How to Trade in Range-Bound Forex Market - AtoZ Markets

Former investment bank FX trader: Risk management part 3/3

Former investment bank FX trader: Risk management part 3/3
Welcome to the third and final part of this chapter.
Thank you all for the 100s of comments and upvotes - maybe this post will take us above 1,000 for this topic!
Keep any feedback or questions coming in the replies below.
Before you read this note, please start with Part I and then Part II so it hangs together and makes sense.
Part III
  • Squeezes and other risks
  • Market positioning
  • Bet correlation
  • Crap trades, timeouts and monthly limits

Squeezes and other risks

We are going to cover three common risks that traders face: events; squeezes, asymmetric bets.

Events

Economic releases can cause large short-term volatility. The most famous is Non Farm Payrolls, which is the most widely watched measure of US employment levels and affects the price of many instruments.On an NFP announcement currencies like EURUSD might jump (or drop) 100 pips no problem.
This is fine and there are trading strategies that one may employ around this but the key thing is to be aware of these releases.You can find economic calendars all over the internet - including on this site - and you need only check if there are any major releases each day or week.
For example, if you are trading off some intraday chart and scalping a few pips here and there it would be highly sensible to go into a known data release flat as it is pure coin-toss and not the reason for your trading. It only takes five minutes each day to plan for the day ahead so do not get caught out by this. Many retail traders get stopped out on such events when price volatility is at its peak.

Squeezes

Short squeezes bring a lot of danger and perhaps some opportunity.
The story of VW and Porsche is the best short squeeze ever. Throughout these articles we've used FX examples wherever possible but in this one instance the concept (which is also highly relevant in FX) is best illustrated with an historical lesson from a different asset class.
A short squeeze is when a participant ends up in a short position they are forced to cover. Especially when the rest of the market knows that this participant can be bullied into stopping out at terrible levels, provided the market can briefly drive the price into their pain zone.

There's a reason for the car, don't worry
Hedge funds had been shorting VW stock. However the amount of VW stock available to buy in the open market was actually quite limited. The local government owned a chunk and Porsche itself had bought and locked away around 30%. Neither of these would sell to the hedge-funds so a good amount of the stock was un-buyable at any price.
If you sell or short a stock you must be prepared to buy it back to go flat at some point.
To cut a long story short, Porsche bought a lot of call options on VW stock. These options gave them the right to purchase VW stock from banks at slightly above market price.
Eventually the banks who had sold these options realised there was no VW stock to go out and buy since the German government wouldn’t sell its allocation and Porsche wouldn’t either. If Porsche called in the options the banks were in trouble.
Porsche called in the options which forced the shorts to buy stock - at whatever price they could get it.
The price squeezed higher as those that were short got massively squeezed and stopped out. For one brief moment in 2008, VW was the world’s most valuable company. Shorts were burned hard.

Incredible event
Porsche apparently made $11.5 billion on the trade. The BBC described Porsche as “a hedge fund with a carmaker attached.”
If this all seems exotic then know that the same thing happens in FX all the time. If everyone in the market is talking about a key level in EURUSD being 1.2050 then you can bet the market will try to push through 1.2050 just to take out any short stops at that level. Whether it then rallies higher or fails and trades back lower is a different matter entirely.
This brings us on to the matter of crowded trades. We will look at positioning in more detail in the next section. Crowded trades are dangerous for PNL. If everyone believes EURUSD is going down and has already sold EURUSD then you run the risk of a short squeeze.
For additional selling to take place you need a very good reason for people to add to their position whereas a move in the other direction could force mass buying to cover their shorts.
A trading mentor when I worked at the investment bank once advised me:
Always think about which move would cause the maximum people the maximum pain. That move is precisely what you should be watching out for at all times.

