There is a daily routine in the maze. Get along with it. Wherever You are You have to know the European, American and Asian trading Hours. There are times when everyone is sleeping and time when everyone is very busy. The intersect between Asian and European and European and American is the busiest.
The volume grows bigger and the price is more likely to move. So it's just up to Your trading style if You are looking for more adrenaline or You decide to stay awake in night waiting for a percent.
The opening of market in each country gives opportunity to determine the direction for each market. So when You're trading American Timezone You can choose to go with the daily direction. There are days when it works. However sometimes the market just won't move and stays in a range. Good opportunity to buy low and sell highs. On the other side there are days when market it heading towards it's gains / losses in much bigger scale. On that days try to catch the trend.
You can choose to trade on certain hours. E.g. let's say You'll open a position before the Americans will close their markets. And wait for another day to find out whether You were right or wrong. This is called end of day trade. You can apply it to weeklies and trade on Friday. Or You can watch for cycles that repeats itself in a Yearly manner. So then just "Sell in May and go away".
Tuesday, May 5, 2015
Maze's Walls
Graphical representation of price has it's own walls and corners. It could be well defined by using the trend-lines. It has ceiling and floor. That's the support and resistance.
When You want to find Your way to maze's treasury. Just follow it. Use the graphical tools to draw a trend lines. Just connect lower low and next lower lows to determine the descending trend line. Or in uptrend connect higher high and next higher high to find an uptrending line. When in uptrend, just wait for price to break the trendline and short. Vice versa when in downtrend wait for price to break the descending line and buy the break.
Vertical lines could be usefull on higher timeframes to find the levels where some traders are stuck. Find highest highs and lowest lows and draw a vertical line to find supports (from lows) and resistances (from highs). Expect either bounce from this levels or it's breaks.
Use Channels to catch the trend. Just use trend line and then copy it to opposite extrema. So when You have a downtrend and You drawed the trend line heading down from highs use opposite lows on the opposite side of channel and move it there. You'll find a trend channel. Once the channel is established look for thirds of it's widht. In downtrend channel short it in upper third. In ascending channel buy at lower third. Once the downtrend channel is broken in the lower trend line get out from the position. Do no buy. Once the uptrend channel is broken in the upper trend line get out. Do not short.
When You want to find Your way to maze's treasury. Just follow it. Use the graphical tools to draw a trend lines. Just connect lower low and next lower lows to determine the descending trend line. Or in uptrend connect higher high and next higher high to find an uptrending line. When in uptrend, just wait for price to break the trendline and short. Vice versa when in downtrend wait for price to break the descending line and buy the break.
Vertical lines could be usefull on higher timeframes to find the levels where some traders are stuck. Find highest highs and lowest lows and draw a vertical line to find supports (from lows) and resistances (from highs). Expect either bounce from this levels or it's breaks.
Use Channels to catch the trend. Just use trend line and then copy it to opposite extrema. So when You have a downtrend and You drawed the trend line heading down from highs use opposite lows on the opposite side of channel and move it there. You'll find a trend channel. Once the channel is established look for thirds of it's widht. In downtrend channel short it in upper third. In ascending channel buy at lower third. Once the downtrend channel is broken in the lower trend line get out from the position. Do no buy. Once the uptrend channel is broken in the upper trend line get out. Do not short.
Financial Market's Maze Surival Guide
To survive in Financial Markets You have to learn how to walk in the Maze. There are pits. There are traps. You can slip into the pit once trading too heavily. Or You can fall into the trap when letting Your position in negative profit. Or You can be trapped in losing streak.
To resist You need discipline. Do not hesitate to close Your position once You'll see nothing but loses for several candles. Use daily limits. Set it to capital divided by days You want to survive. Imagine You have 600$ capital. You want to survive for 30 days. So trade as many as 20$ loss per day at maximum.
Stick to winners. Once You'll see the position is winning move the stop loss to break-even as soon as possible. Set the target as multiply of initial stop loss. When Your stop is 50$ take as near as 200$ when possible.
Choose one or two markets and learn them well. You will experience that once You'll know the behaviour of the Symbol You'll get the advantage across other profit willing traders.
Choose Your style. Either You can buy low, sell high or You'll try to go with the trend. Generally the lower timeframes are more suitable for the prior one. So when on FX 5-minutes chart buy low and sell high. While on the Daily S&P catch the bull market and buy. Of course when stalking the trend it's best to buy pullbacks. So just wait when the market will come lower and buy.
Watch the Volume. It gives a lot of information regarding what are the smart money doing. High spikes volumes in oversold zone could potentionally mean reversal. Lowering volume in uptrend can signal it's losing breath.
To resist You need discipline. Do not hesitate to close Your position once You'll see nothing but loses for several candles. Use daily limits. Set it to capital divided by days You want to survive. Imagine You have 600$ capital. You want to survive for 30 days. So trade as many as 20$ loss per day at maximum.
Stick to winners. Once You'll see the position is winning move the stop loss to break-even as soon as possible. Set the target as multiply of initial stop loss. When Your stop is 50$ take as near as 200$ when possible.
Choose one or two markets and learn them well. You will experience that once You'll know the behaviour of the Symbol You'll get the advantage across other profit willing traders.
Choose Your style. Either You can buy low, sell high or You'll try to go with the trend. Generally the lower timeframes are more suitable for the prior one. So when on FX 5-minutes chart buy low and sell high. While on the Daily S&P catch the bull market and buy. Of course when stalking the trend it's best to buy pullbacks. So just wait when the market will come lower and buy.
Watch the Volume. It gives a lot of information regarding what are the smart money doing. High spikes volumes in oversold zone could potentionally mean reversal. Lowering volume in uptrend can signal it's losing breath.
Maze's Rules
Rule #1 :
USE LOW LEVERAGE. SKIP THE 1:500 OR YOU'LL BE RUINED INSTANTLY ONCE YOUR DISCIPLINE WILL SLIGHTLY DECLINE.
Rule #2 :
USE YOUR OWN STRATEGY. WORK ON IT AND IMPROVE IT. KEEP IT AS SIMPLE AS POSSIBLE.
Rule #3 :
LEARNING TO TRADE WILL TAKE A LOT OF TIME. RESIST THE TEMPTATION TO ABORT.
Rule #4 :
KEEP TRADING SMALL. USE ONLY MONEY YOU CAN AFFORD TO LOSE.
Rule #5 :
USE TIGHT STOP-LOSSES AND AS SOON AS POSSIBLE MOVE STOP TO BREAK-EVEN.
USE LOW LEVERAGE. SKIP THE 1:500 OR YOU'LL BE RUINED INSTANTLY ONCE YOUR DISCIPLINE WILL SLIGHTLY DECLINE.
Rule #2 :
USE YOUR OWN STRATEGY. WORK ON IT AND IMPROVE IT. KEEP IT AS SIMPLE AS POSSIBLE.
Rule #3 :
LEARNING TO TRADE WILL TAKE A LOT OF TIME. RESIST THE TEMPTATION TO ABORT.
Rule #4 :
KEEP TRADING SMALL. USE ONLY MONEY YOU CAN AFFORD TO LOSE.
Rule #5 :
USE TIGHT STOP-LOSSES AND AS SOON AS POSSIBLE MOVE STOP TO BREAK-EVEN.
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