched the previous videos in the series, I highly recommend checking them out. They provide crucial insights into identifying market bias, which Quarter Theory will help you act on effectively.
I’ll attach the links to those videos in the description below.
Premium Discount Price Delivery in Institutional Trading:
Mastering Institutional Order-Flow Price Delivery:
Quarter Theory Mastering Algorithmic Price Movements:
Mastering High Probability Trading Across All Assets:
Best Regards,
The_Architect
Hidden Costs of Trading You Must Know
In this educational article, we will discuss the hidden costs of trading.
1 - Brokers' Commissions
Trading commission is the brokers' fee for opening a trading position.
Usually, it is calculated based on the size of the trade.
Though most of the traders believe that trading commissions are too low to even count them, the fact is that trading on consistent basis and opening a couple of trading positions weekly, the composite value of commissions may cut a substantial part of our profits.
2 - Education
Of course, most of the trading basics can be found on the Internet absolutely for free.
However, the more experienced you become, the harder it is to find the materials . So you typically should pay for the advanced training.
Moreover, there is no guarantee that the course/coaching that you purchase will improve your trading, quite often traders go through multiple courses/coaching programs before they become consistently profitable.
3 - Spreads
Spread is the difference between the sellers' and buyers' prices.
That difference must be compensated by a trader if one wished to open a trading position.
In highly liquid markets, the spreads are usually low and most of the traders ignore them.
However, being similar to commissions, spreads may cut the substantial part of the overall profits.
4 - Time
When you begin your trading journey, it is not possible to predict how much it will take to become a consistently profitable trader.
Moreover, there is no guarantee that you will become one.
One fact is true, you should spend a couple of years before you find a way to trade profitably, and as we know, the time is money. More time you sacrifice on trading, less time you have on something else.
5 - Swaps
Swap is the fee you pay for transferring a position overnight .
Swap is based on a difference between the interests rates of the currencies that are in a pair that you trade.
Occasionally, swaps can even be positive, and you can earn on holding such positions.
However, most of the time the swaps are negative and the longer you hold your trades, the more costly your trading becomes.
The brokers' commissions, spreads and swaps compose a substantial cost of our trading positions. Adding into the equation the expensive learning materials and time spent on practicing, trading becomes a very expensive game to play.
However, knowing in advance these hidden costs, the one can better prepare himself for a trading journey.
Never Trade Without Stop Loss!
Hey traders,
Talking to many struggling traders from different parts of the world, I realized that the majority constantly makes the same mistake : they do not set a stop loss .
Asking for the reason why they do that, the common answer is that
these traders consider the manual position closing to be safer, implying that if the market goes in the opposite direction, they will be able to much better track the exact moment to cut loss.
In this article, we will discuss why it is crucially important to set a stop loss and why it is the number one element of your trading position.
What is Stop Loss?
Let's discuss what is a stop loss . By a stop loss , we mean a certain price level where we close our trading position in loss. In comparison to a manual closing, the stop loss (preferably) should be set at the exact moment when the order is executed.
On the chart above, I have an active selling position on Gold.
My entry level is 2372, my stop loss is 2381.
It means that if the price goes up and reaches 2381 level, the position will automatically close in a loss.
Why Do You Need a Stop Loss?
Stop loss allows us limiting the risks in case of unfavorable movements .
On the chart above, I have illustrated 2 similar negative scenarios : 1 with a stop loss being placed and one without on USDJPY.
In the example on the left, stop loss helped to prevent the excessive risk , cutting the loss at the beginning of a bearish wave.
With the manual closing, however, traders usually hold the negative positions much longer , praying for a reversal.
Holding a losing trade, emotions intervene. Greed and fear usually spoil the reasoning, causing irrational decisions .
Following such a strategy, the total loss of the second scenario is 6 times bigger than the total loss with a placed stop loss order.
Always Set Stop Loss!
Stop loss defines the point where you become wrong in your predictions. Planning your trade, you should know in advance such a point and cut your loss once it is reached.
Never trade without a stop loss.
How to Identify Candlestick Strength | Trading Basics
Hey traders,
In this educational article, we will discuss
Please, note that the concepts that will be covered in this article can be applied on any time frame, however, higher is the time frame, more trustworthy are the candles.
Also, remember, that each individual candle is assessed in relation to other candles on the chart.
There are three types of candles depending on its direction:
🟢 Bullish candle
Such a candle has a closing price higher than the opening price.
🔴 Bearish candle
Such a candle has a closing price lower than the opening price.
🟡 Neutral candle
Such a candle has equal or close to equal opening and closing price.
There are three categories of the strength of the candle.
Please, note, the measurement of the strength of the candle is applicable only to bullish/bearish candles.
Neutral candle has no strength by definition. It signifies the absolute equilibrium between buyers and sellers.
1️⃣ Strong candle
Strong bullish candle signifies strong buying volumes and dominance of buyers without sellers resistance.
Above, you can see the example of a strong bullish candle on NZDCHF on a 4H.
Strong bearish candle means significant selling volumes and high bearish pressure without buyers resistance.
On the chart above, you can see a song bearish candle on EURUSD.
Usually, a strong bullish/bearish candle has a relatively big body and tiny wicks.