Asymmetric losses

Also known as picking up pennies in front of a steamroller. This risk has caught out many a retail trader. Sometimes it is referred to as a "negative skew" strategy.
Ideally what you are looking for is asymmetric risk trade set-ups: that is where the downside is clearly defined and smaller than the upside. What you want to avoid is the opposite.
A famous example of this going wrong was the Swiss National Bank de-peg in 2012.
The Swiss National Bank had said they would defend the price of EURCHF so that it did not go below 1.2. Many people believed it could never go below 1.2 due to this. Many retail traders therefore opted for a strategy that some describe as ‘picking up pennies in front of a steam-roller’.
They would would buy EURCHF above the peg level and hope for a tiny rally of several pips before selling them back and keep doing this repeatedly. Often they were highly leveraged at 100:1 so that they could amplify the profit of the tiny 5-10 pip rally.
Then this happened.

Something that changed FX markets forever
The SNB suddenly did the unthinkable. They stopped defending the price. CHF jumped and so EURCHF (the number of CHF per 1 EUR) dropped to new lows very fast. Clearly, this trade had horrific risk : reward asymmetry: you risked 30% to make 0.05%.
Other strategies like naively selling options have the same result. You win a small amount of money each day and then spectacularly blow up at some point down the line.

Market positioning

We have talked about short squeezes. But how do you know what the market position is? And should you care?
Let’s start with the first. You should definitely care.
Let’s imagine the entire market is exceptionally long EURUSD and positioning reaches extreme levels. This makes EURUSD very vulnerable.
To keep the price going higher EURUSD needs to attract fresh buy orders. If everyone is already long and has no room to add, what can incentivise people to keep buying? The news flow might be good. They may believe EURUSD goes higher. But they have already bought and have their maximum position on.
On the flip side, if there’s an unexpected event and EURUSD gaps lower you will have the entire market trying to exit the position at the same time. Like a herd of cows running through a single doorway. Messy.
We are going to look at this in more detail in a later chapter, where we discuss ‘carry’ trades. For now this TRYJPY chart might provide some idea of what a rush to the exits of a crowded position looks like.

A carry trade position clear-out in action
Knowing if the market is currently at extreme levels of long or short can therefore be helpful.
The CFTC makes available a weekly report, which details the overall positions of speculative traders “Non Commercial Traders” in some of the major futures products. This includes futures tied to deliverable FX pairs such as EURUSD as well as products such as gold. The report is called “CFTC Commitments of Traders” ("COT").
This is a great benchmark. It is far more representative of the overall market than the proprietary ones offered by retail brokers as it covers a far larger cross-section of the institutional market.
Generally market participants will not pay a lot of attention to commercial hedgers, which are also detailed in the report. This data is worth tracking but these folks are simply hedging real-world transactions rather than speculating so their activity is far less revealing and far more noisy.
You can find the data online for free and download it directly here.

Raw format is kinda hard to work with

However, many websites will chart this for you free of charge and you may find it more convenient to look at it that way. Just google “CFTC positioning charts”.

But you can easily get visualisations
You can visually spot extreme positioning. It is extremely powerful.
Bear in mind the reports come out Friday afternoon US time and the report is a snapshot up to the prior Tuesday. That means it is a lagged report - by the time it is released it is a few days out of date. For longer term trades where you hold positions for weeks this is of course still pretty helpful information.
As well as the absolute level (is the speculative market net long or short) you can also use this to pick up on changes in positioning.
For example if bad news comes out how much does the net short increase? If good news comes out, the market may remain net short but how much did they buy back?
A lot of traders ask themselves “Does the market have this trade on?” The positioning data is a good method for answering this. It provides a good finger on the pulse of the wider market sentiment and activity.
For example you might say: “There was lots of noise about the good employment numbers in the US. However, there wasn’t actually a lot of position change on the back of it. Maybe everyone who wants to buy already has. What would happen now if bad news came out?”
In general traders will be wary of entering a crowded position because it will be hard to attract additional buyers or sellers and there could be an aggressive exit.
If you want to enter a trade that is showing extreme levels of positioning you must think carefully about this dynamic.

