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Ok I didn’t make the full 1200 pips because my money management rules dictate that I always take partial profits early therefore locking in profit and ensuring I don’t ever let a winning trade turn into a loser. In fact I did make about 400 full pips so a very good week considering I only traded about 10 hours this week. I am trying to make the best of this dreadful british summer weather by getting outside every time the rain stops.
Anyway yet again I can see huge improvements in my understanding of the charts as a result of all the new forex trading stuff I am learning in the www.fx500club.com Live Trading room.
Have a look at the chart below and I will explain how I took the trades.
For this set of Oil trades I applied classic support and resistance analysis using old resistance becomes new support ( RBS ) and vice versa for old resistance becomes new support ( SBR ), I also used trend analysis waiting for trend confirmation by watching the sequence of high, low, lower high then the lower low, moving average crossovers, cci divergence and japanese candlestick analysis. It never ceases to amaze me how everything I have learned over the last few years is all coming together now with the help of the www.fx500club.com live forex teachers.
The first trade short was from that double top at about 71.30 combined with the lower high on the cci21 showing clear divergence, it allowed a small stoploss at 71.65 with what looked like a 500 pip target down at the significant support level at 66.25. This was a set and forget trade so time to hit the beach.
The second short trade was one in a million for me, I had spent a year trying to learn how to trade pure trend analysis along with support and resistance with a bit of moving average crossovers, I ended up putting it on the back boiler because whilst my tutor was getting a 90% success rate making 100 – 200 pip trades trading $100 a pip I just couldn’t master it at the time. Well this short setup ticked all his entry boxes so I shorted Oil again at 69.25 adding back into my previous trade from 71.30. Profit Target still down at 66.25. Time to chill out again. I will add a chart and explain in detail how I was taught to enter the short at 69.25 using trend analysis.
The third trade once my target of 66.25 was hit was a long trade. 66.25 had been my profit target area because it represented a very significant level of support and resistance in the past. It had been used as support becomes resistance and vice versa numerous times in the past and as such represented a good place to trade down to and then up away from. It was also a good 38.2 percent retracement level using fibonac.ci off the four hour chart, hence me going long here.
I don’t often bother with correlation, news or fundamental trading but with the stock markets rising so much lately , the strong Chinese GDP figures and all this hype from America about green shoots Oil looked now to be a good punt to the upside. It worked.
Please note whilst I do think China and India will drag us out of this recession coupled with the fact commodities like oil and steel are finite, I do not believe we are over the worst of this recession. I feel the western world will have a lot of pain for years to come yet. Haha we even had news that house prices were going up again here in the UK, what a load of crap, 4 hours later British airway announced record losses, they are bankrupt and suggested that the whole airline industry will need drastic changes in order to survive. Say goodbye to free drinks and hot meals on economy class flights.
The banks have just hidden all the last quarters losses by frigging the figures, they have no money to lend for mortgages, the UK government is bankrupt, people are still losing their jobs by the 1000′s every day and average house prices are still 6 or 7 times average income. The stock markets are making new highs as well.
Yay the recession is over, if you believe that you will believe anything I think.
I won’t be trying to call the highs on these recent rallies on the stock markets but when they drop back I won’t be surprised at all. I won’t be buying any more property yet either lol.
Back to Oil, I will be leaving a small part of this long trade on as I see this going to 73.50 then 81.00 then 104.00 all old levels of support became resistance from the old down trend using the 4h charts. Don’t trade these levels please they are just my own observations. As you know it will be a rocky ride up and down as always with oil, it is a beast to trade.
On to my explanation of my second oil trade using trend analysis, support and resistance and moving average crossovers. This is not a forex trading method taught in the www.fx500club.com but everything I have learned in their fantastic live online trading room has enabled me to better understand all aspects of trading the financial markets.
Please note I am not trying to teach you to trade forex here, I am just trying to make you aware that forex can be traded very profitably and I want you to find the best and cheapest way to learn how to trade. That being the www.fx500club.com.
As you can see from the chart I have marked all the highs and lows of the old uptrend and the new downtrend on the 15 minute chart. It is very important that the highs and lows are confirmed as true highs and lows, if the white ema 5 does not cross the salmon ema 20 then I don’t consider that to be a valid high or low.
I have also marked points 1,2 and 3 on the chart, these are also used to validate the trade. Point 1 was an old high, if point 3 had tested that high then it would have invalidated this short trade. Point 2 was a valid higher low in the old uptrend and also an old resistance became support, this is important because it would be come a significant level of support to break on the way down. What we needed now was a valid down trend to build with a sequence of high, low, lower high and then lower low, at that point level 2 would have been broken by a valid downtrend and an old rbs could then become a new support became resistance ( sbr)
Point three was now the critical level in this short setup, what I needed was this low to break point 2 as it did and then close below that level on this 15 minute time frame and the two higher timeframes the 1 hour and 4 hour, this would confirm that the trend was intact. The price closing below in two higher timeframes is CRITICLE. If it doesn’t then no trade.
It did close below on the hourly and 4 hourly charts so I took the trade. You can also see that the moving averages had crossed over favourably as well. The thick red 8o ema had crossed the thick blue 200 sma, a very good indicator of the change of direction of the trend.
The closing price on the two higher timeframes is crucial and has been a pivotal point in my forex learning curve, I was amazed at how the market makers would take the price to within a pip of validating one of these support and resistance setups and how often trades would fail if I tried to enter without waiting for that close. I have not come across may forex systems that use this confirmation method but I have found that if I apply it to other trading systems and methods it does improve their profitability dramatically.
I was taught that the reason this method works is due to the fractal nature of the forex markets and also due to the cyclical nature of the price swings from peak to trough. This method works on all timeframes that can be divided by a factor of four, hence it works best trading the 1 minute and using the 5 and 30 minute for confirmation, also the 15, with 60 and 240 for confirmation, trade the hourly using the h4 and daily for confirmation, trade the daily using the weekly and monthly for confirmation in the same way. Elliot wave , the dow theory and pring trend analysis will help understand this forex trading method as well. Good Luck!
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Always Remember.
Keep your risk as a percentage of your capital low (1%), equals stress free trading.
Always work out potential losses before potential profits.
We are paid to take risks, if you aren’t in a trade you cannot win a trade!!
Buy off support and sell off resistance.
Bank partial profits early and move your stop loss to break even as soon as you can.
I am learning how to trade these setups and indicators across all time frames with the help of the fantastic team at the www.fx500club.com They have a live forex chat room and share their charts so that you can watch them find potential trades in real time.
They also have a school for learning how to trade longer term charts at www.fxmonkeyschool.com.
The fx500club and fxmonkeyschool, forex trading school don’t just trade charts and indicators alone, they teach us to use correlation of the whole market before entering a trade. It truly is the best place to learn how to trade forex properly, safely and profitably. It’s all about the pips and about protecting your capital.
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2b reversal and 123 reversal trading instructions