2️⃣ Medium candle
Medium bullish candle signifies a dominance of buyers with a rising resistance of sellers.
You can see the sequence of medium bullish candles on EURJPY pair on a daily time frame.
Medium bearish candle means a prevailing strength of sellers with a growing pressure of bulls.
Above is the example of a sequence of medium bearish candles on AUDUSD pair.
Usually, a medium bullish/bearish candle has its range (based on a wick) 2 times bigger than the body of the candle.
3️⃣ Weak candle
Weak bullish candle signifies the exhaustion of buyers and a substantial resistance of sellers.
Weak bearish candle signifies the exhaustion of sellers and a considerable bullish pressure.
Usually, such a candle has a relatively small body and a big wick.
Above is the sequence of weak bullish and bearish candles on NZDCHF pair on an hourly time frame.
Knowing how to read the strength of the candlestick, one can quite accurately spot the initiate of new waves, market reversals and consolidations. Watch how the price acts, follow the candlesticks and try to spot the change of momentum by yourself.
Demo Account Will Not Make You a PRO TRADER
Hey traders,
In this article, we will discuss demo account trading .
We will discuss its importance for newbie traders and its flaws.
➕ Pros:
Demo account is the best tool to get familiar with the financial markets . It gives you instant access to hundreds of different financial instruments.
With a demo account, you can learn how the trading terminal works . You can execute the trading orders freely and get familiar with its types. You can get acquainted with leverage, spreads and volatility.
Trading on paper money, you do not incur any risks , while you can see the real impact of your actions on your account balance.
Demo account is the best instrument for developing and testing a trading strategy , not risking any penny.
The absence of risk makes demo trading absolutely stress-free.
➖ Cons:
The incurred losses have no real impact , not causing real emotions and pressure, which you always experience trading on a real account.
Your performance (positive or negative) does not influence your future decisions.
Real market conditions are tougher. Demo accounts execute the orders a bit differently than the real ones. That is clearly felt during the moments of high volatility, with the order slippage occurring less often and trade execution being longer.
Trading with paper money allows you to trade with the sums being unaffordable in a real life, misrepresenting your real potential gains and providing a false confidence in success.
Even though we spotted multiple negative elements of demo trading, I want you to realize that it still remains the essential part of your trading journey and one of the main training tools. You should spend as much time on demo trading as you need to build confidence in your actions, only then you can gradually switch to real account trading.
Profitable Triangle Trading Strategy Explained
Descending triangle formation is a classic reversal pattern . It signifies the weakness of buyers in a bullish trend and bearish accumulation .
In this article, I will teach you how to trade descending triangle pattern. I will explain how to identify the pattern properly and share my trading strategy.
⭐️ The pattern has a very peculiar price action structure :
1. Trading in a bullish trend, the price sets a higher high and retraces setting a higher low .
2. Then the market starts growing again but does not manage to set a new high, setting a lower high instead.
3. Then the price drops again perfectly respecting the level of the last higher low, setting an equal low .
4. After that, one more bullish movement and one more consequent lower high , bearish move, and equal low .
Based on the last three highs , a trend line can be drawn.
Based on the equal lows , a horizontal neckline is spotted.
❗What is peculiar about such price action is the fact that a set of lower highs signifies a weakening bullish momentum : fewer and fewer buyers are willing to buy from horizontal support based on equal lows.
🔔 Such price action is called a bearish accumulation .
Once the pattern is formed it is still not a trend reversal signal though. Remember that the price may set many lower highs and equal lows within the pattern.
The trigger that is applied to confirm a trend reversal is a bearish breakout of the neckline of the pattern.
📉Then a short position can be opened.
For conservative trading, a retest entry is suggested.
Safest stop is lying at least above the level of the last lower high.
However, in case the levels of the lower highs are almost equal it is highly recommendable to set a stop loss above them all.
🎯For targets look for the closest strong structure support.
Below, you can see the example of a descending triangle trade that I took on NZDCAD pair.
After I spotted the formation of the pattern, I was patiently waiting for a breakout of its neckline.
After a breakout, I set a sell limit order on a retest.
Stop loss above the last lower high.
TP - the closest key support.
90 pips of pure profit made.
Learn to identify and trade descending triangle. It is one of the most accurate price action patterns every trader should know.
How to Apply a Position Size Calculator in Forex Trading
In this educational article, I will teach you how to apply a position size calculator in Forex and calculate a lot size for your trades depending on a desired risk .
Why do you need a position size calculator?
Even though, most of the newbie traders trade with the fixed lot , the truth is that fixed lot trading is considered to be very risky .
Depending on the trading instrument, time frame and a desired stop loss, the risks from one trade to another are constantly floating .
With the constant fluctuations of losses per trade, it is very complicated to control your risks and drawdowns.
A lot size calculation , however, allows you to risk the desired percentage of your capital per trade , limiting the maximum you can potentially lose.
A lot size is calculated with a position size calculator .
How to Measure Lot Size for Trades?
Let's measure a lot size for the following trade on EURUSD.
Step 1:
Measure a pip value of your stop loss.
It is the distance from your entry level to your stop loss level.
In the example on the picture, the stop loss is 35 pips.
