Forex Education -

He is on pace to become the highest earner in Jeopardy! history. Who is James Holzhauer.

Jeopardy! winners and winning traders have lots of things in common Jeopardy! is a  game show where three contestents compete in providing the question to answers under topic headings.   Since you need to answer with a question, you need to form your response in the form of a question like "Who is Alex Trebek?"  That would be in response to "He hosts the long running game show where contestants answer in the form of a question". Another response, "Who is James Holzhauer?", would be the response to the answer "He is on pace to becoming the highest earner in Jeopardy! history" The last 10 days on the show has seen a professional sports gambler named James Holzhauer race through the games without much competition.  His 10 day total winnings are $697,787 or $69,778.70 per day. That pace is more than double the all-time record holders average.   That record holder won 74 consecutive days and amassed $2.52M over that period.  That comes to $32,054 per day If Holzhauer were to go 74 days without losing, he would win $5.16M.   Judging from his results to date, it may become his full time job for the entire year.  He is without competition.  No one is close.  The Game. In Jeopardy!, the subject categories are broad in topic like "Shakespearean Plays".  They could also have clever/fun topics.   For examples, the category heading might by "All my Ex-es" and the contestants will be told that the answer all start with letters "Ex".  There are categories that suit the contestants skill, and other that don't. There are two rounds with round 1 having values for correct answers from $200 to $1000 or $15,000 in total on the board.  Round 2 has values from $400 to $2000 or $24,000.  If a contestant were to answer every question correctly, he would win $39,000.  So how can Holzhauer haul in $69,778.70 per show so far? Leverage.   The cumulative totals can be leveraged higher as there is one Double Jeopardy question in game one and two Double Jeopardy questions in game 2 (three in total). Those questions allow the contestant - who is in charge of the board (i.e. answered the last question correctly) - to wager up to his current winnings.  So if the contestant has $5000, he/she can in effect wager $5000 (and double his/her total). The game ends with Final Jeopardy question - another leverage opportunity -  where the contestants can wager all or part of their total winnings (again on a determined topic).  The winner is the one with the most money after Final Jeopardy.  The winning process To  win the game, you need to have broad knowledge on many topics.  You also need  to be ready to press a button with your thumb, on a hand held devise as soon as Alex Trebek finishes  reading the question, and do that ahead of the competition (i.e, you need to anticipate and react).  In effect the game process involves Anticipating responses from the topic chosen, Reading the question,  Listening to the question audibly, Processing the information quickly, and Anticipating with an action (press the button at the right time).  Before game requires: A plan on how to  play the game Immense knowledge Practice. Practice. Practice.  Oh, you also have to hope you are right as a correct answer is rewarded with a dollar value, but a wrong answer leads to a negative value. The higher the value, the higher the dollar risk.  Finally, it does help to utilize leverage opportunities.    Since getting hooked on the show this last week, I started to think if traders/trading relates to contestants/the Jeopardy! game? The answer is a resounding "YES!"  Let's go through some key similariities from the two. Hopefully it will help you up your trading game. 1.  The Game Plan  In my book, Attacking Currency Trends, I outline a game plan for traders. That game plan is to trade trends and keep fear to a minimum.   Trends are where the most money is made and lost. It is essential that you stay on the right side of a trend.  Don't do it, and you lose  Look back on your biggest losses and I guarantee it was because you traded against the trend.   In Jeopardy!, the trend is "knocking it out of the park" in category topics that you know.  I am not great in "Famous baroque composers" but "The Masters" (as in the golf tournament) or "Technical Analysis", would be topics I would ride the trend with lots of confidence.    What about fear? In trading you define your risk, and limit your risk using technical tools.   A trend line or 100 day MA are implicit "lines in the sand" that say bullish above, and bearish below.  If you know that line is your risk line, and you look to limit your risk by trading near it, then do the final step of accepting the risk in your mind. Once you accept the risk,  your fear should disappear. Because you are doing that process, and your risk is limited, you have a greater chance to "make more than your risk".  