SELL @ CMP
SL: 1727.80
TP1: 1715.64
TP2: 1707.30
Risk Reward Ratio: 1:4
Follow proper risk management, always take not more than 3% of your capital
Thursday, May 28, 2020
GOLD ANALYSIS (15 MINUTES) SELL SETUP
SELL @ CMP
SL: 1727.80
TP1: 1715.64
TP2: 1707.30
Risk Reward Ratio: 1:4
Follow proper risk management, always take not more than 3% of your capital
Sunday, June 23, 2019
BREAKOUT TRADING STRATEGIES
A commonly quoted trading principle is buy low and sell high, and that makes a lot of sense, doesn’t it? Nobody wants to buy a financial instrument when it has reached a peak, do they? It would make more sense to sell at the peak, typically. Well, some people disagree, and some of them have been very successful in this thinking.
The first such sentiment I heard came as I was reading some of Jesse Livermore’s quotes online, and this one said, “Remember that stocks are never too high for you to begin buying or too low to begin selling”. Odd, I thought to myself, so I did some more research and found that he had made a fortune during the panic of 1907. Stocks had taken a dive and yet Livermore still shorted the markets – hoe traded the breakouts. This was his primary trading strategy, which later earned him the name ‘The Great Bear of Wall Street’.
What are breakouts
It is the nature of markets to move in a range within ‘normal’ prices. A stock or any other financial asset cannot remain stagnant because there will always be buyers and sellers swaying its value, yet it will remain within an ‘acceptable’ range. As the price nears the top, buyers stop buying and begin to close their positions, then, the opposite happens as the prices come close to the bottom. This creates a see-saw which forms an oscillating pattern between support and resistance levels. See pivot points strategy for more information)
However, sometimes these support and resistance levels are broken, and prices break away from the previous range, often forming a trend. When this happens, it is referred to as a breakout.
These breakouts are what traders like Jesse Livermore sought and that made them fortunes. You too can learn to identify breakouts and make yourself great profits.
How to identify potential breakouts
There are several signs of a potential breakout, but the main ones are:
Broken support and resistance levels
A range in a market is determined by the support and resistance levels, which are values within which the markets are comfortable. Prices will bounce off these support and resistance levels until something happens, and when that happens, a breakout occurs. When you see dominant support and resistance lines broken through, then a potential breakout could be in the works.
The image above is of the CHF/JPY pair within a range for about 2 months after which there was a breakout. As you can see the support level was broken through at points B and E, yet the pair remained in range. The resistance level was also broken through 3 times at points A, C and D, yet the pair remained in range. So, this tells us that there’s more to it than just waiting until a support or resistance level is broken through.
To confirm a successful breakout, you have to confirm your analysis using other indicators, like the stochastic oscillator below.
At points A, C and D, the stochastic oscillator showed overbought market conditions, suggesting prices would come back down. Then, it showed oversold conditions at points B and E, again suggesting prices would come back up. Finally, the markets were overbought at point F, and that’s when the breakout occurred.
The breakout could also have been confirmed by moving averages. In the images above, the green line represents the 200-period SMA, and when prices broke below this level, the breakout began. Candlestick patterns could also have been used, whereby we see exhaustive candles from A to E.
The easiest way is to just be patient. One candle closing above a resistance level or below a support level should not be enough for you to risk your investment. Give the move time and observe how the other candles behave. Rushing at the first sign of a breakout is why breakout strategy traders experience so many fake-outs.
Turned tables
When a breakout occurs, support and resistance levels will serve the opposite purpose. For a bullish breakout, the resistance will turn into a support level and vice versa. This phenomena can be observed in the Forex charts online above at point F when the support level turned to resistance.
Fundamental analysis
Another factor to consider for breakouts are critical news announcements. Below, the EUR/USD had been within a range for around 6 months until the US elections were held causing the US dollar to rise in value.
Important news events can also initiate a breakout, and you should always be aware of this when looking for breakouts and have the economic calendar Forex with you.
What to remember when trading breakouts
Trading breakouts in the market is a risky strategy, although the returns often outweigh the risks. Anyway, here are some things to remember whenever you’re using the breakouts strategy:
Fake-outs are common
As I mentioned before, it is the nature of markets to remain within a range, so even when there is a slight breakout, the prices will attempt to resume the previous range. While trading breakouts, you will often suffer from fake-outs, there is no getting around that, but you can minimize your losses from these.
