Beginner's Guide For Traders About Types Of Trading Channels ?

Beginner's Guide For Traders About Types Of Trading Channels ?

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Types Of Trading Channels: 

Trading channels can be very attractive, you just have to know how and where to trade them.

If the price is within a rising channel, then you should only see a place to buy orders.  You should see them when the price hits the bottom of the channel and fast confirmation, maybe a fast-enclosed candlestick.

When the price moves out of an ascending channel you should only be looking to place trades when the price breaks below the channel and not above.  Most times when the price breaks above an ascending channel it becomes fake!  When the price falls below a channel, you should place a sales order when the price is rated by the channel.

When the price is inside a descending channel you should only place orders to sell.  When you reach the top of the price channel and confirm a slowdown, you should keep them.  A recession-filled candle will trigger a full penetration.  When the value moves out of a descending channel, you should only place a trade when it breaks the channel.

Like the ascending channel, it is normally fake when the value falls below a descending channel!

When the price breaks above a descending channel, you should place a purchase order when the price goes out of the channel.

Beginner's Guide For Traders About Consolidating Markets and Golden Zones ?

Beginner's Guide For Traders About Consolidating Markets and Golden Zones ?

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Consolidating Markets, What Are They?

It is a market condition when the price is ranging in between two prices like the image above. 

When the market is Consolidating it is not an optimal time to trade.  You should avoid trading in ranges like above.  The only time trades should be entered is when the price is rejecting the resistance or support zones of the range.

The reasons we do not tend to trade in consolidating markets is because the saying “The Trend is Your Friend” is true. 

There are not as many opportunities in consolidating markets, and when it doubt .. just sit it out!

The Golden Zone …. What Is It?

The Golden Zone is a zone in-between the 0.382 and the 0.618 fibonacci retracement zones.

We call it the golden zone because it is a zone that the price often reverses out of a retracement at and continues in its overall trend. 

In the picture example above, the price came down to the golden zone, 0.618 retracement zone to be exact but all entries inside this golden zone would have been good, valid and profitable entries.

Work on spotting that golden zone and looking for confirmations of an entry!

DO NOT just enter because the price has come into the zone, look for other signs such as candlestick patterns, increased momentum etc.

Do you look for the golden zone when trading? 

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Beginner's Guide For Traders About The Retest Support and Resistance ?

Beginner's Guide For Traders About The Retest Support and Resistance ?

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A Retest is when the price breaks out of a structure and then comes back up to touch it before continuing on its original breakout direction.

In the example above the price broke beneath a support zone, but then it came back up to test the zone as a resistance zone before dropping further.

When the price tested the newly made resistance zone, this is where our retest of the breakout was.  When a breakout occurs, the best place to enter a breakout trade is at the retest of the structure which has just been broken. 

The price does not always retest the structure after a breakout, we like to say - NO RETEST= NO TRADE..

Support & Resistance Zones are the base of technical analysis.  Here's a couple of tips on how to draw them and use them in the correct way.

Firstly S/R ZONES are ZONES not lines.  We see many charts with lines as their S/R zones, this limits the size of the supply and demand range, also limiting your trading area.

Secondly, a support and resistance zone needs to make at least 3 tests to make it valid.  A structure with 3 or more tests confirms it is actually there.  Many new traders get trapped because they trade based on invalid zones.  We hope this helps you improve your S/R zone drawing and trading.

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Beginner's Guide For Traders About Spotting Trend Reversals ?

Beginner's Guide For Traders About Spotting Trend Reversals ?

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Spotting Trending Reversals ?

Knowing how to spot a trend reversal is important in trading.  

Finding trend reversal trades are the most profitable and it cannot be argued.  It’s a fact, there is no larger space of price action than a trend!

The first way you can spot a change in trend is by spotting a change in flow of higher highs and higher lows into lower highs and lower lows.  This is shown in the image above. 

Another way to spot a change in trend is by looking for major structures.  The most common, which cause change in trends, are support and resistance zones, breakout of trend-lines and channels.

The Three Inside Up candlestick pattern is a great way to spot reversals!!

The Three Inside Up Candlestick Patterns are reversal patterns that occur at the bottom of down trends. The first candle should be found at the bottom of a downtrend and is characterized by a long bearish candlestick. The second candle should at least make it up all the way up to the midpoint of the first candle. The third candlestick needs to close above the first candle s high to confirm that buyers have overpowered the strength of the downtrend.

The Three Inside Down candle stick pattern is also a great way to spot reversals!!

Three Inside Down Candlestick Pattern three inside down candlestick pattern is found at the top of uptrends and they suggest a bearish reversal.  the first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick. The second candle should make it up all the way down the midpoint of the first candle. The third candlestick needs to close below the first candle to confirm that sellers have overpowered the strength of the uptrend.

Taking a counter based trade on just one of these confluence is NOT a very good idea at all.  If let’s say you get 2-4 of these confluences it would be a good idea to look for a trade entry.!

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Beginner's Guide For Traders About Bearish Engulfing Candlesticks ?

Beginner's Guide For Traders About Bearish Engulfing Candlesticks ?