All of which, should lower your fear. In Jeopardy!, the most successful players, like James, are defining, and limiting risk on each question read ("Do I answer it or not?"), and also accepting that risk every time the button is pressed (i.e. I am 80% sure but I accept that risk of loss).  A statistical fact from James Holzhauer's performance to date (CLICK HERE for interesting game facts and comparison to another super contestant), shows he has answered 341 questions correctly with 13 incorrect responses.  That is incredible win/loss percentage, and it does come with outright knowledge, but you can understand why he is so fearless. He has defined and limited his risk, and accepts the risk by pressing the button.2.  KnowledgeYou can't be successful in trading without knowledge, nor the desire to learn.   One of the more frustrating things I hear from traders is how they lost money buying some signal provider.  A signal provider is NOT knowledge. They tend to be the opposite of knowledge.  You need to learn to fish for yourself.   At Forexlive, we all try to teach, coach, and mentor, with not only timely information but trading knowledge. I could tell you to sell the EURUSD on a break of the 1.1282-84 area, but I also show you the chart that has the 200 hour MA and a swing area converged at that area.  Hence a break would shift the bias to the downside.   The price should go lower.  I post everyday using the same tools and trading decisions. I wrote about the "yellow area" and the 200 hour MA many times.   One of the things that James Holzhauer said when asked how he prepared, was that he "studied topics that he was most uncomfortable with".  He is already incredibly smart, but he had a desire to make himself better in things he was not good at.  He also said that there is a "limit to knowledge". You can't learn it all.  There is information that borders on the absurd in knowing.  For example, knowing all the Canadian birds in existence would be a waste of time, but knowing the Loon reside in every province and territory and is on the dollar coin, would be something too know, and a potential question (or answer).  In trading, if you know too much, you can lose track of the obvious.  You need to know enough to win the game but not too much to border on the absurd.   Know what you need to know in trading to win the game, and know it well.  3.  Practice. Practice. Practice. In trading, the longer you do it, the better you become.  For example, through practice,  You learn that Friday's can be the worst of the times to trade, while Tuesday's to Thursday's can be great times. You learn to understand non-trending markets and how to trade them. You learn how to recognize and trade trending markets. You understand how to target and what reaching a target, allows you to do with your stop. You learn to respect failures.  You learn when to trade bigger (leverage up) or when to trade smaller (or not at all).  As you start to trade, you haven't done enough practice. You have not been punched in the gut, made all the mistakes, learned from your mistakes.  There is an apprentiseship in trading (one can argue you never get to the finish line as well).   Reading about winners on Jeopardy!, one of the consistent tips the best contestants shared is to go over the same things over and over and over again.  By doing this, in the heat of the games battle, it will allow your brain to read or hear the question, and go right to the possible answer(s).    It is not good enough to read Romeo and Juliet, it is good enough to know by repetition the families are the Montagues and the Capulets.  It is not good enough to read Hamlet. It is better to know that Hamlet caused the deaths of Polonius, Laertes, Claudius, and two acquaintances of his from the University of Wittenberg, Rosencrantz and Guildenstern.  In trading, if you look at enough charts and are consistent in your approach, you can see things more clearly.  In Jeopardy!, if you know Presidents and State Capitals and Shakespeare, and the most famous movie lines, you see things more clearly as well. Practice. Practice. Practice. 4.  Anticipation.In trading you need to anticipate.  In the hourly chart from above, it is easy to show - after the fact - what happened.  However, the most successful traders were already anticipating the potential break before it happened in that chart, and were "buzzing in" with a trade as it is breaking the 200 hour MA, or looking to lean against the level on a bounceIn trading, if you don't have an idea what the future looks like before it happens, you will be reacting too late.  You need to anticipate by being prepared on what to do.  Below is the minute chart of the price action from the EURUSD with the overlay of the 200 hour MA at 1.1282.  The price fell below the 1.1282 level on the weaker PMI releases to 1.1271 and then bounced to 1.1279 before moving lower again. Why do we see that specific price action?Traders, who anticipated, were waiting to sell below the 1.1282 and/or willing to sell on the correction against the 1.1282 (i.e. at 1.1279).  They were anticipating what might happen next after the break (with defined/limited risk too).  