First, remember to always maintain proper risk management strategies. We’ve discussed Risk-management on Forex in a previous post, go back to it because it’s going to be the difference between fortunes and a blown account. The 2 main points are:
- Never risk too much of your account’s capital, 5% tops. On a smaller account, you can go up to 10%, but this is still not advisable
- Always, always use a stop-loss. This would be the previous support level on a bearish breakout and the previous resistance level on a bullish breakout
The chart below highlights all the areas where a breakout strategy could have resulted in disaster:
The breakout will lead to a trend
As soon as a breakout occurs and the news is out, traders will get into that market, forming a trend. Ride the trend and hold on to the trade as long as you can to enjoy the highest returns. An easy way to do this would be to use a trailing stop, but remember to give it space because markets may attempt to reverse the trend several times.
Personally, I prefer to manually adjust my stop loss, but for those who don’t have time sitting in front of their Forex trading platforms, the trailing stop would be just as good.
Thursday, December 27, 2018
Wednesday, December 19, 2018
Tuesday, December 18, 2018
BITCOIN ANALYSIS 18TH DECECEMBER 2018
Bitcoin has been quite impulsive with the recent bullish momentum, leading the price towards $3,500-600 area. The price is currently residing inside the resistance area of $3,500-600 area from where it is expected to push higher towards $4,000 in the coming days if it manages to break above $3,600 area with a daily close. As the price remains above $3,000 area, the bullish pressure is expected to continue. Moreover, a daily close above $3,600 is expected to lead the price towards $4,000 area in the future.
SUPPORT: 3,000, 3,350, 3,500
RESISTANCE: 3,600, 4,000
BIAS: BULLISH
MOMENTUM: VOLATILE but IMPULSIVE
Monday, November 5, 2018
Wednesday, October 24, 2018
Monday, October 8, 2018
10 STEPS TO BUILDING A WINNING TRADING PLAN
There is an old saying in business: "Fail to plan and you plan to fail." It may sound glib, but those who are serious about being successful, including traders, should follow these eight words as if they were written in stone. Ask any trader who makes money on a consistent basis and they will tell you, "You have two choices: You can either methodically follow a written plan, or fail."
If you have a written trading or investment plan, congratulations! You are in the minority. While it is still no absolute guarantee of success, you have eliminated one major roadblock. If your plan uses flawed techniques or lacks preparation, your success won't come immediately, but at least you are in a position to chart and modify your course. By documenting the process, you learn what works and how to avoid repeating costly mistakes.
Whether or not you have a plan now, here are some ideas to help with the process.
Disaster Avoidance 101
Trading is a business, so you have to treat it as such if you want to succeed. Reading some books, buying a charting program, opening a brokerage account and starting to trade is not a business plan - it is a recipe for disaster. (For more, see Investing 101.)
Once a trader knows where the market has the potential to pause or reverse, they must then determine which one it will be and act accordingly. A plan should be written in stone while you are trading, but subject to re-evaluation once the market has closed. It changes with market conditions and adjusts as the trader's skill level improves. Each trader should write their own plan, taking into account personal trading styles and goals. Using someone else's plan does not reflect your trading characteristics.
Building the Perfect Master Plan
What are the components of a good trading plan? Here are 10 essentials that every plan should include:
1. Skill Assessment
Are you ready to trade? Have you tested your system by paper trading it, and do you have confidence that it works? Can you follow your signals without hesitation? Trading in the markets is a battle of give and take. The real pros are prepared and they take their profits from the rest of the crowd who, lacking a plan, give their money away through costly mistakes.
2. Mental Preparation
How do you feel? Did you get a good night's sleep? Do you feel up to the challenge ahead? If you are not emotionally and psychologically ready to do battle in the markets, it is better to take the day off – otherwise, you risk losing your shirt. This is guaranteed to happen if you are angry, preoccupied or otherwise distracted from the task at hand. Many traders have a market mantra they repeat before the day begins to get them ready. Create one that puts you in the trading zone. Additionally, your trading area should be free of distractions. Remember, this is a business, and distractions can be costly.