Bet correlation

Retail traders often drastically underestimate how correlated their bets are.
Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.
Bruce Kovner of hedge fund, Caxton Associates
For example, if you are trading a bunch of pairs against the USD you will end up with a simply huge USD exposure. A single USD-trigger can ruin all your bets. Your ideal scenario — and it isn’t always possible — would be to have a highly diversified portfolio of bets that do not move in tandem.
Look at this chart. Inverted USD index (DXY) is green. AUDUSD is orange. EURUSD is blue.

Chart from TradingView
So the whole thing is just one big USD trade! If you are long AUDUSD, long EURUSD, and short DXY you have three anti USD bets that are all likely to work or fail together.
The more diversified your portfolio of bets are, the more risk you can take on each.
There’s a really good video, explaining the benefits of diversification from Ray Dalio.
A systematic fund with access to an investable universe of 10,000 instruments has more opportunity to make a better risk-adjusted return than a trader who only focuses on three symbols. Diversification really is the closest thing to a free lunch in finance.
But let’s be pragmatic and realistic. Human retail traders don’t have capacity to run even one hundred bets at a time. More realistic would be an average of 2-3 trades on simultaneously. So what can be done?
For example:
  • You might diversify across time horizons by having a mix of short-term and long-term trades.
  • You might diversify across asset classes - trading some FX but also crypto and equities.
  • You might diversify your trade generation approach so you are not relying on the same indicators or drivers on each trade.
  • You might diversify your exposure to the market regime by having some trades that assume a trend will continue (momentum) and some that assume we will be range-bound (carry).
And so on. Basically you want to scan your portfolio of trades and make sure you are not putting all your eggs in one basket. If some trades underperform others will perform - assuming the bets are not correlated - and that way you can ensure your overall portfolio takes less risk per unit of return.
The key thing is to start thinking about a portfolio of bets and what each new trade offers to your existing portfolio of risk. Will it diversify or amplify a current exposure?

Crap trades, timeouts and monthly limits

One common mistake is to get bored and restless and put on crap trades. This just means trades in which you have low conviction.
It is perfectly fine not to trade. If you feel like you do not understand the market at a particular point, simply choose not to trade.
Flat is a position.
Do not waste your bullets on rubbish trades. Only enter a trade when you have carefully considered it from all angles and feel good about the risk. This will make it far easier to hold onto the trade if it moves against you at any point. You actually believe in it.
Equally, you need to set monthly limits. A standard limit might be a 10% account balance stop per month. At that point you close all your positions immediately and stop trading till next month.

Be strict with yourself and walk away
Let’s assume you started the year with $100k and made 5% in January so enter Feb with $105k balance. Your stop is therefore 10% of $105k or $10.5k . If your account balance dips to $94.5k ($105k-$10.5k) then you stop yourself out and don’t resume trading till March the first.
Having monthly calendar breaks is nice for another reason. Say you made a load of money in January. You don’t want to start February feeling you are up 5% or it is too tempting to avoid trading all month and protect the existing win. Each month and each year should feel like a clean slate and an independent period.
Everyone has trading slumps. It is perfectly normal. It will definitely happen to you at some stage. The trick is to take a break and refocus. Conserve your capital by not trading a lot whilst you are on a losing streak. This period will be much harder for you emotionally and you’ll end up making suboptimal decisions. An enforced break will help you see the bigger picture.
Put in place a process before you start trading and then it’ll be easy to follow and will feel much less emotional. Remember: the market doesn’t care if you win or lose, it is nothing personal.
When your head has cooled and you feel calm you return the next month and begin the task of building back your account balance.