If the price moved back above the 1.1282 (say to 1.1288 oor 1.1289), they would likely bail.  The price never got there, and they rode the trade to the downside.  On Jeopardy!, the most succcessful contestants are already anticipating the answers under a topic. If it is Shakespeare, "Who is Rosencrantz and Guildenstern?" are right there in their brain.  If they are Masters golf experts, they are anticipating Jack Nicklaus, Butler's Cabin, Pimento Cheese sandwiches, Bobby Jones, Magnolia Drive, Amen Corner, Verne Lundquist, bikini wax (if you know the Masters, you can understand each of those).  Moreover, the best contestants are anticipating when to press the button.   Traders pressed the button to sell at 1.1277 to 1.1279 today.You need to anticipate.  5. Reading. Listening. Processing. Reacting. In trading, you need to read (both fundamental information and charts). You need to listen to "the market" through the price action.  You need to process, and finally you need to react.  Admittedly, most traders out there don't have the real-time headline news, but all do have the ability to read about other news that potential could move the market (Brexit, US China trade relations, etc). I read Forexlive, the first thing every morning. I read the WSJ and other news sites.  I don't want to overload, but I need to read.   Being aware is part of being a successful trader. You need to read and understand.  If you don't have a real time feed for news (seconds and minutes do matter a lot of times but so does anticipation of price action), you always have the charts in real-time. Charts do tell a story that may be influenced by something fundamental that you don't even know about yet - or quite frankly don't even need to know.   The price action will always fit the story in tomorrows paper (or on the internet).  Believe me.   Successful traders read stuff.  That can be fundamental or simply charts. Successful traders also listen to 'the market' through the price action and tools. The price action - and tools applied to the price action - do not lie.  If the price in the USDCHF is making new highs since March 2017, don't ask me "Is the USDCHF a sell?.  You are not listening to "the market", but are instead listening to the devil in your mind saying "sell because it is high". LISTEN to what is happening. If the story changes, the price action and tools will tell you. I promise.   Succcessful trader also process and react. Processing and reacting are what you need to do to trade.  If you can't process and react, you are not going to trade.  The same is true for contestants on Jeopardy!.  They need to read and listen to the question, process the answer and react, by pressing the button and answering in the form of a question.Read. Listen. Process. React. 6.  LeverageThe final thing I want to talk about is leverage.  I am a little hesitant to list this as most of you are not at the point where "leveraging up" is a good idea.   However, more experienced traders who have mastered all of the above, can successfully leverage positions.  In order to leverage a position, it should ONLY be with the trend. Occur when you already have great trade location (in profit) on an existing positionBe accompanied by fundamental bias in the same directionBe relatively early in the trend (you don't want to leverage up after 800 pips)Be entered on a retracement against a KEY, KEY level, or on the break of a KEY, KEY  level in the direction of the trend, Have risk that is well defined, and at such a key level that you are sure if breached, would send the price the other way.Be accepted firmly by you (no wishy washy).In Jeopardy!, the biggest differentiating factor with James that has allowed him to break all the 10 day records, is he has mastered 1 to 5 above.  James Holzhauer has a: Game PlanIncredible knowledgeHe has practicedHe anticipatesHe reads, listens, processes. and reacts.  He has all the skills. So that allows him to leverage up.Below are his statistics from the Daily Doubles over the first 10 days:A total of $218,199 of his $697,000 has come on Daily Doubles alone. That is leverage.  Those earnings have allowed him to have an average score at the end of the 2nd round $48,020 (remember there is only $39,000 on both Game 1 and Game 2 combined), and an average lead of $35,780.  His average wager on the Final Jeopardy question has been $22,361.  By that time, he has locked up a win on 9 out the 10 shows he has been on.  Excessive leverage is earned on Jeopardy! and it is earned in trading too.  ----------------------------------------------------------Success in trading, and lots of other things in life - even Jeopardy! - have a lot of similarities in common.   As you progress as a trader, a good exercise is to read about experts in things other than trading, and try a see the similarities in each.   You will find that you learn from them. That in turn will allow you to take the next step in your trading journey.Wishing all a Happy Easter and Happy Pesach.    ForexLive