3. Set Risk Level
How much of your portfolio should you risk on any one trade? This will depend on your trading style and risk tolerance. It can range anywhere from around 1% to as much as 5% of your portfolio on a given trading day. That means if you lose that amount at any point in the day, you get out and stay out. It's better to keep powder dry to fight another day if things aren't going your way. (For more, read "What Is Your Risk Tolerance?")
4. Set Goals
Before you enter a trade, set realistic profit targets and risk/reward ratios. What is the minimum risk/reward you will accept? Many traders will not take a trade unless the potential profit is at least three times greater than the risk. For example, if your stop loss is a dollar loss per share, your goal should be a $3 profit. Set weekly, monthly and annual profit goals in dollars or as a percentage of your portfolio, and re-assess them regularly. (For more, see "Calculating Risk and Reward.")
5. Do Your Homework
Before the market opens, check what is going on around the world? Are overseas markets up or down? Are index futures such as the S&P 500 or Nasdaq 100 exchange-traded funds up or down in pre-market? Index futures are a good way of gauging market mood before the market opens.
What economic or earnings data is due out and when? Post a list on the wall in front of you and decide whether you want to trade ahead of an important report. For most traders, it is better to wait until the report is released than take unnecessary risk. Pros trade based on probabilities. They don't gamble.
6. Trade Preparation
Whatever trading system and program you use, label major and minor support and resistance levels, set alerts for entry and exit signals and make sure all signals can be easily seen or detected with a clear visual or auditory signal.
7. Set Exit Rules
Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals, but pay very little attention to when and where to exit. Many traders cannot sell if they are down because they don't want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don't take it personally. Professional traders lose more trades than they win, but by managing money and limiting losses, they still end up making profits.
Before you enter a trade, you should know where your exits are. There are at least two for every trade. First, what is your stop loss if the trade goes against you? It must be written down. Mental stops don't count. Second, each trade should have a profit target. Once you get there, sell a portion of your position and you can move your stop loss on the rest of your position to breakeven if you wish. As discussed above, never risk more than a set percentage of your portfolio on any trade.
8. Set Entry Rules
This comes after the tips for exit rules for a reason: Exits are far more important than entries. A typical entry rule could be worded like this: "If signal A fires and there is a minimum target at least three times as great as my stop loss and we are at support, then buy X contracts or shares here."
Your system should be complicated enough to be effective, but simple enough to facilitate snap decisions. If you have 20 conditions that must be met and many are subjective, you will find it difficult if not impossible to actually make trades. Computers often make better traders than people, which may explain why nearly 50% of all trades that now occur on the New York Stock Exchange are computer-program generated.
Computers don't have to think or feel good to make a trade. If conditions are met, they enter. When the trade goes the wrong way or hits a profit target, they exit. They don't get angry at the market or feel invincible after making a few good trades. Each decision is based on probabilities. (For more, read: "The NYSE and Nasdaq: How They Work.")
9. Keep Excellent Records
All good traders are also good record keepers. If they win a trade, they want to know exactly why and how. More importantly, they want to know the same when they lose, so they don't repeat unnecessary mistakes. Write down details such as targets, the entry and exit of each trade, the time, support and resistance levels, daily opening range, market open and close for the day, and record comments about why you made the trade and lessons learned.
Also, you should save your trading records so that you can go back and analyze the profit or loss for a particular system, drawdowns (which are amounts lost per trade using a trading system), average time per trade (which is necessary to calculate trade efficiency) and other important factors, and also compare them to a buy-and-hold strategy. Remember, this is a business and you are the accountant.
10. Perform a Post-Mortem
After each trading day, adding up the profit or loss is secondary to knowing the why and how. Write down your conclusions in your trading journal so you can reference them later.
The Bottom Line
Successful paper trading does not guarantee you will have success when you begin trading real money and emotions come into play. But successful paper trading does give the trader confidence the system they are going to use actually works. Deciding on a system is less important than gaining enough skill to make trades without second guessing or doubting the decision.
There is no way to guarantee a trade will make money. The trader's chances are based on their skill and system of winning and losing. There is no such thing as winning without losing. Professional traders know before they enter a trade that the odds are in their favor or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they never make money.
