Per Darkstar's reference to transitory volitility and Fundamental volitility.
Transitory volatility trade setup... lets say the trend is up and the price retraces and consolidates in a nice range for a long time. The longer it ranges , the more traders have entered long and short with their stops on both sides of the range. The stops can be mental because as soon as price moves against the long or short players they will stop themselves out manually as their pain tolerance is met. So the setup is to enter the break of the range boundry with a stop entry.
If the breakout is long, you are buying before their stops, and when their stops are hit they become market buy orders that use up liquidity and you have your profit limit order just behond their stops. So you have bought before their buy stops and sell to them with your limit order...you win and they lose.
If the breakout is to the south, you have entered the breakout short with a stop entry then the market reaches their stops they become market orders that need liquidity so you have your profit limit order just south of their sell stops and buy from them. So you have sold before their sell stops and once their stops are triggered they buy from you..again you win and they lose.
Fundamental volatility .... Once the above process ends you can enter a trade in the direction back to the consolidation. Why , because the range that the price brokeout of represented the last known fundamental, in balance value.
please feel free to rip apart this thesis.
ps. You do not have to y know where the stops are. Just use your knowledge as a trader. What is the average stop loss amount..10-15-20-25-30-50-75-100 pips, use these same amounts for your profit limit, in the setup example above. Or use common sense structural placement that traders would use for their stops like whole numbers etc.. your profit limit is just behond these.
The point is, Darkstar has said that all you need is a chart and basic logic of where stops are and who 's stop would be triggered. Thats easy....if the breakout is to the north you are gunning for the weak short players stops and if breaks to the south you are gunning for the weak long players stops...the logic is as easy as he says it is.
This is the basis of all trading....remember a stop is just a market order when its hit.They are the gas that is thrown on the current price fire. The brokers do not care if they are entry stops or stop loss orders they are just orders that they can nudge the market towards. Trade with their nudge.
Transitory volatility trade setup... lets say the trend is up and the price retraces and consolidates in a nice range for a long time. The longer it ranges , the more traders have entered long and short with their stops on both sides of the range. The stops can be mental because as soon as price moves against the long or short players they will stop themselves out manually as their pain tolerance is met. So the setup is to enter the break of the range boundry with a stop entry.
If the breakout is long, you are buying before their stops, and when their stops are hit they become market buy orders that use up liquidity and you have your profit limit order just behond their stops. So you have bought before their buy stops and sell to them with your limit order...you win and they lose.
If the breakout is to the south, you have entered the breakout short with a stop entry then the market reaches their stops they become market orders that need liquidity so you have your profit limit order just south of their sell stops and buy from them. So you have sold before their sell stops and once their stops are triggered they buy from you..again you win and they lose.
Fundamental volatility .... Once the above process ends you can enter a trade in the direction back to the consolidation. Why , because the range that the price brokeout of represented the last known fundamental, in balance value.
please feel free to rip apart this thesis.
ps. You do not have to y know where the stops are. Just use your knowledge as a trader. What is the average stop loss amount..10-15-20-25-30-50-75-100 pips, use these same amounts for your profit limit, in the setup example above. Or use common sense structural placement that traders would use for their stops like whole numbers etc.. your profit limit is just behond these.
The point is, Darkstar has said that all you need is a chart and basic logic of where stops are and who 's stop would be triggered. Thats easy....if the breakout is to the north you are gunning for the weak short players stops and if breaks to the south you are gunning for the weak long players stops...the logic is as easy as he says it is.
This is the basis of all trading....remember a stop is just a market order when its hit.They are the gas that is thrown on the current price fire. The brokers do not care if they are entry stops or stop loss orders they are just orders that they can nudge the market towards. Trade with their nudge.