If you think about trading USDCAD, take two aspirin and lie down until the feeling goes away.

Brutal up and down price action Looking at the USDCAD price action of late, I am reminded of what an old colleague of mine at Citibank used to say when markets were particularly choppy.  He would say "If you think about trading ____________, take two aspirin and lie down until the feeling goes away."    You can fill in the blank with the "USDCAD" of late.  There has been lots of choppy action including today's run lower on the higher core CPI, and the snap back rally that erased the declines.   Nevertheless, in the ugliness, is there any broader technical themes in play when you see such price action.  This is what I think:  Realize that anything is possible.  I am always looking for a break in an up and down market, but realize that there can also be failuresOn the chart, find technical areas that "seem" to be working.  Put faith that they will  give bias clues and levels to lean against to define risk, Be humble and don't fall in love with positionsLooking at the hourly chart of the USDCAD, the 1.32966 area was home to 4 swing lows (see red circles). Yes there was a failed break on April 9 (anything can happen), but subsequently the price level was reestablished as a low on Monday (red circle 3 and 4).  Key level.  The other thing is the 200 hour MA (green line in the middle of the chart) has done a good job of dissecting bullish and bearish bias in the middle of the up and down range.   Finally, there is a double top at the highs (see green circles 1 and 2). That was yesterday's "best trade". So what happened today? The price fell below the 200 hour MA earlier and stayed below (bearish).  On the CPI data, the pirice tumbled lower and below the 1.32966. That is even more bearish. The price should have gone lower below the 1.32966 level.  It did for a little while reaching 1.3273 on the break.  However, the price rebounded and then held the low from April 9 at 1.32832.  Having the mindset that "anything can happen", a red flag goes up.  You gotta be careful. You also have to be humble and realize you can't be in love with positions.  So sellers shifted - despite the bullish news - and turned to buyers.  The race was on to the upside.   The price rise got close to the 200 hour MA (green line) at 1.33454 (high reached 1.3339). Sellers may be leaning and hoping the price stays below.   What now? You always have the option to take two aspirin, lie down and wait for the trading feeling to go away.  Alternatively, you can lean against the 200/100 hour MAs and hope that the buyers off the low, are sellers against the MAs above.   The hope is the the price retests the 1.32966 level again, but remember, anything can happen and be humble.  It will help you make sense of horrible up and down price action.  If you are lucky and nimble from the homework, you may make a few bucks (but don't fall in love with the position).   ForexLive

