Ok, just thought that I will share of my ideas about the market. Feel free to comment and share your own views on this - a debate would be cool 
From my perspective, trading is about mastering a set of skills.
The simplest skill to master is chart reading, how to read candlesticks, open, close, high, low prices. How to know which levels are significant.
The next skill that can be easily mastered is entry - this includes learning how to do quick lot sizing in real time, knowing where to place stops etc.
The slightly harder skill is exit - where should my targets be and why? How should I capture as much profits from the market as possible.
Once you get a faint idea of how to do all the above, trading starts becoming challenging to you, now you will start facing the psychological problems such as maintaining discipline, consistency and patience.
Then you will like to learn how to scale into trades. How to exit from trades early, how to reenter trades after you have exit, and how to reverse positions within a split second. These are more advanced skills and are not necessary for a trader to be consistently profitable.
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I shall start by talking about entries.
Look at the 15 min chart of EUR/USD i have attached below.
How do we know when we should enter the market? The old adage, "buy low, sell high" is absolutely right advice if you take it in the right context.
1) Buy low in an uptrend, and sell high in a downtrend
2) A high point is 'low' relative to what is going to come later. Similarly, a low point is 'high' relative to what is going to happen later.
For now, we will look at one.
This post is mostly catered to intra-day trading, but if you are a swing trader, or position trader, some of this will make good sense to you as well.
From the chart below, we can see that eur/usd approached the support area marked by the weekly S1 level at around 7am (GMT+0) in the morning. Why did I mention the time? Because timing is everything.
An interlude - How do you profit from the markets? You profit when price moves. If everyone knew what the correct price is, there will be no trading; there will be no price movements. We profit from the inefficiencies in the market. Keep that in mind as I explain.
When price entered the support zone, we see that the red bar left a lower wick. This means that there was some late buying that came in and pushed prices up. We have located a battlefield at a key price area - so now go ahead and mark out this key battlefield.
Now what we want to see is, sellers (i.e. a red bar) try to push prices down again, and we want to see who emerges victorious from the battlefield.
In this case, we see that before London open, sellers made another attempt to push prices down - but to no avail. Buyers came in and support price back up and eventually managed to hold the support level. Well now all you need to see is for buyers to actually come in and make a higher high - i.e. push prices up above the previous bar by 1-2 pips as a confirmation of momentum and buying and that should be a clean entry for you.
What makes one entry better than another?
Like I said, we want to exploit market inefficiencies - so let's answer the question, when is the market most inefficient?
1) When there is a huge number of traders in the market - this means that we should be looking at key significant levels such as daily high/low, weekly open and so on that a large number of traders are watching/ trading based on. It also means that we need to time the market and only enter when we know that there are many traders out there trading together - which is why it is a good idea to stay away from asian sessions.
2) During breakouts. When price movements become extremely volatile, the market is extremely inefficient as emotions of fear and greed come into play. This is when the profit opportunities are the greatest, and it is for this reason that trend following trading is profitable in the long run.
That's all I have to share for now. happy trading.
From my perspective, trading is about mastering a set of skills.
The simplest skill to master is chart reading, how to read candlesticks, open, close, high, low prices. How to know which levels are significant.
The next skill that can be easily mastered is entry - this includes learning how to do quick lot sizing in real time, knowing where to place stops etc.
The slightly harder skill is exit - where should my targets be and why? How should I capture as much profits from the market as possible.
Once you get a faint idea of how to do all the above, trading starts becoming challenging to you, now you will start facing the psychological problems such as maintaining discipline, consistency and patience.
Then you will like to learn how to scale into trades. How to exit from trades early, how to reenter trades after you have exit, and how to reverse positions within a split second. These are more advanced skills and are not necessary for a trader to be consistently profitable.
---
I shall start by talking about entries.
Look at the 15 min chart of EUR/USD i have attached below.
How do we know when we should enter the market? The old adage, "buy low, sell high" is absolutely right advice if you take it in the right context.
1) Buy low in an uptrend, and sell high in a downtrend
2) A high point is 'low' relative to what is going to come later. Similarly, a low point is 'high' relative to what is going to happen later.
For now, we will look at one.
This post is mostly catered to intra-day trading, but if you are a swing trader, or position trader, some of this will make good sense to you as well.
From the chart below, we can see that eur/usd approached the support area marked by the weekly S1 level at around 7am (GMT+0) in the morning. Why did I mention the time? Because timing is everything.
An interlude - How do you profit from the markets? You profit when price moves. If everyone knew what the correct price is, there will be no trading; there will be no price movements. We profit from the inefficiencies in the market. Keep that in mind as I explain.
When price entered the support zone, we see that the red bar left a lower wick. This means that there was some late buying that came in and pushed prices up. We have located a battlefield at a key price area - so now go ahead and mark out this key battlefield.
Now what we want to see is, sellers (i.e. a red bar) try to push prices down again, and we want to see who emerges victorious from the battlefield.
In this case, we see that before London open, sellers made another attempt to push prices down - but to no avail. Buyers came in and support price back up and eventually managed to hold the support level. Well now all you need to see is for buyers to actually come in and make a higher high - i.e. push prices up above the previous bar by 1-2 pips as a confirmation of momentum and buying and that should be a clean entry for you.
What makes one entry better than another?
Like I said, we want to exploit market inefficiencies - so let's answer the question, when is the market most inefficient?
1) When there is a huge number of traders in the market - this means that we should be looking at key significant levels such as daily high/low, weekly open and so on that a large number of traders are watching/ trading based on. It also means that we need to time the market and only enter when we know that there are many traders out there trading together - which is why it is a good idea to stay away from asian sessions.
2) During breakouts. When price movements become extremely volatile, the market is extremely inefficient as emotions of fear and greed come into play. This is when the profit opportunities are the greatest, and it is for this reason that trend following trading is profitable in the long run.
That's all I have to share for now.
happy trading.
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