Step 2:
Open a position size calculator
Step 3:
Fill the form.
Inputs: Account currency, account balance, desired risk %, stop loss in pips, currency pair.
Let's say that we are trading with USD account.
Its balance is $10000.
The risk for this trade is 1%.
Step 4:
Calculate a lot size.
The system will calculate a lot size for your trade.
0.28 standard lot in our example.
Taking a trade on EURUSD with $10000 deposit and 35 pips stop loss , you will need 0.28 lot size to risk 1% of your trading account.
Learn to apply a position size calculator. That is the must-use tool for a proper risk management.
Learn How to Apply Top-Down Multiple Time Frame Analysis
In this article, we will discuss how to apply Multiple Time Frame Analysis in trading .
I will teach you how to apply different time frames and will share with you some useful tips and example of a real trade that I take with Top-Down Analysis strategy.
Firstly, let's briefly define the classification of time frames that we will discuss:
There are 3 main categories of time frames:
1️⃣ Higher time frames
2️⃣ Trading time frames
3️⃣ Lower time frames
Higher Time Frames Analysis
1️⃣ Higher time frames are used for identification of the market trend and global picture. Weekly and daily time frames belong to this category.
The analysis of these time frames is the most important .
On these time frames, we make predictions and forecast the future direction of the market with trend analysis and we identify the levels , the areas from where we will trade our predictions with structure analysis .
Above is the example of a daily time frame analysis on NZDCAD.
We see that the market is trading in a strong bullish trend.
I underlined important support and resistance levels.
The supports will provide the safest zones to buy the market from anticipating a bullish trend continuation.
Trading Time Frames
2️⃣ Trading time frames are the time frames where the positions are opened . The analysis of these time frames initiates only after the market reaches the underlined trading levels, the areas on higher time frames.
My trading time frames are 4h/1h. There I am looking for a confirmation of the strength of the structures that I spotted on higher time frames. There are multiple ways to confirm that. My confirmations are the reversal price action patterns.
Once the confirmation is spotted, the position is opened.
Analyzing the reaction of the price to Support 1 on 1H time frame on NZDCAD pair, I spotted a strong bullish confirmation - a triple bottom formation.
A long position is opened on a retest of a broken neckline.
Lower Time Frames
3️⃣ Lower time frames are 30/15 minutes charts. Even though these time frames are NOT applied for trading, occasionally they provide some extra clues . Also, these time frames can be applied by riskier traders for opening trading positions before the confirmation is spotted on trading time frames.
Before the price broke a neckline of a triple bottom formation on an hourly time frame on NZDCAD, it broke a resistance line of a symmetrical triangle formation on 15 minutes time frame. It was an earlier and riskier confirmation to buy.
Learn to apply these 3 categories of time frames in a combination. Start your analysis with the highest time frame and steadily go lower, identifying more and more clues.
You will be impressed how efficient that strategy is.
Red Trading DaysDoes this ring a bell?, You lose a trade and you feel the need to instantly reenter. You were absolutely sure that trade would win. So you reenter, this new trade loses as well, now you are furious you wait a bit and you reenter again with the same lot size and yet again you lose - this typically occurs because you are no longer trading based on logic but on pure vibes, pure emotion. You are 3 trades in the hole and your desire to be right is higher than ever. You’re almost seeing red itself as if you had a bloodlust towards the market. So you take a 4th trade but this is where the beginning of the end starts, you decide to go in with a bigger lot size. Once you get here, you’ve already lost the game because now you are no longer willing to listen to reason.
You definitely aren’t willing to stop and you won’t rest until you win a trade. And maybe you do win this trade but it wasn’t enough, you’re still just under break even and you need to make back your profit. So you take another trade with the same overleveraged lot size and that trade comes and loses as well, bummer. And now you are delusional thinking that the market must be against you, So by this point you pretty much give up, you yolo the account activating the margin call. Account has been blown.
Nobody likes red days, you know what I’m talking about - when almost no matter how hard you try you just can’t seem to win any trades. I promise you aren’t alone in both feeling that way and having red days to begin with. But I’ve found in my experience that learning to be okay with a losing day is one of the keys to trading from a place of peace. It is also instrumental in stopping you from both taking stupid trades and or revenge trading.
We’ve all been there, things going good - it seems like you’re finally getting it. Everyday you’re winning, Monday Profit. Tuesday Profit. Wednesday Profit. And then BAM. Thursday you start to lose your first trades. Calm down and relax, what you do next will dictate if you get to keep this account alive or not. I’ve seen it happen to other traders and it has happened to me as well. As soon as you lose a trade you instantly feel wrong and have an immediate desire to make your money back. But if you come to terms with the fact that it was never your money to begin with. You can have a shift in your perception which could help calm your nerves a bit. Many a trader has destroyed their entire account because of one silly losing trade.
So we already know that, feeling this way is normal and you are not alone. So why is it other traders can be successful and you can’t? Well the answer is you can but you must control yourself. Trading is more of a mental thing than anything else. For instance, drawdown. Drawdown is a mental thing. It is designed like that to freak you out but in actuality if you are right drawdown is just a part of the process, maintain control and follow your directive.