That's a wrap on risk management

Thanks for taking time to read this three-part chapter on risk management. I hope you enjoyed it. Do comment in the replies if you have any questions or feedback.
Remember: the most important part of trading is not making money. It is not losing money. Always start with that principle. I hope these three notes have provided some food for thought on how you might approach risk management and are of practical use to you when trading. Avoiding mistakes is not a sexy tagline but it is an effective and reliable way to improve results.
Next up I will be writing about an exciting topic I think many traders should look at rather differently: news trading. Please follow on here to receive notifications and the broad outline is below.
News Trading Part I
  • Introduction
  • Why use the economic calendar
  • Reading the economic calendar
  • Knowing what's priced in
  • Surveys
  • Interest rates
  • First order thinking vs second order thinking
News Trading Part II
  • Preparing for quantitative and qualitative releases
  • Data surprise index
  • Using recent events to predict future reactions
  • Buy the rumour, sell the fact
  • The mysterious 'position trim' effect
  • Reversals
  • Some key FX releases
***

Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
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Part II - 10 Minute/Day Trading Strategy

Part II - 10 Minute/Day Trading Strategy
Access Part I here: https://www.reddit.com/Forex/comments/h0iwbu/part_i_my_10_minuteday_trading_strategy/
Welcome to Part II of this ongoing series. How many parts will there be? No idea. At least 4-5, I guess. I'd rather have this broken down into digestible chunks than just fire hose you with information.
Part I was really just a primer. If I'm using the whole baking a cake analogy, then in Part I we covered what kind of cake we're baking. I will not cover in this post where we look for entries and exits, that's coming next. Part II is going to cover what ingredients we need and why we need those ingredients in greater detail.
What Kind Of Strategy Is This Again?It's my 10 minutes per day, trading strategy. I think the beauty of this strategy is that it allows you to take a good number of trader per week without having to commit an inordinate amount of time to the screens. This is both a mean reversion and trend-continuation based strategy. It is dead simple to learn and apply. I'd expect a 10 year old to be able to make money with this.
The List Of Ingredients & Why We Use These Particular Ingredients
*I will have an image at the end of the post showing a textbook long and short setup*
Bollinger Bands: Bollinger Bands (BB) have a base line (standard is the 20SMA, which is also what we will use for this strategy) and two other trend lines (known as the upper Bollinger band [UBB] and lower Bollinger band [LBB]) plotted 2 standard deviations away from the 20SMA. The idea behind BB is deviously simple - the vast majority of price action, approx. 90%, takes place in between the two bands. In other words, when price trades off the UBB or LBB, you could consider prices to be overbought/oversold. However, just because something is OVERbought does NOT mean its run is OVER. Therefore we need additional tools to make sure we are using the BB as effectively as possible. TLDR: BB help contextualize where to look for our technical setups using this strategy. Finding the candle/bar pattern is not enough. We need to make sure the setup is in the 'right' part of the chart. We accomplish that using the BB.
