Volatility is something that we can use when looking for good breakout trade opportunities. Volatility measures the overall price fluctuations over a certain time and this information can be used to detect potential breakouts. There are a few indicators that can help you gauge a pair’s current volatility. Using these indicators can help you tremendously when… Continue reading How to Measure Volatility
How to Trade Breakouts
What are breakouts and how can I take advantage of them? Unlike the breakouts you might have had as a teenager, a breakout in the trading world is a little different! A breakout occurs when the price “breaks out” (get it?) of some kind of consolidation or trading range. A breakout can also occur when a specific… Continue reading How to Trade Breakouts
Protect Yo Self From Reversals
Whenever Happy Pip goes swimming at the beach or the pool, she always wears her pink rubber ducky floaters. Whenever she trades retracements, she uses stop loss points. Pink rubber ducky floaters are lifesavers. Stop loss points are capital savers. As we said before, reversals can happen at any time. Retracements can turn into reversals without warning. This makes using trailing stops… Continue reading Protect Yo Self From Reversals
How to Identify Reversals
Properly distinguishing between retracements and reversals can reduce the number of losing trades and even set you up with some winning trades. Classifying a price movement as a retracement or a reversal is very important. It’s up there with paying taxes. *cough* There are several key differences in distinguishing a temporary price change retracement from a long-term trend reversal.… Continue reading How to Identify Reversals
Trend Retracement or Reversal?
Imagine this scenario. Price starts to rise. Keeps rising. Then it starts falling. And falling some more. And falling some more. And then it starts going back up! Have you ever been in this situation before? It looks as though price action may be rallying and a buy trade is in order. WRONG! You’ve been… Continue reading Trend Retracement or Reversal?
What is a Range-Bound Market?
What is a range-bound market? A range-bound market is one in which price bounces between a specific high price and a low price. The high price acts as a major resistance level in which price can’t seem to break through. Likewise, the low price acts as a major support level in which price can’t seem to break… Continue reading What is a Range-Bound Market?
What is a Trending Market?
What is a trending market? A trending market is one in which price is generally moving in one direction. Sure, the price may go against the trend every now and then, but looking at the longer time frames would show that those were just retracements. Trends are usually noted by “higher highs” and “higher lows” in an uptrend and “lower… Continue reading What is a Trending Market?
Know Your Trading Environment
When two people go to war, the foolish man always rushes blindly into battle without a plan, much like a starving man at his favorite buffet spot. The wise man, on the other hand, will always get a situation report first to know the surrounding conditions that could affect how the battle plays out. Like… Continue reading Know Your Trading Environment
Divergences are NOT a Trade Signal
Please keep in mind that we use divergence as an INDICATOR, not as a signal to enter a trade! It wouldn’t be smart to trade based SOLEY on divergences since too many false signals are given. It’s not 100% foolproof, but when used as a setup condition and combined with additional confirmation tools, your trades have a high probability… Continue reading Divergences are NOT a Trade Signal
Divergence Cheat Sheet
Have you had your fill on learning how to trade divergences? Let’s review! Divergence is a popular concept in technical analysis that describes when the price is moving in the opposite direction of a technical indicator. There are two types of divergences: Regular divergence Hidden divergence Each type of divergence will contain either a bullish bias or a bearish bias.… Continue reading Divergence Cheat Sheet