One thing that has greatly helped me better deal with red days is pass it off as a loan towards the market. I like to think as though the market needs to borrow my money, no biggie, sometimes people need to borrow money from you right? But good news, you get to apply interest when they are paying you back because all financial institutions do that, why shouldn’t you? When you are taking money back from the market that is the market paying interest to you. It sounds silly but that is what I do to cope with losing, something I have little to no control over. It stops me from taking stupid ill-advised trades and allows me to justify those “losses”.
It is all about the little things that allow you to better control yourself. It isn’t crazy if it works. What if I told you.
It is also very important to acknowledge the fact that you cannot win every single trade. By not actively trying to win every single trade what you are actually doing is taking pressure off of yourself because you are prepared for the worst.
I say this to say - I will likely be taking the rest of the day off from trading Either Gold or BTC as neither of them have any real opportunity to me currently. Peace out folks!
Understanding Technical Indicators - Avoid FaultsI received a question from a member today related to Divergence on RSI or Stochastics.
I've been lucky to actually sit down with the creator of Stochastics, George C. Lane, to discuss his indicator and how he used it to trade.
I've also been luck to be able to attend multiple industry conferences over the past 20+ years where I've been able to watch and listen to dozens of the best technicians and analysts explain their techniques.
Boy, those were the days - right?
This video is going to help you understand most technical indicators are designed based on a RANGE of bars (usually 14 or so). This means they are measuring price trend/direction/strength/other over the past 14 bars - not longer.
And because of that you need to understand any trend lasting more than 14+ bars could result in FAILURE of the technical indicator.
Watch this video. I hope it helps.
Get some.
The Wisdom of Pro Traders vs. Newbie Naivety
Hey traders,
In this article, we will discuss the perception of trading by individuals .
We will compare the vision of a professional trader and a beginner - trading vs gambling.
Most of the people perceive trading performance incorrectly. There is a common fallacy among them that win rate is the only true indicator of the efficiency of a trading strategy.
Moreover, newbies are searching for a strategy producing close to 100% accuracy.
Such a mindset determines their expectations.
Especially it feels, when I share a wrong forecast in my telegram channel.
It immediately triggers resentment and negative reactions.
Talking to these people personally and asking them about the reasons of their indignation, the common answer is: "If you are a pro, you can not be wrong".
The truth is that the reality is absolutely different. Opening any position or making a forecast, a pro trader always realizes that there is no guarantee that the market will act as predicted.
Pro trader admits that he deals with probabilities , and he is ready to take losses . He realizes that he may have negative trading days, even weeks and months, but at the end of the day his overall performance will be positive.
Remember, that your success in trading is determined by your expectations and perception. Admit the reality of trading, set correct goals, and you will take losses more easily.
I wish you luck and courage on a battlefield.
WHAT IS TRADING ACCOUNT DRAWDOWN | 3 Types Of Drawdown Explained
In my videos, I frequently use the term "trading account drawdown ".
Many of you asked me to explain the meaning of that term and share some examples.
What is Trading Account Drawdown?
The account drawdown is the highest observed loss from the highest
value of the deposit to the lowest value of the deposit at
a certain period of time.
Imagine you started to trade with 10,000$ account.
At the end of the year, your account size reached 15,000$ .
However, at some point through the year the deposit value dropped to 6,000$ . It was the absolute minimum for the one-year period.
At some point, your net loss was -4,000$ or 40% of your account balance.
The account drawdown is 40% .
❗️Knowing the account drawdown is very important for the risk assessment of the trading strategy. Usually, 50% and bigger drawdown signifies an extremely high risk.
3 Types of Drawdown
1. Current drawdown - a temporary drawdown associated
with the negative total value of opened trading position(s)
at present.
Once you start trading with 10,000$ deposit, you open several trading positions. Being opened, with the constant price movements, your potential gains fluctuates from positive to negative.
For example, with 3 active trades :
EURUSD ( -500$ at present);
GBPUSD ( +200$ at present);
GOLD ( -100$ at present)
Your current account drawdown is -400$ or 4% of your deposit.
2. Fixed drawdown - the negative value of the closed trading
position(s) at present for a certain period of time.
While some of your trades remain active, some are already closed .
Imagine the same deposit - 10,000$ .
On Monday you opened 6 trades,
2 still remain active ;
4 are already closed .
Your total loss from your closed trades is -500$. Your fixed Monday's drawdown is 5%.
3. Maximum Drawdown - the maximum observed loss from
the highest value of the deposit before a new maximum
is reached.
Starting to trade with 10,000$ you are already trading for 5 years .
Your account were growing rapidly and at some moment it reached 25,000$ . Then the recession started. You faced a dramatic loss of 12,500$ before you started to recover.
That was the maximum observed loss for the period.
Your maximum account drawdown was 50% .
❗️Different types of drawdown give a lot of insights about a trading strategy. Its proper assessment will help to spot a high risk strategy and to find a conservative one.
Constantly monitor your account drawdown and always check the numbers.
What is your highest account drawdown?
The ONLY Strategy You Need to Identify The Market Trend
In this article, we will discuss a proven price action based way to identify the market trend .
❗️And let me note, before we start, that no matter what strategy do you use in your trading, you should always know where the market is going and what is the current trend . Your judgement should be based on strict and objective rules that proved its accuracy.