Stochastic Oscillator: The Stochastic Oscillator (Stochs) is a secondary momentum indicator. Because it is an oscillator that means the signals it generates are range-bound between 0 and 100. There are tons of momentum indicators out there. Theoretically you could swap out the Stochs for RSI or MACD. My hunch is that you won't see a measurable statistical difference in performance if you do. So why Stochs? Because I like the fact you have the %K and %D lines (you can think of them as moving averages) and the fact that the %K and %D lines crossover is a helpful visual aid. Like any other momentum indicator, the Stochs will generate overbought and oversold signals. We use the Stochs to help back up what the BB are telling us. If price is trading at, or even broken out of, the UBB and Stochs are also veeeery overbought that can be potentially useful information. It doesn't mean we have a trade necessarily, but it is a helpful piece of data.
Fibonacci Retracement & Extension Tool: This tool is OPTIONAL. The only reason I use this tool for this strategy is to integrate a mechanistic means of entry and exit. In other words, we can use fibonacci levels to place limit orders for entry and profit taking, and a stop order to get us out for our pre-defined risk allocation to each particular trade. If you DON'T want to use the fibs, that is perfectly okay. It just means you will add a more discretionary layer to this strategy
Candlestick/Bar Patterns: There isn't a whole lot to say here. We look for ONE formation over, and over, and over again. An indecision bar (small body, doesn't close on its highs or lows) followed by the setup bar which is an outside bar or an engulfing bar. It doesn't particularly matter if the setup bar is an engulfing bar or outside bar. What matters is that for a long trade the setup bar makes a HIGHER HIGH and has a HIGHER CLOSE relative to the indecision bar. The opposite for a short trade setup. The bar formation is what ultimately serves as the trigger for placing orders to take a trade.
*MOVING ON* Now We Get Into The Setup Itself:There are 3 places where we look for trades using this strategy:
  1. Short off the UBB (Here we want to see Stochastics overbought and crossing down. Bearish divergence is even better)
  2. Long off the LBB (Here we want to see Stochastics oversold and crossing up. Bullish divergence is even better)
  3. Long/Short off the Middle Bollinger Band (Here if you are looking for a short trade off the MBB you ideally want Stochs overbought. Vice versa for a long trade. NOTE: Often when taking trades off the MBB, Stochs WON'T go overbought/oversold. Because this doesn't happen often, I don't let it stop me from taking trades off the MBB.)
The actual setup is very simple and straightforward. We look for our candle/bar formation in conjunction with points 1 through 3 from the above.
There will be other nuances I will cover in terms of how to make the strategy more effective in Part 3. For example, I will go into much more detail about how the shape of the BB can tell us a lot about whether a currency pair is likely to reverse or not. I will also cover how to gauge the strength of the setup candle and a few other tips and tricks.
Technical Nuances: You can overlay a lot of other traditional technical analysis on top of the above. For example you can look for short trades off the UBB in conjunction with a prior broken support level that you now expect to be working overhead resistance. If you want to go further and deeper, of course you can. Note: the above is about as far as I went when overlaying other kinds of analysis onto this strategy. I like to keep it simple, stupid.
TEXTBOOK LONG TRADE OFF LBB:

https://preview.redd.it/e06otysgsh451.png?width=2820&format=png&auto=webp&s=101b3eed1b42512d639644bcc096d1026e558f17

TEXTBOOK SHORT TRADE OFF UBB:
https://preview.redd.it/yfg02yjhsh451.png?width=2820&format=png&auto=webp&s=18b427995f3dcecb22e1ae7f15cd5b3cd53c18e4
TRADE OFF MBB:
https://preview.redd.it/8kvzknaish451.png?width=2820&format=png&auto=webp&s=2f1e6113475193e8b812bface880a77e82ad7eeb

And that's a wrap for Part II.
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Top Forex Trading tips and Strategies- 2018

Forex trading is completely bounded by the economy of the currency pair. Forex trading is not a kind of business where you can take spontaneous decisions to run your business. It needs a thoughtful and strategic process with the emotional discipline to make any move in Forex trading. It is always said that a Forex trader must strive to develop his/her own trading strategy or try a strategy that has proven itself in past. Best Forex trading tips and strategies for 2018 can develop after multifaceted analysis of currency pairs and economy news. Here are some forex currency trading tips that will work in 2018:
1. Trading is an Art, not a Rocket Science:
You must remember that trading is an art, not a rocket science. No one can assure you for 100% accurate movement of any currency. Therefore, no rule in trading is ever absolute. You have to learn Art of trading. How the market reacts to the economic news? And how technical indicators work with those data?
2. Emotional Discipline:
Everyone knows about emotional discipline, but no one controls their emotions while trading which becomes a reason for the loss of trading. Emotional discipline keeps you on the track of successful trader. If you are trading with a strategic process and don’t have the emotional discipline you can lose your money on trading and we suggest you stop wasting time in trading. You can do more interesting in your life.
3. Don’t Get Greedy:
Forex trading is highly fluctuating trading system. You are making a good profit 1 min ago and next min you are having a loss. If you’re in profit and you are making good money with respect to your investment. Then don’t get greedy into making more profit. Just close the trade and have fun with your profit.
4. Risk Management:
Most of the people trade without risk management and wipe out their account. If you want to be a successful trader don’t forget to put proper risk to management in your trades. Trading is a kind of business if you are not able to lose money that you are investing. Please don’t put any trade in stocks, currency market.
5. RSI (Relative Strength Index) Indicator:
As you know it is a momentum indicator. It is used to understand the movement of the market. It also helps us to learn the trend of the market in particular time frame. But why we are suggesting to others to use in your toolkit. We know that market is run by investors and all investors need something to predict short terms and long-term movement of the market to make a good amount of profit. That’s why they use tools used by a majority of traders and RSI is one of the tools which is used by the majority.
6. ATR (Average True Range):
Most of the traders lose money in Forex trading not because they are trading against the trend, they lose money because they don’t what is stop loss and take profit they have to put while trading and ATR will help you to use a proper stop loss on your all trade so you can increase the number of profitable trade in your portfolio.
7. Stochastic Oscillator
Every trader must keep this tool in his/her toolkit. This tool will let you know about get-in and get-out price of your trade. If you are following the signals provided by this tool, you may lose most of your trades with good profit. It shows the overbought and oversold price of any currency, commodity, and stock. This range – from 0 to 100 – will remain constant, no matter how quickly or slowly a security advances or declines. Considering the most traditional settings for the oscillator, 20 are typically considered the oversold threshold and 80 are considered the overbought threshold. However, the levels are adjustable to fit security characteristics and analytical needs. Readings above 80 indicate a security is trading near the top of its high-low range; readings below 20 indicate the security is trading near the bottom of its high-low range.
8. Simple Moving Average:
The thing to remember about SMA is it helps you to determine the upcoming trend. It helps you to know upcoming the bullish trend and bearish trends in your currency trading.
Two popular trading patterns that use simple moving averages include the death cross and a golden cross. A death cross occurs when the 50-day simple moving average crosses below the 200-day moving average. This is considered a bearish signal that further losses are in store. The golden cross occurs when a short-term moving average breaks above a long-term moving average. Reinforced by high trading volumes, this can signal further gains are in store.
9. A risk to Reward Ratio:
Before entering every trade, you must know your pain threshold. You need to figure out what the worst-case scenario is and place your stop based on a monetary or technical level. Every trade, no matter how certain you are of its outcome, is an educated guess. Nothing is certain in trading. Reward, on the other hand, is unknown. When a currency moves, the move can be huge or small. Always trade in 1:2 risks to reward ratio. So if you lose two trade you, your one profit trade can recover your loss and put you in no loss- no profit situation.
10. Never Risk more than 5\% of your investment:
If you are a trader with the low budget in rang $100-$1000. Never put more than %5 of your total amount of investment. And if you have budget more than $1000 than please don’t get greedy and don’t put more than 2% on risk.
If you remember this rules and learn to use above mention tools properly. Definitely, you can make a good amount of money from your trades, without wiping out your account. Trading is subject to market risk. You can lose all money, so please trade safely and don’t get emotional.
submitted by sannidhyammf to u/sannidhyammf [link] [comments]