How to trade double tops and bottoms

A look at a key technical analysis pattern from SimpleFX In many cases you can easily identify a trend reversal using a simple double tops or double bottoms pattern. In this post I will explain you how to do it. Here's the next episode of SimpleFX CFD Academy tutorials for beginner traders. Of course, the signals you (and all other experienced trades) learn to recognize in practice can go the other way. It's a question of probability. If you are confident in your chart signals interpretation, you will be able to see when something extraordinary happens. Especially cryptocurrencies, but the most traded Forex pairs as well, are exposed to market manipulation. You could see it at the beginning of April when allegedly $100,000,000 was enough to move the largest cryptocurrency 20% up, and start a bullish trend on Bitcoin and other altcoins. Most of the times you won't be able to read this kind of events from the chart. The big actors who want to make money include the basic patterns into their scheme of playing the small traders. This is just another reason why you have to know the basic patterns. Don't miss today's lesson where I'll write about a pretty straightforward double top formation and double bottom formation. Double tops and double bottoms are variations to support and resistance trading. They are technical analysis ABC, simple patterns to spot. Recognizing a double top pattern This trading formation occurs when the market is trending up. As always during a bullish trend, you get retracements (temporary price declines when some of the investors sell their assets to make a profit) after which the market should go to the new heights. However, if the retracement happens before breaking the old resistance level, this may be the beginning of a double top chart pattern. Take a look at the example below. Here's a GBPCHF price action on a 5-minute chart.  Image: SimpleFX WebTrader As you can see, the price moves down once again before reaching the previous heights. At this point, you may suspect a double top, but if you don't want to take too much risk (which may be a good strategy for beginners), you could wait for a confirmation. In this case, it does come when the price breaks through the local support level. The double top pattern showed up, and I place an order assuming that the price will go down at least the amount equal to the difference between the local high and low market by my horizontal lines. I'll go by the book and make a SELL order here. Image: SimpleFX WebTrader Let's take a look if it worked for me here... It did. Not only the price dropped substantially during the next two and a half hours, but also the pattern helped me predict a trend reversal. Image: SimpleFX WebTrader In this case, the double top formation and the confirmation of the pattern proved to be a clear signal and used created an attractive opportunity for profit. Taking advantage of a double bottom chart pattern Since the double bottom formation is just a mirror reflection of a double top one, to make things more attractive, let's take a look at the stock chart and use candlesticks this time. Let's take a look at the pattern on the chart of Tilray Inc., a popular among SimpleFX traders stock on the Nasdaq. Once again I chose the same timeframe, where each candle represents five minutes worth of trading. At the moment shown below, we are in a downtrend. Some retracements happen, then we have a rally that starts above the last support level. This may be a sign of trend reversal. Image: SimpleFX WebTrader Once again, let's wait for confirmation. Will the rally break the local resistance line? We may open a BUY order now, but it's much safer to wait for a confirmation. Let's see, what happens next. Image: SimpleFX WebTrader The chart broke the resistance. I decide to open a long position assuming that the price will go up at least the difference market by the two horizontal lines. Image: SimpleFX WebTrader This time it worked, too. In the next period, I managed to make a 2,89% profit, before closing my position. Of course, these are just examples, and you may point to many historical examples where the pattern didn't work. It's always the case when trading the patterns. You need to be aware that other traders use them, but also that big influential players may want to act against them. As usual, the devil is in the details. When trading chart patterns, it's crucial to adjust your stop loss levels accordingly. In the Tilray example above I set it at the lower support level, had I done it tighter, I would have been knocked out of my position during the "third bottom." On the other hand, placing it that low made a possible loss bigger, and if I applied maximum leverage, this could mean a substantial risk. Give the double top and double bottom pattern a try. See how it works on your favorite instruments. Try tempering with different stop loss and take profit levels, and develop a successful trading strategy. Good luck. This article was submitted by SimpleFX.

Interpretting the "wiggles and waggles" of the GBPUSD

The "wiggles" to the 200 bar MA find sellers. The "waggles to the 1.3024 level stalls the falls. When the market is chopping around, sometimes the "wiggles and waggles" up and down tell a story.  That story can only change on a chapter that does not do what the story line has been saying.   You don't have to get too complicated in the story. Looking at the GBPUSD on the 5 minute chart, on the "wiggles" higher,  the 200 bar MA (green line)  has shown a pattern of holding the rallies. That is the price goes up, and sellers lean against the MA line.  That is the topside story (I outlined that potential story line earlier in the day in THIS post). On the downside, the "waggles" today have made the 1.30246 a floor. Now, that floor was broken (the story line changed) not once but twice, but in recent history, the floor has found buyers.    So on the "waggles" you can say the 1.3024 level is a level to get AND stay below.  Since it has failed twice, we can sell on a break, but if it fails again (and can't get below the low for the day), we have to cover. So when interpretting a wiggle and waggle market, try to tell the markets story by reading what the charts are saying.   It could give you clues as to what the future chapters of the price action will tell us.   ForexLive

Start by doing the nesessary, and then the possible. Before long you will be doing the impossible.