There are a lot of ways to identify the market trend. One of the simplest and efficient ones is price action based method .
This method relies on impulse legs .
The market never goes just straight up or down, the price action always has a zigzag shape with a set of impulses and retracements.
The impulse leg is a strong directional movement , while the retracement is the correctional movement within the boundaries of the impulse.
UPTREND
📈The market is trading in a bullish trend if 3 conditions are met:
1️⃣the price forms an initial bullish impulse ,
2️⃣ retraces , setting a higher low ,
3️⃣then starts growing again and sets a new high with the second bullish impulse .
Once these 3 conditions are met, we consider the market to be bullish, and we expect a bullish continuation in such a manner.
Take a look at a price action on USDCAD. According to the trend-analysis rules, the pair is trading in a bullish trend.
DOWNTREND
📉The market is trading in a bearish trend if 3 following conditions are met:
1️⃣the price forms an initial bearish impulse ,
2️⃣ retraces , setting a lower high ,
3️⃣then drops lower and sets a new low with the second bearish impulse .
Once these 3 conditions are met, we consider the market to be bearish, and we expect a bearish trend continuation.
According to the rules, NZDUSD is trading in a bearish trend on the chart above.
CONSOLIDATION
➖The third state of the market is called consolidation . The market is trading in a consolidation if the conditions for bullish or bearish trend are not met . The price chaotically forms bullish and bearish impulses, usually trading within the range .
Above is the example of a sideways, consolidating market, where the price sets equal or almost equal highs and lows and conditions for bullish/bearish trend are not met.
Knowing the current trend, one always knows whether a current trading position is trend-following or counter trend, or it is a sideways consolidation trade.
Learn these simple rules and try to identify the market trend with them.
From Beginner to Pro - The Evolution of a Trader
Hey traders,
In this educational article, we will discuss 3 stages of the evolution of a trader .
Stage 1 - Unprofitable trader 😞
The unprofitable trader has very typical characteristics:
-total absence of trading skills
Most of the time, people open a live account simply after completing some beginners course like on babypips website.
Being sure that the obtained knowledge are completely enough to start trading, they quickly face the tough reality.
-no trading plan
Having just basic knowledge, of course, they do not have a trading plan. Why the hell to have it if everything is so simple?!
All their actions on the market is just gambling. They open the positions randomly most of the time, simply relying on intuition.
-poor risk management
In 99% percent of the time, the unprofitable trader does not even think about risk management. The position sizing, stop placement and target selection are completely neglected.
Trading performance of the unprofitable traders is characterized by small wins and substantial losses and negatively trending equity.
Stage 2 - Boom and bust trader 😶
Usually, traders reach boom and bust stage after 1-2 years of unprofitable trading. At some moment, winning trades start to compensate losing trades, brining non-trending equity.
Such traders have very common traits:
-not polished trading plan
Being unprofitable for so long, traders start to realize the significance of a trading plan.
Sticking to the set of rules, they notice positive changes in their trading performance.
However, trading plan requires to be polished and modified. It takes many years for a trader to identify all its drawbacks before it starts bringing net profits.
-lack of confidence
When one starts following a trading system, confidence plays a substantial role.
The fact is that even the best trading strategy in the world occasionally produces negative results. In order to not give up and keep following such a system, one needs to build trust in that.
The confidence that after a series of losing trades, the strategy will manage to recover.
Such a trust can be built after many years of trading that strategy.
Stage 3 - Profitable trader ☺️
That is the final destination.
After many years of a struggling trading, one finally sees positively-trending equity. Winning trades start to outperform losing ones, leading to consistent account growth.
Profitable trader is characterized by iron discipline, confidence and consistency.
He knows what he is trading, when and why. His trading plan is polished, he fully controls his emotions.
He never stops learning and constantly develops his strategy.
Knowing the 3 stages of the evolution of a trader, one can easily identify at what stage he currently is. That will help to identify the things to be focused on to move to the next stage.
At what stages are you at the moment?
3 Best Fibonacci Tools For Forex Trading
Hey traders,
In this article, we will discuss 3 classic Fibonacci tools you must know for trading different financial markets.
1️⃣ Fibonacci Retracement
Fib.Retracement is my favorite fib.tool. It is aimed to identify strong horizontal support and resistance levels within the impulse leg .
We draw this tool based on the high and low of the impulse (from wick to wick) and it shows us POTENTIALLY strong structure levels determined by Fibonacci numbers .
Common Fib.Retracement levels are: 0.382, 0.5, 0.618, 0.786 .
Once one of the levels is reached, wait for a confirmation before you open a trading positions.
Above is the example of an application of a fibonacci retracement tool based on a bearish impulse leg on EURUSD.
2️⃣ Fibonacci Extension
Fib.Extension indicates strong horizontal support and resistance levels beyond the impulse . Similar to Fib.Retracement tool, Fib.Extension is drawn relying on impulse's high and low (from wick to wick) and it shows POTENTIALLY strong structure levels where the consequent impulses may complete based on Fibonacci number.
Common Fib.Extension levels are: 1.272, 1.414, 1.618 .
