How to identify trade entry points - the secrets of intraday trading. The best entry into Forex - how to choose the point of opening a profitable position How to enter the market using the lines on
With the development of Internet technologies, even ordinary broker clients with a small deposit can enter the Forex market and earn on currency fluctuations. How to do it correctly so as not to lose funds and make a profit? It is worth understanding this topic more deeply in order for the investment to be successful.
TOP 3 Forex brokers in the world:
To start trading, a beginner needs to go through the following steps:
- Explore Forex market and understand what it is.
- Find a broker, register and fund your account.
- Download software as client platforms and install it on your computer.
- Make trading plans and strategies.
- Learn to analyze the market.
- Based on all factors, look for good points for opening deals and closing them with a profit.
As you can see, it is not at all difficult to enter the market; it is more difficult to exit it without losses, at least at the initial stages. And this will require careful preparation of trading plans and the construction of effective strategies.
Choosing a broker and opening an account
There are quite a lot of brokers in the domestic space, and all of them have different trading conditions, technological support and differ in other factors. Still, the main thing for any trader is not to fall for the so-called broker - "kitchen", that is, one that appropriates the funds of its clients by various frauds. Most often, this consists in the supply of non-market "fake" quotes in order to "drain" the trader's deposit. Therefore, you need to choose a broker who has been working for more than one year and has already gained a certain authority.
When choosing a broker, you should pay attention to the following factors:
- minimum deposit;
- spread size;
- order execution method;
- licenses and regulation;
- testimonials from other existing customers.
After the broker is determined, you will need to go through the registration procedure. Usually it is simple, but includes filling out a questionnaire. It must contain personal data, as well as an email address and phone number for identification.
Registration of a Personal Account in Alpari.
You should be careful, because brokers have such a procedure as verification, which each client must go through, but for different brokers it is carried out on different stages. Therefore, the data provided in the questionnaire must correspond to the information in the document that certifies the identity.
After being registered Personal Area you need to open a trading account. By the way, some brokers register an account simultaneously with a personal account.
Form for registering a trading account.
If a trader believes that he is already ready to trade on the real market, he can replenish his trading account for any amount, but no less minimum deposit specified in the trading conditions.
By the way, brokers offer the registration of a practice account on which trading is carried out with virtual funds, but under the same market conditions. That is, it is better to start working with a demo account in order to test the work of a broker or better understand the mechanism for making transactions.
Alpari platform.
Entering a trade and the rules for successful trading
There is not a single trader who could consistently make money on banal luck, while not using any rules in his trading. Trading must be subject to clear regulations, systems and strategies that the speculator must follow.
Therefore, before concluding transactions, the trader performs the following actions:
- Creates a trading plan.
- Defines the rules of money management.
- Builds trading strategies.
In order to be able to do all this, you first need to undergo training in which you will learn how to analyze the market correctly.
For reference! There are two types of analytics - fundamental and technical. It is worth using tools of both kinds.
Fundamental analysis takes into account external factors- political and macroeconomic, which have an impact on the price. To do this, traders study the economic calendar, where news is published.
Technical analysis is based on the study of charts and their historical data. The market is cyclical, and this will allow you to predict how the price will behave in similar situations. We can say that technical analysis is based on the principles of precedent.
Trend trading - a strategy for beginners
There are a huge number of different strategies and trading styles. For beginners, it is recommended to start their trading by making deals with the trend. A trend is a situation in the market when the price is steadily moving in one direction, for example, rising. Having found a strong trend in the market (upward/downward), the trader gets the opportunity to enter into an advantageous buy/sell position, respectively.
Classic trend trading is based on the following rules(on the example of downtrend trading):
- To make a buy deal, the market must have downtrend.
- The trader must wait for the last local minimum extremum to be broken.
- After that, the minimum should no longer be updated.
- After the formation of the maximum, the trader can use such a tool as the "Trend Line" and be able to build it correctly.
- The most successful entry point into the Forex market will be the third touch of the “trend line” price, that is, the formation of the third maximum.
With this strategy, it is better to use a pending order, although you can wait for the maximum to form and open a sell order yourself, but in this case there is a high probability of missing a good moment.
Traders should not forget about the placement of protective orders. Stop Loss must be set no lower than the second high of this trend. Concerning take profit, then the deal can be closed manually or calculated depending on the wavelength or using channels.
