Lesson nine damn good forex setups Welcome to Lesson nine. My name is Sam ADA. I'm a global macro Currency Trader and the owner of FX Renu calm. This is the advanced forex course for smart traders. Warren Buffett said I like to go for centuries I like to shoot fish in a barrel, but I like to do it after the water has run out. setups are a key source of ages to help you stack the probabilities in your favor the video setup the greater the chance of having a winning trade.
The more winning trades you have, the easier it will be to achieve your objectives through your position sizing model. There are numerous setups, probably almost as many as our traders and it is a matter of finding setups that suit your personality. If you try and copy someone else, you'll find it difficult to even feel confident enough to trade it size. But what you can do is take setups and make them your own. In this lesson we go through several setups that you can adapt to your trading plan when you find one you like get to know it intimately for each of your setups you want To learn it's probability of success. What the price action looks like when it fails how far the move goes when it succeeds.
When you truly understand your setup, you can make it your own. And when you do that, even an average setup can become damn good setups or not entries. Once you uncover your setup, you then go into stalking mode. You can place a trade when you say set up in some setups require you to but often you will be better waiting for the opportune moment to enter. It's all about optimizing the risk reward if you are patient, you'll generally be able to find entry level ins two or three times more from the trade. This may mean that sometimes you miss out this opportunity does not materialize.
But as a rose based discretionary trader, we're not looking to take every trade only the ones that really stack up our risk reward filter for your trades. The concept behind a risk reward filter is that you don't place a trade unless the potential reward is greater than the risk by a certain amount. For example, you might not take a trade and miss the potential is to make at least three times a profit compared to the risk. A word of caution. setups can be very entrancing, it's easy to get sucked down the rabbit hole and spend far too much time on this aspect of your trading plan. As a general rule, you want to spend 10 to 15% of your system development process time on setups.
Market was at Bruce kovner said fundamentalists who say they're not going to pay any attention to the charts, like a doctor who says he is not going to take a patient's temperature combine setups. While you can try to effectively using a setup on its own. Often your probability of success on the trade will improve if you combine it with more than one factor. For example, if you have a fundamental view and then you get an excellent technical setup that supports your view, then your trade will be much better than if you had only one of the factors in your favor. market was it Stewart Walton said some Sometimes opportunities are so obvious that you almost can't lose when they come around. The only problem is that they don't come around that often.
The key is not to lose money in the times in between some damn good setups. If you pick up any book on forex trading, it is lightly packed full to the brim of setups. In general, you will find a lot of them work and will give you an edge. What the books probably don't cover, other position sizing and trade management techniques you need to turn that age into profit. It would be impractical for me to cover anywhere near the number of setups that you will come across throughout your trading career. And if you learn or have learnt ones from elsewhere that fit you.
The mat is good, take what you have and work on the other elements of your trading plan. Market wizard Jim Rogers said I haven't made a rich technician. market was it Marty Swartz said I always laugh at people who say I've never made a rich technician. I love that it is such an arrogant, nonsensical response. USD fundamentals for nine years and got rich as a technician. Technical Analysis setups.
Technical setups are based on Chart Analysis. Charts can be a window into the soul of your trade and fortunes have been made by the application. But charts can also be very easily misunderstood by the newbie who tends to make things much more complex than they need to be. The trick with chart analysis is to keep things simple, look for low risk high reward entries, and then focus on managing the trade after you get in, which will be the topic of a future lesson. One of the most common ways to use charts is to use technical indicators such as moving averages, bollinger bands, or stochastic while these indicators are too numerous to go into In this lesson, let's look at some best practice around how you can use an indicator in system development. One indicator needs to have a purpose.
You should not add an indicator to a chart at least it helps you do something specific to the indicator Should not cause confusion. Many traders apply too many indicators to the charts and they conflict with each other. Three, keep in mind that indicators are fictional. Ultimately indicators are just lines on a chart, they are not real. Just because your indicator gives you a buy signal does not mean that anything has actually happened. The markets are driven by supply and demand and will move based on market orders.