Once one of the levels is reached, wait for a confirmation before you open a trading positions.
Above is the example of fibonacci extension tool based on USDJPY based on a bullish impulse leg.
3️⃣ Fibonacci Channel
Fib.Channel shows strong vertical supports and resistances (trend lines) within the channel . The tool is drawn based on the trend line of a valid parallel channel (based on wicks) and it shows POTENTIALLY strong trend lines from where the market may retrace .
The trend lines within Fib.Channel rest on 0.382, 0.5, 0.618, 0.786 Fib.Levels .
Once one of the levels is reached, wait for a confirmation before you open a trading positions.
Above is the example of a fibonacci channel on USDCHF.
Remember that Fibonacci's are simply tools in a toolbox. In order to use them properly, you need to build a trading system around them, test it and confirm its efficiency.
How to Start Forex Trading. Step-by-Step Learning Plan
Hey traders,
If you are wondering how to start Forex trading, or you just started to trade, I suggest a 12 weeks intensive learning plan.
Each week will be dedicated to a specific topic. Starting from the basics you will gradually mature and by the end of the intensive you will have a complete trading strategy.
✔️Week 1 - Practice market trend identification
Learn to identify the direction of the trend. Master the recognition of a bullish trend, bearish trend and sideways market.
✔️Week 2 - Practice support and resistance.
Learn to identify key levels. Master support & resistance recognition.
✔️Week 3 - Learn candlestick patterns.
Study classic candlestick formations and practice their recognition.
✔️Week 4 - Learn price action patterns.
Study classic price action patterns: trend-following patterns, reversal patterns and consolidation pattern and learn to recognize them.
By the end of the first month, you will mature the basics of candlestick chart analysis.
✔️Week 5 - Practice supply and demand zones.
Learn to identify supply and demand zones. Learn to combine candlestick analysis with support and resistance to identify the potential reversal zones.
✔️Week 6 - Practice multiple time frame analysis.
Master top-down analysis. Learn to apply all the techniques studied previously on multiple time frames.
✔️Week 7 - Learn different entry strategies.
With all the knowledge being obtained, you can practice different entry techniques. You can try trading candlesticks patterns or price action patterns, or simply key levels. Search what works for you.
✔️Week 8 - Learn risk management.
Of course, entry strategies are not enough for profitable trading. Learn how to set stop loss and how to manage your risks properly.
By the end of the second month, you will have a foundation for a strategy building.
✔️Week 9 - Practice trade management.
Knowing how to enter the trade and how to manage the risks, the next step is to learn how to manage the active position (stop loss trailing, position protection, manual closing, etc.)
✔️Week 10 - Create a trading plan.
Combine all the knowledge that you gained in a structured trading plan.
✔️Week 11 - Follow the strategy.
Be disciplined and follow your rules. Test them and learn to be consistent.
✔️Week 12 - Review your plan.
Following your strategy, you will inevitably find its flaws. Learn to constantly improve it.
By the end of the third month, you will have a complete rule-based trading strategy. Of course, that won't be a perfect strategy, but you will have broad knowledge in technical analysis.
The next 3 months alone should be sacrificed on polishing and improvement of your trading plan.
Try this intensive, traders. I strongly believe that you will see a dramatic improvement in your trading upon its completion.
Let’s Compare INVESTING, TRADING and GAMBLING
Hey traders,
In this post, we will compare investing, trading and gambling .
📈 Investing
Investing is the act of putting money in a financial market with the expectations of a long-term positive return.
The investing decisions are usually made using fundamental analysis.
The main goal of an investor is to predict the long-term market trends and benefit on them.
Professional investing also involves assets allocation and diversification aimed to hedge potential risks.
💱 Trading
Trading is the process of selling and buying financial instruments expecting a short-term (occasionally, mid-term) profit.
The trading decisions are usually based on technical and fundamentals analysis.
The goal of a trader is to predict local price fluctuations and catch them.
Professional trading implies strict, rule-based actions following a trading plan.
🎰 Gambling
Gambling is the act of betting on a specific event with the expectations of winning some value.
Being completely luck-based, gambling usually involves get rich quick schemes and pursuit of easy money.
What differs professional trading and investing from gambling is the fact that professional trading / investing involves objective analysis and strict planning, while gambling remains purely intuition based.
Unfortunately, most of the market participants pretend that they trade and invest professionally while acting as gamblers in fact.
Remember that long-term, consistent profits can be achieved only with the plan. Your intuition may bring some short-term profits, but in a long-run it will most likely lead you to a bankruptcy.
Here is WHY You Must Learn TRADE MANAGEMENT
Hey traders,
In this post, I will share with you my tips for trade management in Forex trading .
But first, let me elaborate on what is exactly a trade management .
Trade management is the set of rules and techniques applied for managing of an already active position.
Trade management is a very important element of any trading strategy that should never be neglected.
1. Never remove a stop loss
Being in a huge loss, many traders refuse to admit that they are wrong. Instead, watching how the price moves closer and closer to a stop loss, they remove stop loss hoping on a coming reversal.
The alternative situation may happen when the price is going sharply in the desired direction. Watching the increasing profits, traders remove a stop loss (and occasionally take profit), being afraid to miss bigger profits.