The strategy is described rather briefly, but on the TradeHow resource, you can view articles on how to build trend lines correctly and use them to enter a trade.
Important! With such a strategy, the main thing is to see the trend in the market and correctly predict when it will be broken.
A trade is entered when a trend is formed. If the breakdown and the trend are calculated incorrectly, a protective Stop Loss order will help save you from losses.
Trend trading is very disciplined because traders will have to hold the trade for a while to close it profitably. Earnings here do not come from random market fluctuations, so it may take a long time to wait for convenient moments. But this is a big plus for beginners, because the constant study of charts will allow you to better understand market processes.
Before you enter the Forex market, you should make sure that a novice trader really has the right arsenal of knowledge and techniques. According to statistics, 90% of beginners lose their first deposit. In order not to be one of them, you need to be able to correctly find entry and exit points in the market reasonably, using an effective strategy and all the rules of money management.
I don't want to say that professional members market in the vast majority use indicators for market analysis. Most often, among the pros of the stock and currency markets, you will meet two types of traders: those who use trading advisors and those who use the analysis of trading levels and price patterns with volumes in their work. I do not urge you to make a choice between two styles of trading and I understand that for most beginners it will be easier and more accessible to analyze indicators of classical analysis.
Therefore, it is the use of classical indicators in determining entry and exit points that we will deal with in this tutorial. First, I would like to draw your attention to the fact that using only an entry and exit indicator would be unwise without determining the trend and other components of the market phase. If expressed plain language and discarding some of the nuances of the behavior of the exchange rate, we can say that there are only two phases in the market: trend and flat.
The constant change in the phase of the market prevents us from using the same trading strategy in different markets. Since, the one that works well on the trend will show disgusting results on the flat, and vice versa. This problem cannot be solved in one trading system, therefore, when developing the most profitable Expert Advisor in the world, we introduced a dynamic trading system into its algorithm that adapts to changes in the market phase. Only this made it possible to achieve such high results and get rid of the need for constant optimization of the strategy.
Therefore, before looking for an indicator to determine the best entry and exit points for a trade, think about how your strategy adapts to trend changes to flat and vice versa. Only such a concept in the development of a trading system will allow you to be sure that you have correctly identified the trend in the direction in which you will look for an entry point.
What are the ways to protect the entry point indicator from changing market phases?
Of course, there are no ideal methods, so I think that here the whole choice will depend on your individual preferences, which will allow you to confidently apply one or another strategy for determining the trend (market phase). In my opinion, the best tools for determining the market phase and its trend are trading levels, which are built according to the principle I have described. The ability to build consolidation, support and resistance levels will allow you to use exactly the trading strategy that is most suitable for the current market situation. And it has all the necessary properties for you to successfully earn money by changing the exchange rate of a currency instrument.
Therefore, my conclusion is disappointing: you must take into account the market phase and adjust to it trading system(or use several for a specific market), otherwise you will never succeed in trading financial instruments. I say this for a reason, and I came to this conclusion quite recently, when we started developing win-win strategies for forex.
As you know, I don't draw conclusions until I automate a trading strategy and test it on a multi-year stretch of history. And I can say that it is the systems focused on changing the strategy for flat and trend that allow you to get stability on the exchange, everything else is a time bomb, because one day the phase will change and you will inevitably start to lose money. I am sure that each of you has already faced this problem for a long time and just now, I have announced to you the only possible solution.
Many developers of automatic forex robots try to solve the problem by stopping trading after a series of losses, but this method has big disadvantages. To voice which in this review seems superfluous to me. I will only highlight the main ones:
Closing a trade after a significant loss. It is psychologically difficult to wait for several weeks with such a large loss on the trading account, I am sure that only beginners use this method, and for them such trading is more like torture.
Impossibility to immediately win back the loss, and the market may recover after a negative series. Which again will unsettle you as soon as you see what you could earn here.
Probabilistic determination of non-trading time, since you do not analyze when the unfavorable phase will end and the next one, positive for your strategy, will begin.
What I have described above is only the tip of the iceberg, but it is useless to delve into the discussion of a system that is not well adapted to effective trading. So let's not waste time on it. Now let's move on to the description of indicators that will allow you to find the necessary entry and exit point from the market.
Why is determining the exit point as important as determining the entry point to the trade?