What is possible is an important step in your trading. This weekend, I posted my most recent video. It was inspired by a quote from someone who had nothing to do with the financial markets, but I could easily bridge the gap between the mindset for success in life, with the mindset for success as a traders.  I hope you learn from what I have to say and start applying the thoughts in your trading.   If you have not seen it, click on the link above and remember to give your thumbs up or thumbs down on YouTube. Share it on social media, and add a comment - or ask any questions - too.  ForexLive

USDJPY stuck in the mud. When will it break free? The price action will tell us.

Last week's range was the lowest since January 2012 The USDJPY is stuck in the mud. Last week, the range for the pair was only 52-53 pips wide. That was the most narrow trading week since January 2012. Its is 2019 now, so that makes it a 7+ year record.  That's a long time and says the market is non-trending. Non-trending leads to trending (it is either one or the other)   Looking at the hourly chart, the 110.55 to 110.94 is the "Red Box" that has confined the range over the last 3+ days.  The low is above the low from last week which was down at 110.42.   We currently trade at 110.83.  If the price is to extend one way or the other, getting out of the "Red Box" is what traders will look for. The next thing they will look for is staying out of the "box" and showing momentum.   Absent that, and we remain in the mud. I know that is somewhat obvious, but we as traders, need to recognize what is happening and then anticipate what might happen next.    What I know is the price action tends not to sit in a 52 pip range for too long (or more recently a 40 pip range). At some point, there will be a shove that breaks the market higher or lower (PS. the price is doing nothing because "the market" does not know what to do next...yet). Is there any other levels to eye other than the extremes? The 100 and 200 hour MA (blue and green lines at 110.724 and 110. 683) tends to see the price action move above and below in non-trending markets. However, it still defines the bias. Trade above is more bullish. Move below is more bearish.  Today, the price last tried to trade below,but that move failed near the 3 day lows.  However,  note what happened on the move back higher.  The price used the 200 hour MA (green line) as support and has moved higher over the last 3 hours or so.   The buyers are making a play. They are more in control. Can they push above and outside the "Red Box"?  No one really knows (it might fail in which case buyer turn to sellers), but traders can anticipate the future from the wiggles and waggles from the intraday technical clues and hope that the bigger shove is just around the corner. ForexLive