Both situations may lead to substantial, higher than initially planned losses. Driven by many factors, the market can easily burn all gains and move against the desired direction much longer than traders stay solvent.
Take a look at this long trade on Gold. When the price comes closer and closer to a stop loss, many traders can not take a psychological pressure and remove stop loss, being afraid to take the loss.
However, most of the time, stop loss will help you to limit your losses. You can see that after Gold reached stop loss, the price dropped much lower. Removing the stop loss, you would inquire bigger losses.
Never remove a stop loss. It must be always set.
2. Never modify your stop loss if a position is in loss
Watching how the price moves closer and closer to a stop loss is painful. Instead of removing stop loss, some traders move it and give the market more space for reversal.
Even though such a technique is safer than the complete stop loss removal, it is still a very bad habit.
Each stop loss adjustment increases the potential loss, not giving any guarantees that the market will reverse.
It is highly recommendable to keep your stop loss fixed and let the price hit it and admit the loss.
Above is one more example, why the earlier you close the trade in a loss, the better. Modifications and adjustment of your stop loss will most of the time lead to even bigger losses.
3. Know in advance your profit protection strategy
Where do you take your profit?
Do you have a fixed tp level or do you apply trailing stop?
You should always know the answers.
Coiling around take profit level but not being able to reach it, the price makes many traders manually close the trade or move take profit closer to current price levels.
Another common situation happens when the market so quickly reaches the desired TP level so the traders remove TP hoping to make bigger than initially planned profit.
Such emotional interventions negatively affect a long-term trading performance. TP removal may even burn all profits.
Do not let your greed intervene, and always follow your rules.
Above is the example of trade management rules in Forex trading. After GBPUSD reached a key support, a long position was opened from that. Once the price moves up by a certain distance, stop loss will be moved to entry. Take profit will be the closest key resistance.
4. Never add to a losing position
Watching how the price refuses to go in the intended direction and cutting a partial loss, many traders add to a losing trade in hopes that the market will reverse and all the losses will be recovered.
Again, such a fallacy usually leads to substantial losses.
Remember, you can add to a position only AFTER the market moved in the desired direction, not BEFORE.
Just imagine what could happen with your trading account, if you kept adding to a losing short position in a recent crazy bullish market on Gold.
5. Close the trades manually only following rules
Quite often, newbie traders manually close their trades because of some random factors:
they saw someone's opposite view, or they simply changed their mind.
Remember, that if you opened a trade following your trading plan, you should always have strict rules for a position manual close. Do not let random factors affect your trading.
Above is the example how you could easily miss a lot of pips on Gold, simply because the market temporarily stuck on some resistance.
Following these 5 simple tips, your trading will improve dramatically. Remember, that it is not enough to spot and accurate entry. Once you are in a trade, you should wisely manage that, following your plan.
Top 4 Price Action Signals For Beginners. Best Trading Entries
I will reveal 4 accurate price action signals that even a newbie trader will manage to easily recognize.
Watch carefully because these signals alone will help you to make a lot of money trading Forex, Gold or any other financial market.
Change of Character
Change of character is a strong signal that indicates a trend violation and a highly probable market reversal.
In a bearish trend, the change of character will be a bullish violation of the level of the last lower high.
Check how the change of character accurately indicated a bullish reversal on EURJPY pair.
In a bullish trend, a bearish violation of the level of the last higher low will signify a change of character and a highly probable bearish reversal.
Bearish violation of the last higher low level and a change of character on USDJPY gave a perfect bearish signal.
Breakout of Consolidation
No matter what time frame you trader, you probably noticed that quite often the markets become weak and start consolidating .
Most of the time, the prices tend to consolidate within horizontal ranges.
Breakout of one of the boundaries of the range can give you a strong trading signal.
Check how the price acted on GBPCHF.
The breakout of the support/resistance of the range always gave an accurate signal, no matter what was the preceding direction of the market.
Trend Line Breakout of a Pattern
There are a lot of trend line based bullish and bearish price action patterns: the ranges, the wedges, the triangles, the channels.
What unites these patterns is that the violation of the trend line of the pattern gives a strong trading signal.
A bullish breakout of a resistance line of a falling wedge, a bullish flag and a symmetrical triangle will give us a strong bullish signal.
Just look how EURUSD bounced after a bullish breakout of a resistance line of a falling wedge pattern.
While a bearish breakout of a support line of a rising wedge, a bearish flag or a symmetrical triangle will indicate a highly probable bearish continuation
Here is how a bearish breakout of the support of a symmetrical triangle formation helped me to predict a bearish movement on Gold.
Neckline breakout of a horizontal pattern
There are a lot of different price action patterns.
One element that unites many of them is the so-called horizontal neckline.
In bearish price action patterns like double top, head and shoulders, descending triangle, triple top, etc. a horizontal neckline represents a support from where buyers are placing their orders.
Bearish violation of such a neckline will be considered to be an important sign of strength of the sellers and a strong bearish signal.
In bullish price action patterns like double bottom, inverted head and shoulders pattern, ascending triangle, cup & handle, etc. a horizontal neckline represents a resistance where sellers a placing their orders.
Its bullish violation will a strong bullish signal.