Perhaps some of the novice traders think that "I would like to find an entry point", but in practice, the inability to exit a trading position in time is much more important than the correct entry. Without knowing exactly where to take profits or limit losses, you will not be able to receive a stable income, this will only lead to even greater psychological problems in trading. I am a categorical opponent of manual trading, as the human factor has too much influence on making competent decisions.
However, if you are trading hands and still do not know the exit point of the transaction, then it is better to immediately sell your computer and spend more time away from on-line. This will bring more benefits to both psychological and physical health, not to mention your wallet. Therefore, when analyzing indicators of market entry points, I will pay special attention to the rules for exiting a position. And her support in the process of working with an open deal.
Forex trade entry and exit indicators. How to determine the exact trading signals to open a position?
We will look at two of my favorite classic indicators for determining the entry and exit points, but of course there are a huge number of them, listing which we will turn this review into a whole textbook on determining entry points. Therefore, I suggest that you start to value your time and study the most reliable entry and exit indicators.
Entry and exit point indicator - Stochastic Oscillator
If you do not know what this indicator is, then I recommend studying this review and be sure to use this analyzer in the first stages of your work on the market. It is a separate window on the chart of the financial instrument you have chosen and allows you to determine the points of maximum purchases or sales. It is calculated on the basis of the square of the price for several price bars before the current moment, the square is determined by the analyzer period, and further price changes are diagnosed in accordance with the deviation of the current quotes from those that are in the "price square". The stochastic looks like this:
You may notice that when approaching the lower level (sell high), the price often bounces and goes up, and when approaching the upper level, it starts to decline. exchange rate forex pairs. This indicator works great on any financial instruments, many practitioners recommend using it on several time intervals for a more accurate trend analysis. If the entry points for the stochastic indicator are less and less clear at first glance at the analyzer, then the exit point is determined when the main line of the indicator crosses with the additional one. Usually, this always indicates a trend reversal.
Entry and exit point indicator - CCI
I want to draw your attention to how accurately this indicator predicted the results of the Brexit vote and how well its signals are processed when approaching levels 200 and -200. I assigned these levels myself, there are no these levels in the standard settings of the CCI indicator. It is believed that it is necessary to make purchases when the level of 100 is broken and sells when the level is broken - 100. I recommend sticking to the CCI rebound rule from your levels: that is, when breaking the level of 100 or -100, we wait for a return to the level and a confirming rebound from it towards our positions. This is a more reliable signal from the CCI indicator or the definition of an entry point.
To determine exit points from a position, most in a simple way will wait for the indicator line to break through the level of 200 or -200 and take profits. For the same levels experienced traders open trades against the current trend. Since the finding of the indicator beyond the levels of 200 and -200 indicates an imminent trend reversal. In addition, it allows you to get the most profitable trades, because the distance from -200 to 200 is much greater than from 100 to 200. I strongly recommend this analysis tool, both for a beginner and for someone who considers himself a pro.
Every trader knows that the key to a profitable transaction is correctly noticed the moment to open a position. How to learn to find entry and exit points? In which direction to open trades to make a profit? We analyze all the nuances in this article.
What are entry points to the Forex market and where to find them
A competent definition of the moment of entering the market is the dream of any speculator. Before moving on to the analysis of methods and examples, let's understand the basic concepts.
Entry points are indications on the chart that give clues when you can open a trade and when not. Your income is directly related to the correct definition of such moments. The market situation allows you to determine the optimal period and make money on it. This is possible by analyzing charts and making predictions. It happens that the decision needs to be made momentarily, and sometimes it takes weeks to open a deal. Everything here is individual and depends on the personal style of trading and the chosen strategy.
How to find forex dots
Let's deal with the main question of traders - how to determine right time and find points. Search rules:
These simple tricks will help you develop a profitable algorithm. Just do not break it, do not give in to emotions and observe money management.
Methods for determining points
Methods for choosing the moment may be different. Traders work with patterns, Japanese candles, different indicators, lines and shapes. There are both simpler approaches and more complex ones. They will vary depending on:
- Timeframe;
- traded asset;
- strategies;
- personal preferences.
For example, you are a risky person and love fast trading. Then your tactic is most likely scalping. There will be their own laws for detecting points. But if you are a long-term investor who has chosen a trading style for longer periods, then the points will be completely different. Let's take a closer look at some of the options.
