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Learn What to Pay Attention to and How Things Work in the Forex Market If you've read Jack Schwager's 'The New Market Wizards,' he finds there are three things the best of the best traders have in common. One of them is they all have an edge in trading. What is meant by having an edge? It means having a unique approach, system or perspective on the market that is tested, clear and unique. They find these edge's and apply them to the markets. Your goal as a trader is to find an edge. The question is which one? In reality, there are many edge's which will work. There are tons of traders who can make a system work while others cannot with the same system. It is not too important which one you take as long as it has; a) an edge b) it matches your overall personality Finding an edge with a in place is not hard, finding one with b takes a little more effort because it requires you to understand yourself. It means finding a trading method you can trade and live with day in day out - not something that satisfies your ego or fantasies of what you'd like trading to be. We all want to make boatloads of money as fast as possible - this is the time of instant gratification. And rightfully so, who wouldn't prefer making money now as opposed to 3mos or 1year later? The bottom line is you have to find an edge that is adaptable but to find an edge you have to understand how things work and what to look for. Once you have those, you can go about finding an edge. What we are going to cover in this eBook is; 1) how things work in the forex market 2) how to find the 'where' to get in 3) how you can get an edge knowing these two things
In summary, impulsive moves have a force and strength behind them and are clearly identifiable via the chart if you can find 3 simple characteristics; 1) Impulsive Moves tend to have the largest candles in a series or amongst the most recent price action 2) Impulsive Moves tend to produce more candles of the same color 3) Impulsive Moves often produce candles with smaller wicks (tails) and closes near the highs if the direction is up and lows if the direction is down If there is any type of movement or base chart formation you will want to spot more than anything else, it is impulsive moves. Once you find them, all you have to do is get in the same direction they are moving and find the right place to get in. Getting in the same direction is not complicated but learning how to find the right place takes a little more skill. We will address the 'how' for this in the next section. Before we do, we will show you some examples of impulsive moves.
Now ask; Does the down move have the largest candles in the set? Check Does the sell-off tend to have most of the candles one color (red)? Check Does the sell-off have smaller wicks meaning more price acceptance? Check Before we go into the next example, lets take a look and see if the logic of counter-trend trading holds up. If you go long against the move, you will have to be quick to take profits. Why? Because if you notice, there are a) not many of them and b) they are all followed up with another red candle. Considering this is a hourly chart, each candle is 1hr's worth of price action. Thus, logically to make money counter-trend trading this pair, you'd have to a) get in at the right candle and b) be happy with not making much since each blue candle barely gains any ground. Simply put, the logic of counter-trend trading doesn't hold up with the natural movements of the market.
Chris Capre, Founder - Second Skies http://2ndskiesforex.com
Regardless of the oscillation, the majority of the move was to the downside so this is where the real gains were to be made. Lets go through the checklist to see if all three of the characteristics of imoves were present; Largest candles red = check Majority of candle red = check Majority of red candles with staller wicks = check, Then its an impulsive move. Note*not all impulsive moves require all three characteristics (2 out of 3 is preferred to be safe). Thus, you have the formula for finding the moves the institutional players are involved in (imoves). Learn how to spot these moves inside and out and you will find the right moves / direction to get into. Now its time to discuss the location/place/where to get into these moves.
If you were looking to take advantage of the small range trading opportunity after the sell-off, being aware of those pivots would have changed the game for you and given you a precise entry and exit point. If you were looking to sell in the market open, you would have had a clear line in the sand to sell and if you were looking to buy into a dip, you would also have had an entry point so pivots really solve one of the most challenging piece of the puzzle for daytrader (entries and exits). Thus learning how to use these on a day trading basis will greatly improve your trading. Taking a look at another example below,