Traders who win consistently treat trading as a business. While it's not a guarantee that you will make money, having a plan is crucial if you want to be consistently successful and survive in the trading game.
If you have a written trading or investment plan, congratulations! You are in the minority. While it is still no absolute guarantee of success, you have eliminated one major roadblock. If your plan uses flawed techniques or lacks preparation, your success won't come immediately, but at least you are in a position to chart and modify your course. By documenting the process, you learn what works and how to avoid repeating costly mistakes.
Whether or not you have a plan now, here are some ideas to help with the process.
Disaster Avoidance 101
Trading is a business, so you have to treat it as such if you want to succeed. Reading some books, buying a charting program, opening a brokerage account and starting to trade is not a business plan - it is a recipe for disaster. (For more, see Investing 101.)
Once a trader knows where the market has the potential to pause or reverse, they must then determine which one it will be and act accordingly. A plan should be written in stone while you are trading, but subject to re-evaluation once the market has closed. It changes with market conditions and adjusts as the trader's skill level improves. Each trader should write their own plan, taking into account personal trading styles and goals. Using someone else's plan does not reflect your trading characteristics.
Building the Perfect Master Plan
What are the components of a good trading plan? Here are 10 essentials that every plan should include:
1. Skill Assessment
Are you ready to trade? Have you tested your system by paper trading it, and do you have confidence that it works? Can you follow your signals without hesitation? Trading in the markets is a battle of give and take. The real pros are prepared and they take their profits from the rest of the crowd who, lacking a plan, give their money away through costly mistakes.
2. Mental Preparation
How do you feel? Did you get a good night's sleep? Do you feel up to the challenge ahead? If you are not emotionally and psychologically ready to do battle in the markets, it is better to take the day off – otherwise, you risk losing your shirt. This is guaranteed to happen if you are angry, preoccupied or otherwise distracted from the task at hand. Many traders have a market mantra they repeat before the day begins to get them ready. Create one that puts you in the trading zone. Additionally, your trading area should be free of distractions. Remember, this is a business, and distractions can be costly.
3. Set Risk Level
How much of your portfolio should you risk on any one trade? This will depend on your trading style and risk tolerance. It can range anywhere from around 1% to as much as 5% of your portfolio on a given trading day. That means if you lose that amount at any point in the day, you get out and stay out. It's better to keep powder dry to fight another day if things aren't going your way. (For more, read "What Is Your Risk Tolerance?")
4. Set Goals
Before you enter a trade, set realistic profit targets and risk/reward ratios. What is the minimum risk/reward you will accept? Many traders will not take a trade unless the potential profit is at least three times greater than the risk. For example, if your stop loss is a dollar loss per share, your goal should be a $3 profit. Set weekly, monthly and annual profit goals in dollars or as a percentage of your portfolio, and re-assess them regularly. (For more, see "Calculating Risk and Reward.")
5. Do Your Homework
Before the market opens, check what is going on around the world? Are overseas markets up or down? Are index futures such as the S&P 500 or Nasdaq 100 exchange-traded funds up or down in pre-market? Index futures are a good way of gauging market mood before the market opens.
What economic or earnings data is due out and when? Post a list on the wall in front of you and decide whether you want to trade ahead of an important report. For most traders, it is better to wait until the report is released than take unnecessary risk. Pros trade based on probabilities. They don't gamble.
6. Trade Preparation
Whatever trading system and program you use, label major and minor support and resistance levels, set alerts for entry and exit signals and make sure all signals can be easily seen or detected with a clear visual or auditory signal.
7. Set Exit Rules
Most traders make the mistake of concentrating 90% or more of their efforts in looking for buy signals, but pay very little attention to when and where to exit. Many traders cannot sell if they are down because they don't want to take a loss. Get over it or you will not make it as a trader. If your stop gets hit, it means you were wrong. Don't take it personally. Professional traders lose more trades than they win, but by managing money and limiting losses, they still end up making profits.
Before you enter a trade, you should know where your exits are. There are at least two for every trade. First, what is your stop loss if the trade goes against you? It must be written down. Mental stops don't count. Second, each trade should have a profit target. Once you get there, sell a portion of your position and you can move your stop loss on the rest of your position to breakeven if you wish. As discussed above, never risk more than a set percentage of your portfolio on any trade.