Top 10 Forex Trading Strategies and Recommendations that work in 2018

Forex trading is completely bounded by the economy of the currency pair. Forex trading is not a kind of business where you can take spontaneous decisions to run your business. It needs a thoughtful and strategic process with the emotional discipline to make any move in Forex trading. It is always said that a Forex trader must strive to develop his/her own trading strategy or try a strategy that has proven itself in past. Best Forex trading strategy for 2018 can develop after multifaceted analysis of currency pairs and economy news.
1. Trading is an Art, not a Rocket Science: You must remember that trading is an art, not a rocket science. No one can assure you for 100% accurate movement of any currency. Therefore, no rule in trading is ever absolute. You have to learn Art of trading. How the market reacts to the economic news? And how technical indicators work with those data?
2. Emotional Discipline: Everyone knows about emotional discipline, but no one controls their emotions while trading which becomes a reason for the loss of trading. Emotional discipline keeps you on the track of successful trader. If you are trading with a strategic process and don’t have the emotional discipline you can lose your money on trading and we suggest you stop wasting time in trading. You can do more interesting in your life.
3. Don’t Get Greedy: Forex trading is highly fluctuating trading system. You are making a good profit 1 min ago and next min you are having a loss. If you’re in profit and you are making good money with respect to your investment. Then don’t get greedy into making more profit. Just close the trade and have fun with your profit.
4. Risk Management: Most of the people trade without risk management and wipe out their account. If you want to be a successful trader don’t forget to put proper risk to management in your trades. Trading is a kind of business if you are not able to lose money that you are investing. Please don’t put any trade in stocks, currency market.
5. RSI (Relative Strength Index) Indicator: As you know it is a momentum indicator. It is used to understand the movement of the market. It also helps us to learn the trend of the market in particular time frame. But why we are suggesting to others to use in your toolkit. We know that market is run by investors and all investors need something to predict short terms and long-term movement of the market to make a good amount of profit. That’s why they use tools used by a majority of traders and RSI is one of the tools which is used by the majority.
6. ATR (Average True Range): Most of the traders lose money in Forex trading not because they are trading against the trend, they lose money because they don’t what is stop loss and take profit they have to put while trading and ATR will help you to use a proper stop loss on your all trade so you can increase the number of profitable trade in your portfolio.
7. Stochastic Oscillator Every trader must keep this tool in his/her toolkit. This tool will let you know about get-in and get-out price of your trade. If you are following the signals provided by this tool, you may lose most of your trades with good profit. It shows the overbought and oversold price of any currency, commodity, and stock. This range – from 0 to 100 – will remain constant, no matter how quickly or slowly a security advances or declines. Considering the most traditional settings for the oscillator, 20 are typically considered the oversold threshold and 80 are considered the overbought threshold. However, the levels are adjustable to fit security characteristics and analytical needs. Readings above 80 indicate a security is trading near the top of its high-low range; readings below 20 indicate the security is trading near the bottom of its high-low range.
8. Simple Moving Average: The thing to remember about SMA is it helps you to determine the upcoming trend. It helps you to know upcoming the bullish trend and bearish trends in your currency trading. Two popular trading patterns that use simple moving averages include the death cross and a golden cross. A death cross occurs when the 50-day simple moving average crosses below the 200-day moving average. This is considered a bearish signal that further losses are in store. The golden cross occurs when a short-term moving average breaks above a long-term moving average. Reinforced by high trading volumes, this can signal further gains are in store.
9. A risk to Reward Ratio: Before entering every trade, you must know your pain threshold. You need to figure out what the worst-case scenario is and place your stop based on a monetary or technical level. Every trade, no matter how certain you are of its outcome, is an educated guess. Nothing is certain in trading. Reward, on the other hand, is unknown. When a currency moves, the move can be huge or small. Always trade in 1:2 risks to reward ratio. So if you lose two trade you, your one profit trade can recover your loss and put you in no loss- no profit situation.
10. Never Risk more than 5\% of your investment: If you are a trader with the low budget in rang $100-$1000. Never put more than %5 of your total amount of investment. And if you have budget more than $1000 than please don’t get greedy and don’t put more than 2% on risk.
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How to Trade - Pair Strength and Average Daily Range - Advanced 5.6 Trading Average True Range (ATR) instructions - YouTube Range Bound or Trending  The Best Way Traders Can Determine Market Conditions The ATR Forex Indicator. A FREE Average True Range tool ... Range Trading Strategy For 28 Currency Pairs Average True Range Indicator Strategies & Techniques: When ... AMA - To Detect Trading and Range bound Market Moving Average Crossovers in Forex -- There's a Better Way ... Range Bound Markets - The Simplest Trading Strategy How to read ATR in Forex - Average True Range Indicator Explained