The famous classical technical chart patterns

A look into the more familiar patterns on the chart This article was submitted by Technical analysis is a type of analysis which is applied by traders on different financial assets, where they study the past price performance of a certain financial asset to forecast the future price direction or trend of this asset. There are numerous ways of analyzing the markets via technical analysis. Some traders might use technical indicators and oscillators, while others prefer to use the price action itself. According to the Dow Theory, the market discounts everything. In other words, the price of a certain financial asset discount all the past, current, and even future economic releases, events, etc. So by studying the price action of a certain financial product, traders will be searching for repeated price patterns which could assist them in determining the future direction of the market. In this article, we will cover the classical chart patterns which are to split into two categories: trend continuation patterns and trend reversal patterns. Continuation Patterns They are considered as a pause in the prevailing trend which implies that during an uptrend, the bulls are preparing for another push higher whereas during a downtrend, the bears are preparing for another push lower. These patterns should be drawn properly by traders and they should be very patient while trading the breakout of such patterns to avoid being trapped in false breakouts. Usually, when these patterns take more time to form, they will be followed by significant price movements. Triangles fall under the category of continuation patterns and are of three types: symmetrical, ascending, and descending. A symmetrical triangle is formed of higher lows and lower highs which usually signals that the market is balanced and ready to move either way. As the triangle is being formed, the volume shrinks, and the breakout would be accompanied with great volume which leads the market to the next move. An ascending triangle is usually considered as a bullish pattern which forms in an existing uptrend. It consists of a horizontal line combining the highs or resistance points, and a line combining a series of higher lows. Despite the fact that the breakout could occur to either direction, traders usually await a break to the upside as the triangle is a continuation pattern which means that the market had a slight consolidation to prepare for an upcoming price move within the same direction of the prevailing trend. A descending triangle is considered as a bearish structure which forms in an existing downtrend. It consists of a horizontal line combining the lows or support level and a line combining a series of lower highs. Traders will be waiting for a break to the downside as they believe that the market took a pause from the prevailing trend and the trend will resume when we breakout from this consolidation pattern. Reversal Patterns Reversal patterns are patterns that occur at the end of a prevailing trend to give a signal to the trader that there could be a possibility of a change in direction. In other words, these patterns will help us indicate that the current price movement has topped or bottomed. If a trader was holding buy positions in an uptrend, and he detected the formation of a possible reversal pattern, then he should be thinking of liquidating his position and re-assess his bias. Among the most recognized classical reversal patterns are the head and shoulders formations, the double top & bottom, and the triple top & bottom. Head and Shoulders patterns consist of three peaks with the middle peak being the highest, the left and right peaks holding similar or close price levels. The volume will be the largest in the first shoulder and starts to decrease until we break out from this formation. A Head and Shoulders pattern will appear at the top of an uptrend, while an inverted head and shoulders pattern will form at the bottom of a downtrend. Double/Triple tops and bottoms are among the most reliable reversal chart patterns and can be found easily on charts. Usually, they are formed when the price of a financial asset retests a resistance or support zone without being able to break above or below respectively. Some traders add technical oscillators such as the Relative Strength Index and search for divergence to confirm their trading setup. If we go over charts of different time frames or even range charts, we will be able to find a classical chart pattern, whether from the mentioned above or the rest. However, it is always better to adopt the formations that occur on higher time frames taking into consideration the length, uniformity, and clarity. Traders should always be cautious about being stuck in a false breakout. In order to avoid such entries, a trader should make sure that the breakout is occurring with heavy volume, or ignore the initial breakout and wait for a retest to the neckline/support/resistance and jump into a trade. Chart patterns will help you pick your trades. Many traders wait for such formations to trade which would lower their number of trades and also reduce the percentage of losing trades. Despite the theory that price discounts everything, it is better to always apply fundamental analysis along with technical analysis. When a technical trading setup matches the fundamental analysis findings, the trade would have a higher chance of success. Finally, we advise all traders to stick to strict risk management techniques as risk management is the key to successful trading. ForexLive

No man is an island....especially if you want to be a successful trader

Lean on other traders and technical levels to increase your success as a trader No man is an island...especially if you want to be a successful trader.  When I get up in the morning, turn on my computer and load my charts, the first things that come to my mind when looking at that chart is Where am I going to lean and Where are most of my friends going to be hanging out.  You see, you need to lean on "the market"...that is the collection of successful traders who lean against technical levels   There is no room for you to be on your own island.   If you like the video, please be sure to give a thumbs up and put a comment as well on YouTube.   Have a great weekend..... ForexLive