8. Set Entry Rules
This comes after the tips for exit rules for a reason: Exits are far more important than entries. A typical entry rule could be worded like this: "If signal A fires and there is a minimum target at least three times as great as my stop loss and we are at support, then buy X contracts or shares here."
Your system should be complicated enough to be effective, but simple enough to facilitate snap decisions. If you have 20 conditions that must be met and many are subjective, you will find it difficult if not impossible to actually make trades. Computers often make better traders than people, which may explain why nearly 50% of all trades that now occur on the New York Stock Exchange are computer-program generated.
Computers don't have to think or feel good to make a trade. If conditions are met, they enter. When the trade goes the wrong way or hits a profit target, they exit. They don't get angry at the market or feel invincible after making a few good trades. Each decision is based on probabilities. (For more, read: "The NYSE and Nasdaq: How They Work.")
9. Keep Excellent Records
All good traders are also good record keepers. If they win a trade, they want to know exactly why and how. More importantly, they want to know the same when they lose, so they don't repeat unnecessary mistakes. Write down details such as targets, the entry and exit of each trade, the time, support and resistance levels, daily opening range, market open and close for the day, and record comments about why you made the trade and lessons learned.
Also, you should save your trading records so that you can go back and analyze the profit or loss for a particular system, drawdowns (which are amounts lost per trade using a trading system), average time per trade (which is necessary to calculate trade efficiency) and other important factors, and also compare them to a buy-and-hold strategy. Remember, this is a business and you are the accountant.
10. Perform a Post-Mortem
After each trading day, adding up the profit or loss is secondary to knowing the why and how. Write down your conclusions in your trading journal so you can reference them later.
The Bottom Line
Successful paper trading does not guarantee you will have success when you begin trading real money and emotions come into play. But successful paper trading does give the trader confidence the system they are going to use actually works. Deciding on a system is less important than gaining enough skill to make trades without second guessing or doubting the decision.
There is no way to guarantee a trade will make money. The trader's chances are based on their skill and system of winning and losing. There is no such thing as winning without losing. Professional traders know before they enter a trade that the odds are in their favor or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they never make money.
Traders who win consistently treat trading as a business. While it's not a guarantee that you will make money, having a plan is crucial if you want to be consistently successful and survive in the trading game.
Monday, August 20, 2018
EURUSD DAILY CHART ANALYSIS (20 AUG 2018 @ 23:07)
USD is still going strong in the market. EUR having no strong economic report or event to be held this week is expected to continue its struggle to gain momentum against USD whereas any positive outcome of the USD events is expected to help regain momentum in the coming days.
SUPPORT: 1.1300, 1.1150
RESISTANCE: 1.15, 1.17
BIAS: BEARISH
MOMENTUM: VOLATILE
SUPPORT: 1.1300, 1.1150
RESISTANCE: 1.15, 1.17
BIAS: BEARISH
MOMENTUM: VOLATILE
Monday, July 23, 2018
EURUSD DAILY ANALYSIS
FUNDAMENTAL ANALYSIS & TECHNICAL ANALYSIS
AUD/USD has been quite corrective and volatile between the price range of 0.73 to 0.75 area which is still expected to push lower in the coming days as of the trend momentum. AUD has been quite positive with the recent gains against USD which is expected to last for short-term.
Ahead of the high impact economic reports to be published on Thursday this week including CPI report which is expected to show an increase to 0.5% from the previous value of 0.4% and Trimmed Mean CPI report is expected to be unchanged at 0.5%. Today AUD CB Leading Index report is going to be published which previously was at 0.1% and expected to have an optimistic outcome.
On the other hand, this week Core Durable Goods report is going to be published on Thursday which is expected to increase to 0.5% from the previous value of 0.0% and Average GDP report on Friday is expected to increase to 4.0% from the previous value of 2.0. Today Existing Home Sales report is going to be published which is expected to have a slight increase to 5.46M from the previous figure of 5.43M.
As of the current scenario, both currencies in this pair are quite optimistic with the upcoming economic reports which might lead to further volatility in the pair but USD may have an upper hand over AUD having bigger gap in the forecasts with more optimism in the market sentiment.
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