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The Bearish Engulfing Candlestick pattern can be very powerful if you identify them in the right place. 

Before we get onto where to find them, you need to know what they look like first.  When the price is rallying upwards and forms a candle which closes below the open of the previous candle, like the image above, that is a bearish engulfing candle.

This candle tells us that the bears (sellers) have taken over the market, but only tells us if this occurs at a significant zone in the market.  In this case, if a bearish engulfing candle occurs at a resistance zone, it’s a valid sell signal.

This candlestick does work better with higher timeframes, so it will be more effective on the daily chart and 4H chart rather than the 1H and 15M chart.

These candlesticks can suggest a retracement (pullback), that’s why it’s important to look for them at zones.  This will give you a confirmation that the price is reversing and that the bears are taking over!

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Beginner's Guide For Traders About Bullish Engulfing Candlesticks ?

Beginner's Guide For Traders About Bullish Engulfing Candlesticks ?

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Who has used this pattern before?

Bullish engulfing candlesticks are the opposite of bearish engulfing candlesticks.

They can be very powerful if used in the correct way.

When the price is trending down and reaches a support zone, this is a great pattern (confirmation) to look for.  It tells us that the bulls (buyers) have taken control of the market.

The bullish engulfing candlestick pattern consists of a bullish candle closing higher then the open of the previous bearish candle like we have shown in the image above. 

When you see this candlestick pattern at a support zone it is a valid buy signal!

Remember, this candlestick pattern is only valid at zones, trend lines and fibonacci zones, if it occurs in a random spot in the market (no mans land) then it could just be a pull back (retracement)

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Beginner's Guide For Traders About Backtesting ?

Beginner's Guide For Traders About Backtesting ?

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Backtesting is possibly one of the most underrated forms of education when it comes to trading.

In the markets, price always repeats itself so using the “replay” button on your Trading View platform is like having a cheat code. 

Backtesting is easy once you know how.

Firstly you need to have a strategy in place which tells you when to enter and exit a trade.  It should include all the variables you use to determine if a trade is worth taking. 

Once you have your strategy you want to test it.  Replay your charts to a time in the past and as the chart moves along place trade setups based on your strategy.

Do this multiple times using the same strategy on the same pair and get a win to loss ratio.  If you placed 50 trade setups and 40 were winners, then the strategy is definitely one that you want to adopt in a live market.

TRADING VIEW HELPFUL TIP #1 

First on the list, learning how to make objects only visible on certain timeframes. 

This is helpful for several reasons, it helps you to keep your chart clean, helps you keep monthly, weekly and daily zones separate. 

How do I do it?

Simply double tap the object you want to edit, go to the “visibility” tab and select what time frames you want the object to be visible on.

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Beginner's Guide For Traders About Support and Resistance Zones ?

Beginner's Guide For Traders About Support and Resistance Zones ?

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Support and Resistance, what are they?

Support & Resistance zones are the base of technical analysis.  Here's a couple of tips on how to draw them and use them in the correct way.

Firstly S/R ZONES are ZONES not lines.  We see many charts with lines as their S/R zones, this limits the size of the supply and demand range, also limiting your trading area.

Secondly, a support and resistance zone needs to make at least 3 tests to make it valid.  A structure with 3 or more tests confirms it is actually there.  Many new traders get trapped because they trade based on invalid zones.  We hope this helps you improve your S/R zone drawing and trading.

They are zones where the price has previously struggled to either break below or above.

This means that they are zones where the price will most likely struggle to either break below or above in the future.  We look for these zones as they provide the best trading opportunities due to the number of reversals that occur at them. 

Resistance zones act as a resistance to the price going up.  Resistance zones are basically ceilings to the market.  When the price breaks above a resistance zone, this tells us that the price is going up but the resistance zone that was just broken becomes support. 

A support zone acts as a floor in the market and provides the market support from falling drastically.  When a support zone is broken it tells us that the prices given directions is downwards, and the broken support zone becomes a resistance zone.

The more a resistance / support zone is tested, the stronger it is.  Price can either break out of these zones or can bounce from them, the stronger the zone the stronger the move from the zone will be. 

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Beginner's Guide For Traders About Stop Loss Placements ?

Beginner's Guide For Traders About Stop Loss Placements ?

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Stop Loss Placements

Do you place your stop losses in valid places or do you just place them anywhere?

Here are 3 valid reasonings to position your stop loss in the right place.

1.  If trading inside 2 zones, it makes sense to place your stop loss outside of the zone.  For eg: if we place a buy at the support (bottom) zone, we would place our stop loss underneath the zone. 

2.  If trading the breakout strategy, it would make sense to place your stop loss underneath or above the zone that the price has just broken above/below.  For eg: If the price breaks above resistance (upper) zone and retests it, we would place our stop loss underneath the newly made support zone.

3.  If trading using trend lines, and you’re trading with the trend, it makes sense to place your stop loss underneath the trend line.  This ones simple - if the price breaks below the trend line, the price has changed trend. 

Remember to always place your stop loss in valid places and make sure your stop loss is significantly smaller than your take profit.

RISK: REWARD IS EXTREMELY IMPORTANT!!!

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