Part-time Trading - Part 3.3

Basic Principles of Support and Resistance Trading:

1. You need a clear Market Direction
2. Avoid Alien Zone
3. Search for highways
4. Follow the Trend
5. Always remember Long-term trading is better than Short-term trading.
6. Use proper time frame
7. Horizontal S/R is better than Diagonal lines (trend lines)
8. Don't try hard to find a trade. If you don't find it, it is not there.

You need a clear Market Direction:
Please make sure the direction of the market before taking any trade. Always remember there are only 2 possibilities. {For example: If you have an up-trend you can search for either continuation moves (up) or breakout (down)}.The same thing goes with range boundaries.

Avoid Alien Zone:
The Alien Zone what I call is when the price is very far from the S/R levels. If the price is nowhere near the support or resistance, stay out of it as there is no clear direction.

Search for Highways:
Search for highways free of traffic. Here traffic jam represent the support / resistance. If you are driving in a highway with plenty of cars (horizontal & diagonal lines of support / resistance) it is just painful to drive (take trade on those charts) as there is lot of confusion. Likewise wait for the price to show you a clear direction and trade where there is more room for your trades.

Follow the Trend:
This is very important. Buy of support and sell of resistance. {For example: if you have an up-trend and has a resistance line drawn before, if the prices breaks upwards and follows the trend, wait for the price to retest the support (former resistance) then buy of support line or if the price breaks below the support (former resistance will be stronger and again acts as resistance) then sell of the resistance}.Don't sell of support and buy of resistance. Specially you must not sell against long term support or buy against long term resistance.

Long-term trading is better than Short-term trading:
If you get two trading signals on different time frames, always remember long time frames are better and safer to trade than the short term time frame charts. This is very effective for your win/loss ratio.

 Use proper time frame:
You have to search for the price patterns (you will know about this in next post) in the same time frame where you drew your Support/Resistance. If you have your S/R on Monthly time frame, don't try to enter your trade based on Daily or weekly time frame just to sharpen your entries. That is called micro-managing your trades, which are most of the times, fake entries end up in losses. Wait for the proper time entry point on proper time frames. The sharper the S/R the better.

Horizontal S/R is better than Diagonal lines (trend lines):
As a trading set-up, the signal you get from horizontal lines of S/R is of higher quality than that you get from diagonal lines (trend lines). But it doesn't mean that you can consider diagonal lines as bad set-ups. If you get two signals on one pair, one each from horizontal line and diagonal line, you better go for horizontal line S/R as the quality is better.

Don't try hard to find a trade. If you don't find it, it is not there:
Be Selective of your trading set-ups. If you don't find it, it is not there. Don't try too hard to find a trade just for the sake you want to trade. Wait for a good quality set-ups and pick the proper charts to place the trades for better win/loss ratio.

That's all for now. In the next post we will talk about price patters which you want to trade on the Support or Resistance.

Part-time Trading - Part 3.2

Hello,

Yesterday we discussed about how to draw support / resistance, trend-line, range boundaries & Fibonacci retracements. Few of you who checked the post through email, didn't get the chance to go through the video regarding Fibonacci retracements. Please click here to check the same.

In the mean time, let us have a look at an example of support lines and trend-line in real time charts.

In the above picture you can see GBP/USD daily chart, on a up-trend. The diagonal line I have drawn in blue is the trend line. The green horizontal lines are the support lines. The red horizontal lines are resistance lines. You can also see that I have marked some circles. The blue circles (you will not draw them on your actual chart, it is only for information purpose) shows exactly where the trend line have been marked. The red circle shows the previous swing low where the trend line was marked before. I know I have drawn lot of lines there, they are only for Information purpose. In the real trading, I will not draw so many lines because as I said earlier I don't like my charts look ugly and confusing.

We will see one example of Fibonacci retracements:

In the above picture you can see AUD/USD monthly chart. You can also see that the price was in a good up-trend and it went down to 38% Fibonacci and bounced back upwards.

 

The above picture, you can see the same pair on the same time frame. But here we have to wait for the price to move downwards between 38% to 61% to bounce back so that we can have a valid trade.

Let us look one example of Range Boundaries:

In the above picture you can see USD/CAD on daily time frame. It was a beautiful Range boundary formation there.

I hope you will do your own exercise to understand how to draw these important lines.

That's all for now.
Have a nice day.

Part-time Trading - Part 3

Hello

Yesterday we learnt the the important factor for successful part-time trading is long term support / resistance and price action around that that support and resistance.

Today we are going to learn how to draw those key levels of support / resistance in the long term charts (daily, weekly & monthly time frames)

The trades we are going to look for are, bounce trades, continuation trades or breakout trades.

Support / Resistance (S/R): when you look into the charts, you will see many swings (zig- zag patterns), but you are not going to draw lines for all those highs and lows of the charts but only to the significant highs and lows. Please note not to make the mistake of drawing too many lines as the chart looks ugly (*_*).