Below is a perfect example how a bullish breakout of a neckline of an inverted head and shoulders pattern on Bitcoin triggered a strong bullish rally.
Here is how a breakout of a neckline of a double top on USDCAD confirmed an initiation of a bearish correctional movement.
The most important thing about these price action signals is that it is very simple to recognize them. You should learn the basic price action rules and a couple of classic price action patterns, it will be more than enough for you to identify confirmed bullish and bearish reversals on any time frame and any trading instrument.
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HOW TO SET STOP LOSS | 3 SIMPLE STRATEGIES 📚
Hey traders,
In this post, we will discuss 3 classic trading strategies and stop placement rules .
I will teach you how to set a safe stop loss, relying on price action.
1️⃣The first trading strategy is a trend line strategy .
The technique implies buying/selling the touch of strong trend lines, expecting a strong bullish/bearish reaction from that.
If you are buying a trend line , you should identify the previous low.
Your stop loss should lie strictly below that.
Buying a test of arising trend line on GBPCHF, stop loss is lying strictly below the previous low.
If you are selling a trend line , you should identify the previous high .
Your stop loss should lie strictly above that.
2️⃣The second trading strategy is a breakout trading strategy .
The technique implies buying/selling the breakout of a structure,
expecting a further bullish/bearish continuation.
If you are buying a breakout of a resistance , you should identify the previous low . Your stop loss should lie strictly below that.
If you are selling a breakout of a support , you should identify the previous high. Your stop loss should lie strictly above that.
Selling a retest of a broken structure on AUDJPY, Stop Loss is strictly set above the previous high.
3️⃣The third trading strategy is a range trading strategy .
The technique implies buying/selling the boundaries of horizontal ranges , expecting bullish/bearish reaction from them.
If you are buying the support of the range , your stop loss should strictly lie below the lowest point of support.
Opening a long position from the support of the range on Dollar Index, stop loss is placed below its support.
If you are selling the resistance of the range , your stop loss should strictly lie above the highest point of resistance.
As you can see, these stop placement techniques are very simple. Following them, you will avoid a lot of stop hunts and manipulations.
How do you set stop loss?
HARMONIC PATTERNS TRADING | ABCD PATTERN & HOW TO TRADE IT
Harmonic ABCD pattern is a classic reversal pattern.
In this article, I will teach you how to recognize that pattern and trade it properly.
This pattern is composed of 3 main elements (based on wicks of the candles):
1️⃣ AB leg
2️⃣ BC leg
3️⃣ CD leg
The pattern is considered to be bullish if AB leg is bearish.
The pattern is considered to be bearish if AB leg is bullish.
AB leg must be a strong movement without corrections within.
A is its initial point and B is its completion point.
BC leg is a correctional movement from B point after a completion of AB leg. The price may fluctuate within that.
B is its initial point and C is its completion point.
CD leg must be a strong movement without corrections within.
C is its initial point and D is its completion point.
❗️ABCD movement is harmonic if the length and the time horizon of AB and CD legs are equal.
By the length, I mean a price change from A to B point and from C to D point.
By the time, I mean a time ranges of AB leg and CD leg.
If the time and length of AB and CD legs are equal, the pattern is considered to be harmonic, and a reversal will be expected from D point at least to B point.
🛑If the pattern is bullish, stop loss must be placed below D point.
🛑If the pattern is bearish, stop loss is placed above D point.
Initial target level is B point.
Usually, after reaching a B point the market returns to a global trend.
What pattern do you want to learn in the next post?
DON'T TRADE THESE SUPPORTS AND RESISTANCES
When it comes to technical analysis,
the understanding of which support and resistance levels to not trade can be as important as knowing which ones to trade.
In this article, I will show you the structure levels that professional traders avoid to maximize their profits and minimize losses.
Invalidated support and resistance
Invalidated support/resistance is the structure that has a clear historical significance, but that lost its strength and was neglected by the market during the last 2 tests.
Have a look at that key horizontal support.
We can see that in the recent past, the price bounced from that multiple times, confirming its significance.
Then, the price suddenly broke and closed below that support.
According to the rules, that structure should turn into a resistance after a violation.
However, after its test, the price bounced and violated that to the upside.
The structure became invalid, and you should not trade that in future.
Resistance in a Bullish Trend
If the market is trading in a bullish trend, according to the rules its last higher high composes a key horizontal resistance.
USDJPY is trading in a strong bullish trend.
The price dropped once it set a new higher high higher close.
It composes a key horizontal resistance.
Always remember, that in a bullish trend, the price tends to set new higher highs and higher lows over time.
Quite often, the test of the level of the last high leads to a further bullish continuation and a formation of a new higher high.
For that reason, it is better not to trade such resistances.
Support in a Bearish Trend
In a bearish trend, the last lower low is always considered to be a key horizontal support.
Above is a price action on USDCHF.
The pair is bearish and recently set a new lower low.
It is a key horizontal support now.
However, in a bearish trend, the price tends to set a new low after a retracement. Most of the time, it does not respect the support based on the last lower low.
I recommend you not to trade such supports.
I always repeat to my students that key levels work, but they are not equal in their significance. While some of them are very strong, some are better to be avoided.
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