Pros and Cons of Trading Range Bound Forex Pairs. Forex price ranges can be tricky to trade; there are some advantages and disadvantages in trading ranges. Below we will discuss some pros and cons of the Range Bound currency trading. Pros for Trading Ranges . Clearly Stated Levels For Trading Inner Swings – When you have a range on the chart, you have a clearly stated high and low of a ... Traders can make good profits from a range-bound forex market. In a range market, it is easy to spot the support and resistance levels to enter a position. BTC: $15,303.10 ETH: $449.27 XRP: $0.26 Market Cap: $446B BTC Dominance: 63.37%. BTC: $15,303.10 ETH: $449.27 XRP: $0.26 Market Cap: $446B BTC Dominance: 63.37%. Advertise Publish. Home; News. Forex Cryptocurrency Regulation Announcements ... The Average True Range Trading strategy incorporates not just the ATR volatility readings, but it also looks at the price action to confirm the increase in the ATR volatility. This brings us to the next step of the best average true range Forex strategy. Step #3: Check the Price Chart to Ensure the ATR Breakout is Followed by a Price Breakout Starting with the main forex pairs, it is clear that the GBP/JPY and GBP/USD pairs both look particularly appealing to short-term traders right now because they both have an average daily trading range of over 100 pips. However much of this volatility is due to the ongoing uncertainty surrounding Brexit, so day traders need to be wary of any breaking news when trading these or any other GBP ... In forex, crosses are defined as currency pairs that do not have the USD as part of the pairing. The EUR/CHF is one such cross, and it has been known to be perhaps the best range-bound pair to ... Simple Range-Bound Forex Trading Strategy. Traders sought out for range-bound zones when trading the forex market, and they tend to do this in a bid to spot possible breakouts. The theme here is to spot range areas in the market, having it mind that such zones precedes a possible breakout, which are usually profit laden. The Simple Range-bound forex strategy helps you spot profitable breakouts ... A range bound trading strategy is based on the tendency of prices to revert back to their average price or equilibrium price after a particular period of time. This theory has been implemented in various trading strategies over decades and involves the purchase or sale of stocks, currencies and other assets, based on the relation between their current price and average prices. It should be ...

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How to Trade - Pair Strength and Average Daily Range - Advanced

If a currency pair is cycling up and down between support and resistance in wide range on one of the larger time frames, like the H1 time frame or larger, and the range is around 200 pips or more,... This part of the software determines which currency is most out of balance for the traders to be a Buyer/Seller along with the amount of achievable pips remaining in the Average range for the day ... What I'm about to show you isn't new, lots of people do it. But it's important, and it sure beats the heck out of Moving Average Crossovers. Beginners Video ... Here we are going to show you one of the great indicator which tells you market is trading or range-bound It is a Adaptive Moving Average(AMA) For Calculation & Excel Visit our website : http ... Best Moving Average Trading Strategy (MUST KNOW) ... No Nonsense Forex 122,830 views. 28:59 . How To Invest $10,000 Dollars For RIDICULOUS Dividend Income - Duration: 45:47. ppcian 87,983 views ... I love the Average True Range (ATR) indicator. Because unlike other trading indicators that measure momentum, trend direction, overbought levels, and etc. Th... Range Bound or Trending The Best Way Traders Can Determine Market Conditions ... Secret Tip To Detecting Trend Changes As Early As Possible In Forex - Duration: 21:27. Forex Reviews ... How to read ATR in Forex - Average True Range Indicator Explained The Average True Range (ATR) is a simple yet very effective technical indicator, developed by the American mechanical engineer J ... Very few Forex traders know the true value of the Average True Range indicator freely available on most platforms. This videos show you how to get the maximu... http://www.capexforextrading.com/forex-technical-indicators The average true range is solely used to measure volatility. It is because of this that it can be...

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