If you have two swing points to join together to draw a line then it is a stronger support / resistance (also known as double tops or double bottoms).

Trend-lines: You can only draw trend line (diagonal line) only if you get two swing points in the direction of the trend. If the trend line is below the price then it is up-trend line and if the trend line is above the price then it is the down-trend line. But always keep in mind the trend lines should begin from the very beginning of the new trend. Also you can draw only outer trend lines of a trend.

In both the cases (trend line or simple horizontal S/R line) wait for the price to move towards the lines and based on the price pattern (You will know about it in future posts) you are going to place your trades (entries).

Range Boundaries: Now let us talk about the Range Boundaries. Range Boundaries or Ranges are the price conjunction between the two boundaries or support or resistance. These Ranges can take horizontal levels of support or resistance or triangular shape (One S/R and the other trend-line). But the good quality ranges are horizontal ranges.

Fibonacci Retracements: One more type of drawing the lines are Fibonacci Retracements. There are plenty of videos who show you how to draw Fibonacci Retracements on your charts. But please remember we concentrate only on 38% to 61% area of this Fibonacci Retracements for the REVERSAL so that we can trade in the direction of the trend. Please note that Fibonacci Retracements are only valid on trending in one single direction. If there is no clear trend or swing in the direction of the trend, then there is no valid trade. Please go through the video.



That's all for now.

Good night.

Part-time Trading - Part 2

I hope you realised that part-time trading is not as stressful as intra-day trading and much more pleasant experience.

Important factor to succeed in part-time trading is:
Support / Resistance and Price action - especially LONG TERM support / resistance and price action around that support / resistance

What we do is to wait for the price to move towards the support or resistance (S/R) in the chart. Depending on the price reaction near the key levels (S/R) we are going to trade (Buy/Sell) always in the direction of the market reaction.

If the price is moving up (uptrend / bulls), it reaches a top of that trend & then it collapses down (bear), that swing high we mark as resistance level. After few days (daily time frame) or week (in weekly chart), if the price again moves upwards towards that resistance, we look for a trade either to sell or buy depending on the price formation.

Conclusion: we draw support or resistance (level) lines in our charts (daily / weekly or monthly) and WAIT for the price to move towards our levels either to breakout or bounce to place our respective entry trades. as simple as that.

Part-Time Trading - Part 1

Even though, Intra-day trading sound exciting and more fun, Part-time trading is much easier way of trading Forex. Let me tell you why.

1. It is easier to search the trade.
2. As we use long term charts (daily, weekly & monthly), the movement of chart is slow. So if you find a trade you don't have to worry about the trade as much as you do in intra-day trading. In intra-day trading, you have to make decisions quickly (in fraction of a second when you get a signal) to place trades and also to exit. Where as in part-time trading, you have plenty of time to take a trade and to manage it.
3. It is as much profitable as intra-day trading, it is more efficient with less effort.
4. Intra-day Trading carries a higher degree of risk than part-time trading because, in intra-day trading, the signals you get are of lower quality because you are using smaller time frame charts, price is volatile, validity of the signals will be very less.

Please click here know about basic concepts of Forex.
Please click here to get the user guide of the chart of my favourite broker.
Please click here to know how to draw lines (support & resistance) on the chart.

Part-Time Trading - Introduction

Hello Everybody,

Welcome to our new session of Trading. I hope you have opened the demo account with my favourite broker. As you all know the market is closed for the weekend, you can trade again on Monday (can't just wait to trade).

There are different types of trading, few of them I mentioned in my previous post. Few of them I didn't mention are Carry Trade, Range Trading, Trend Trading, Swing Trading, Counter-Trend Trading etc.. I mainly concentrate on few that I mentioned in my previous posts.

Part-Time Trading:
This type of trading is suitable for almost everybody, especially for those who have a full time job. You need around 30 minutes a day to trade.
In this type of trading, we concentrate on long term charts. If you check the market scope (chart), There are different time frames, we concentrate on daily, weekly and monthly charts.
In this type of trading we look for 200 to 250 pips per trade and around 8 to 10 trades per month, that's right you will not have trades everyday.
If you have a mini account,  200 pips = $ 200/- (EUR/USD) x 8 trades = $ 1,600/month
If you have a micro account, 200 pips = $ 20/- (EUR/USD) x 8 trades = $ 160/month
If you have a standard account, 200 pips = $ 2,000/- (EUR/USD) x 8 trades = $ 16,000/ month.

Now you realised Part-time trading is also a profitable type of trading.
That's all for now.

Please don't forget to visit my Blog PipBase for the older posts, in case if you have missed any.

Forex Trading

Hello There,

Enough of that boring theory Stuff. Now you know what is Forex, Trading, Forex Market, let us concentrate on real Trading.

There are different types of Forex Trading.

1.     Long term Trading

2.     Intraday Trading

3.     News Trading

4.     Part-Time Trading

5.     Scalping