Trading 5 and 15 Minute Charts From Inertia To Breakout

Ok, so now here are 2 charts today where we can witness how all things eventually change in time. While many times during the day traders wait for some new data and news to give them a new sense of direction and purpose, there will be always the opportunity for a trade when momentum suddenly builds upwards or downwards.

In the day short term traders can scalp by buying and selling within the framework of a minute. For example the 'buy' on the EUR/USD maybe 1.0635 and the 'sell' 1.0632. The spread would be 3 pips and usually within the space of under 1 minute the price may change  to 'buy' 1.0643 and the 'sell' 1.0640. Now if you have bought 1 unit EUR/USD at 1.0635 and if you had sold at 1.0640 in under a minute you may have made 5 pips on the trade. Scalpers thrive on momentum and weigh probabilities of a downward drive or upwards climb scalping all the way every 1 minute. Looking at the 15 minute charts scalpers pretty much understand that a decent run could last up to an hour before it fizzles out. Using these techniques many teen phenomena have emerged the last couple of years and making huge amounts of money in the process.

Lets start with the 5 min chart first.

On the EUR/ USD notice the last 2 red bars. That's 10 minutes where prices dropped from 1.0632 to 1.0625 which is a 5 pip range. Once momentum moves a scalper will sell and buy to close and then sell and buy to close inspecting the rate of change between the last candle and the preceding 5-10 candles on the 5 minute charts. Increases in the rate of change convinces the scalper to pile in and in some cases add more units on the scalp trade by scaling up to exploit profits on the window of momentum.

Lets start at the beginning and look at the 15 minute chart to see how the market developed today 8 hours ago.

As we can see 8 hours ago the market flatlined in a tight range. Notice that the flatline followed an explosive climb with an upwards bias. But all things run out of steam and so commonly the trajectory started to drift.

Now lets look the last 2 hours at the 15 minute chart to see what followed after the flatline.

Now notice that the flatline that followed after an explosive surge then resumed its course upwards over a 2 hr period. the market climbed from 1.06070 to 1.0655 in a massive momentum push.

So the lesson learnt is that with patience if you follow the flatline on inertia, a direction will eventually ensue to the up or downside and then you can capitalize on either by scalping every 1-2 minutes or by trading 5 minute or 15 minute candles.

It often pays to watch with keenness any lull and inertia because a market breakout becomes the essence of an intra-day swing trade. A good FX trader can keenly watch 5-6 strongly liquid majors during the Euro session and pile in trades with regimental stop-losses in place and often conclude a 6-4 winning ratio. Add the pips up in a day and that's significant. Therein lies the basis for many teen phenomena trading today. They simply have the stamina to rake in the trades with a brutal discipline to cut their losses and not think about it.

Most profitable hours for day trading forex

FX trading can be highly profitable for the disciplined mind whether as a day trading vocation or swing trading position taking over several days.

The most Profitable Hours for FX trading are the Euro session prior to New York cut. In these hours are the greatest depth and liquidity and volatility. You cannot make a profit if a price doesn't move. Usually key US economic announcements start early morning US session and at the back end of the Euro session. All the jockeying for positions takes place prior to a key US announcement. So if you are going to trade forex I would suggest to track the Euro session to the US session opening 1hr. If you track the session volatility for about a month it will become evident that price movements occur rapidly nd therefore you can make money on a good trade. Outside these hours the forex markets tend to drift as the buzz and excitement dies away.

The key to a good trader is consistency. When things go wrong do not waver. Apply your formula for success and markets will change direction as surely as the wind does.When there is volatility the markets can change on a dime so you are not always going to carry a good trade. But with consistent application in the long run you will have more good trades than bad.

Flash crash trade Pound/ Sterling

Flash Trading

Yes I'm a trader by background but after I saw Pound/ Dollar crash 6% in 2 mins in Asian session i need to point out the dangers of day trading.  Computer program trading is becoming more and more autonomous and self-determining and what started as a push became a cascading tsunami and more and more computer sell orders got triggered yesterday on the Pound. Mathematically computers are sifting through key words in news statements and quantifying those words as probabilities and exponential equations. Day trading has got a whole lot harder now because of the automated trading world and i recommend swing trading over 2-3 days using Japanese candlestick day charts is a safer analysis of momentum.