How to enhance your trading experience using price bands

How to use price bands - This article was submitted by moving average usually helps us detect the trend of the price of certain financial assets. However, prices usually fluctuate around the moving average. Whether you prefer breakout trading or sideways trading, price bands will support you in your journey. We will cover three technical analysis indicators that are used to quantify how much prices fluctuate near a certain moving average. Bollinger Bands, Keltner Channel, and Envelopes are among the most used trading tools. The upper and lower bands for the mentioned three indicators could be used as support and resistance. A trader could adjust the inputs of these indicators in order to suit his trading style. If the trader is trading the reversion to the mean, he will be using larger inputs. He will initiate sell positions near the upper band and buy positions near the lower band, as he believes that near these bands, the prices are extended. On the contrary, if a trader is looking for breakouts, he will be using smaller inputs to jump into trades at the earlier stages of an upcoming trend. Bollinger Bands The popular Bollinger band indicator was developed by John. A. Bollinger. It consists of a simple moving average and two standard deviations; one above and one below the moving average. The moving average is named as the middle band, the standard deviation above is called the upper band, and the standard deviation below is called the lower band. He used the standard deviation as it will give him a signal about the current market volatility. When the volatility is low, the bands get closer to the moving average which will give a signal to the trader that the market could be preparing for a move. On the other hand, when the bands are extremely far away from the moving average, it is a hint that the current market move is coming to an end. The below chart is the daily USDCAD chart with the regular inputs of the Bollinger band indicator (Moving average 20, Standard Deviation 2). The above chart sums up the benefits of the Bollinger band indicator. We can see that when the bands were getting closer to the moving average, we were preparing for a breakout (1), and when the bands were extremely far from the moving average, it gave the trader a signal that the current move is about to end (2). Moreover, the circles prove that the upper and lower bands are used as dynamic support and resistance. Even when the market was trending up, the pair was finding resistance near the upper band and was dropping back towards the moving average which acted as a support. Some breakout traders are now using a new version of the Bollinger band indicator, which only plots the minimum value of the standard deviation that is opposite to the current price direction. The above chart shows the same phase of the USDCAD pair, but with the new version of Bollinger bands that only draws the minimum deviation of the band opposite the price. In a trending market, the break of the upper band is usually considered as the break of resistance and the break of the lower band is usually considered as the break of support. Keltner Channel Keltner Channel is another technical analysis indicator that is used to detect the range where the price fluctuates from the moving average. It consists of a moving average and upper and lower bands. The bands are formed by calculating the Average True Range of the same period of the moving average and adding above and below the moving average. Simply, if the 20-day simple moving average of the USDCAD pair is at 1.3288, the Average True Range of the last 20 days is 0.0081, and the multiplier is set at 1, then the upper band will be at 1.3369, and the lower band will be at 1.3207. If we are looking to trade reversals from overextended price moves, we should raise the multiplier to possibly detect the extremes and jump into trades. The above chart shows the USDCAD daily chart, with Keltner Channel using a 20-day simple moving average and multiplier 1 ATR. Such inputs could help a trader to enter breakout trades, but he should be using a proper stop loss and strict risk management.  The above chart shows the USDCAD daily chart, with Keltner Channel using 20-day simple moving average and multiplier 3 ATR. Such input supported the trader in noticing overextended moves. It gives fewer signals but reduces the chances of defects.  Moving Average Envelopes A moving average envelope is a technical indicator that uses a moving average with an upper and lower band. The upper band is formed by adding a specified percentage above the moving average, and the lower band is formed by adding the same specified percentage below the moving average. Simply, if the 20-day simple moving average of the USDCAD is at 1.3288, we add (1.3288*1%) above the moving average to obtain the upper band and we deduct (1.3288*1%) from the moving average to obtain the lower band. The interpretation is similar to the one of the Keltner Channel, if a trader is seeking breakout trades, he will use a smaller percentage, and if he is searching for the extremes, he should be using a larger percentage.  The above chart shows the USDCAD daily chart, with a simple moving average envelope using 20 as period and 0.5% as a percentage. Such inputs will create numerous trade opportunities which will increase the chances of jumping into losing trades. The above chart is the USDCAD daily chart, with the moving average envelope using 20 as period and 2% as a percentage. The trader will be able to find price extremes and trade back to the mean. Finally, all the above-mentioned indicators are used for the same purposes. They can help us to detect when the market is less volatile and preparing for a breakout, and when the market is overextended. A trader must choose the input that suits his trading style. If he is aiming to find the overbought and oversold zone and trade the price back to the mean then he should be using higher standard deviation, ATR multiplier, or percentage. If a trader wants to scalp or even join an upcoming trend, he should use smaller inputs for the bands. However, a more sensitive indicator would create many trading signals but with smaller chances of success. Make sure you set the proper inputs that suit your trading style and always apply an appropriate strategy with strict risk management to accomplish better trading performance.

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