While indicators can be immensely useful, it pays to keep this very much in mind and remember to practice risk management for a pace to get to know your indicator, rather than chopping and changing indicators, it can be good to get to know your indicator intimately. Learn to use it on different sittings, timeframes and currency pairs. Here's an example of a MACD indicator on the Great British Pound yen chart. Support and Resistance are key levels. Support and Resistance indicates previous price levels were buyer's or seller's have stepped into the market and prices change direction. If a level has held in the past, it can be an indication that level will hold again in the future.
Support and Resistance can make good setups as the price can reverse off these levels. pivot points. The concept behind pivot points is that more often than not price will stay inside the reversal zone. In a sideways market type the price move from one pivot point to another. pivot points can be used as setups in both trending and sideways market types. They also work well when combined with support and resistance setups.
Chart patterns classic technical analysis patterns are used by Chartists to time the market. These patterns help a trader recognize the supply and demand factors that drive the markets and are often reflections of market psychology. Here are some of the more common chart patterns symmetrical triangles, ascending triangles, descending broadening wedge ascending wedge hidden shells or embrace hidden shoulders. Here's an example of the oldest pattern on the Great British Pound IUD. Big money can be made by the contrary and picking tops and bottoms. Picking tops and bottoms is not for the faint hearted.
You need to be prepared to take the opposite view to the crowd and fearlessly buy when others are selling. You also need to be flexible enough to admit when you're incorrect. The trading landscape is littered with ego driven traders who refused to believe that they were wrong. The market cares little for your views. But if you do manage to get in on a top or bottom thing you can stand to make very large returns depict the turning points you can look for double tops and bottoms for head and shoulder patterns. If you see one of these, it could be a sign that the market is set to change direction and this makes quite a good setup.
If you're looking to pick tops and bottoms don't expect to get it right the first time. It might take several goes before the direction changes. So keep your risk management tight consolidations. The forex market expands and contracts from periods of volatility to quiet periods. These periods of quiet can make excellent setups is when the market expands the most can be rapid in the risk versus reward excellent. These periods of consolidation happen across numerous timeframes from weekly write down to intraday correlations.
Some experienced traders look at not only the currency pair their trading, but also check to see how the currency they are planning to trade is performing against other currencies. For example, if there is a lot of demand for the ad against the yen, this could have positive implications for the ad against the USD time of day. Due to the 24 hour nature of the Forex markets, money flows into currency pairs at different times. Depending on the market opening hours in the US, UK and Japan. during times of money flow, you might expect to experience more breakouts while during quiet times. You might expect the market to range trade more this time That's not always held true though, is if a train gets going during quite illiquid times then it can be a wild ride with no volume to hold it back.
Time of day is a very important setup that traders often neglect. If you can place trades at optimal times, then you can improve your each market was in Mako Platt said I develop a macro view about something but then there are 20 different ways I can play it. The key question is what gives me the best risk reward. Fundamental setups. Fundamental setups are based on supply and demand factors. Generally, the more currency pair is in demand, the more it will strengthen.
Fundamental analysis of currencies isn't a means topic. It is also a tricky it's a market often prices in the fundamentals. So when you get news that you think is positive for the currency, it may actually go down interest rates and central bank policy. The actions of central banks around the globe are heavily scrutinized and their policies can be significant drivers of movement and currency pairs economic news. It used to be before the days of such prolific central bank intervention, their currencies move based on the economic performance of the country. Today, economic news can still be a significant factor.
In economic news releases can be very good trading setups. There are plenty of ways to use news as a setup. Some traders will look to predict the news events outcome and place a trade beforehand. Others will wait for the news event and frantically into the trade based on the announcement while other traders will wait for the reaction to the news event and place a trade a few minutes after all valid strategies, you just need to choose the one that appeals to you and gives you an edge. Now it's your turn. Select some damn good setups for your trading system.
You want to make sure they fit your psychology but the other elements of your system give you an edge. Make sure you don't just settle for the easy option. Technical analysis can be seductive because it's simple to get started and intriguing. But you will find that if used in combination with other setups, it will yield more fruit And remember that setups are only one source of ages. Others such as position sizing and exits are also of significance. For this lessons coursework, complete the setups worksheet.
I'll see you in the next lesson.