 

Anyone Can Be A Successful Trader

So long as a person can become disciplined to learn a system and stick with the system then there is nothing to stop anyone from becoming a successful trader. This is part 2 of the story put together by London hedge fund manager Lex Van Dam how he recruited normal people from all walks of life and turned them into competent traders to match any professional trader in the City. Lex Van Dam proves this point.

Million Dollar Traders part 2

 

 

Robot v s Human; The Discussion On Artificial Trading

Contrary to what many people think; robotic trade programs without human intervention are not without their own faults. Based upon a set of probabilities upon a series of historic data the robotic program attempts to reach an answer just as fast as the human trader. However, there is a difference. The robotic program is an artificial intelligence and copy of the human mind in function at it's very best. When there is a sudden object in the middle of the road ahead the robotic program may learn to swerve the car upon a quick risk analysis, but the human trader is more likely to take a decision to swerve direction even faster due to the synergistic combination of right and left brain responses. Do computer programs recognize patterns just as well as humans? They may recognize a pattern but when it comes down to interpretation and trading decision an artificial intelligence may lack the intuitive capabilities of a seasoned trader.

In the last two years automated trading has become the rave of discussion on the Internet.

Please read on the FT today the discussion about artificial intelligence and automated trading.

https://www.ft.com/content/84bb5c72-37a9-11e6-9a05-82a9b15a8ee7

The Age Of Information OVERLOAD For The Forex Trader

Actually, I personally think that when it comes to forex trading the Internet has far more damaging influences than positive when it comes to knowledge dissection, analysis and judgement. Why? Because there's so much information out there on the Internet it's mind-boggling. The average trader wants to make a decision; is he going to buy EUR/USD or is he going to sell? Alright; that's pretty simple enough given an analysis of candlestick charts and given that the trader has sufficient understanding of patterns and how they affect the markets. But to most traders that's not enough; they have to refer to ADX, ATR, Bollinger Bands, Elliot Waves,  price-envelope theory, MACD, OBV, oscillators, RSI, stochastic, Wiiliams percentage and so on and so on until all the hair splitting analysis takes so long that the petrified trader in the end doesn't know whether to buy or sell because his brain has been fried by the sheer size of information out there.

I'm going to relate to you a bad story now. A friend of mine was once hit on the road by a car at 50 mph in London, UK. The doctors said to her the only reason she lived was because she closed her eyes. if she had kept her eyes open and watched the car hit her the sheer shock of vision would have killed her instantly. It is an unfortunate example that I have to draw upon. Gratefully my friend recovered within a year miraculously. Thank God for her life. But the point I'm tying to make rather starkly is that with so much information out there hurtling at you almost at the speed of light on your broadband optics who is to say that you won't end up like Bambi frozen before the headlights? Because there's just way too much information out there for your brain to rationally process. The more indicators you study then the more time goes by and the more confused you begin to feel. No wonder 90% of new traders implode within 6 months of forex trading. This is because they have not learned to filter out the noise and retain only the most accurate and relevant analysis needed to make a very fast decision. Then their emotions run riot when the mental confusion sinks in. Good traders react fast. By the time you read over all the analysis on the Internet the trade window has long since gone and you're going to end up stressed with the burden of information overload.

But there is a solution; the answer is very simple. Just as simple as Alexander the Great cutting through the mighty and fabled Gordian Knot with his sword. Whether you buy or sell just do it and do not procrastinate with information overload. If it's a mistake, ok, never mind, you win some and you lose some, but do not look at the hurtling information flying in your face. Close your eyes, be silent, meditate in peace and become decisive. If you can understand Japanese candlestick charts as a science of trading then truly you will let your system do all the talking without having to refer to endless technical indicators out there on the Internet.

find inner peace as if you were within the eye of the storm. Unlock the real you of you in the face of boundless information and trade your system methodically and unwavering to success.

Traders are made; not born

You cannot depend on luck in the world of forex trading. You make your luck through constant learning and education. Traders are not born; there is no natural genius about trading. Trading is a systematic process that can be taught to anyone of any background an upbringing. to illustrate my point watch on Youtube - Million Dollar Traders which is a story about London trader Lex Van Dam who takes people from all walks of life, educates them and then throws them into the trading arena. Just watch very closely how they fare.

The point is that literally anyone can become a trader if they put their back into it and learn the principles.

Please read my Money Science The Trading Revolution for more pointers for your trading plans.