Trend directions
The trend trading is the most profitable on the market. There are bullish and bearish.
Bullish - ascending, built on the two nearest min, through which the straight line passes. The brighter the lows and the more obvious, the longer the duration of the trend. The timeframe indicates the strength of the trend. The longer the period of time, the stronger the developing trend in the market. In such a situation, the player receives a signal to sell.
Bearish - descending. Characterized by a continuous decline in prices and a sequence of three low lows and lower max. On the charts, bearish direction is a straight line connecting consecutive highs and a sell signal. To confirm the breakdown, indicate minimum percentage price changes. Chart advances approaching the bearish line are a good opportunity to open trading positions in the direction of the main current trend. A bear market is developing a profit-taking zone for traders trading on short-term swings.
trend points
All forex signals can be divided into two categories:
- The entry signal can be detected and processed - the trend approach. Those. the purchase is closed after a signal to sell is received, and a short position is established before creating a deal to increase the price of the asset.
- The moments of entry and exit on Forex depend on trends, but are formed after a rollback.
One of the trend-based methods is to track the movement of the chart on different timeframes. A longer time frame indicates the direction of the price. Then, of course, you can study smaller time intervals. If the directions of the larger and smaller time intervals coincide, the entry point will be at the beginning of their joint movement. A well-known example of this phenomenon is ““. This strategy includes three timeframe charts and their analyzes. In this case, the lower, current and higher timeframes are displayed. At the low point, a trade is opened for an uptrend. For descending - at the maximum point.
Channel trading
You can search for entry points in . How to build a corridor you can read on our website. You need to draw support and resistance lines and look for opportunities to trade near these levels. Open BUY positions at the bottom line, and SELL at the top. You can also use the breakdown of the corridor.
Forex reversals
A good way to enter the market at the moment of a trend reversal. It can be determined even visually or using special trend indicators.
If we are dealing with a reversal that has purely technical reasons (remember. One of them says that history always repeats itself), then special indicators will show us entry points.
But there are situations when a reversal occurs suddenly. This can be caused by various fundamental aspects (news, political events, etc.). In this case, it is worth estimating the number of points during a rollback. And if the rollback has grown, then open positions in its direction.
News & Events
Economics form the basis. And as noted above, they have an impressive influence on the price direction. You can independently study and build analytics, or you can use special news indicators.
When the chart reacts sharply to some information, open a position in accordance with the trend (bullish or bearish). But this approach requires experience and, often, intuition. The quote reaction does not always behave exactly as speculators expected. There are many examples in history when investors earned impressive amounts due to fundamental aspects. Remember the legendary Soros? But an ordinary or novice player is hardly able to instantly determine the future prospects based on fundamental analysis. Therefore, it is still better for beginners to turn to other tools.
Point indicators
Using the tools of your trading terminal, you can receive . They are built-in (standard) or installed, paid and free. Your task is to choose from the whole variety those with which you are comfortable working. Here are just a few of the possibilities:
- « Moving Averages or moving average. Display sharp changes in the movements of the foreign exchange market. Moving average - the average price for a period of time at the time of opening and (or) closing positions.
- "Bollinger Bands". They are represented by three moving averages, one is the main one, two are offset. The upper and lower benchmarks indicate the price that is inside the axis.
- . It clearly gives signals, which are indicated by arrows, and calculates the level of setting stop loss and take profit.
In fact, there are a lot of indicators. And the choice will be yours.
All the methods mentioned in the article are only a part of the whole variety. But using this information, you can receive reliable signals and trade profitably. No one can give you a 100% guarantee that the situation will work out the way you expected. And all signals are just hints. The market is an unpredictable environment influenced by many factors. But a competent approach still allows you to make more positive transactions than negative ones.
Nowadays, there are a huge number of different trading strategies. There are so many of them that novice traders are lost among the entire range, although the most effective trading techniques are based on simple rules. In this article, you will learn how to identify the best market entry points. This information useful for both beginners and experienced traders, as with its help you can increase the efficiency of trading.
Trend Trading Strategies
Trend trading strategies are considered the most profitable among traders. There is some truth in this, but working with the trend is not as easy as it might seem at first glance. From a psychological point of view, it is quite difficult to buy if the price has been rising for a long time, since after a long trend, an rollback often occurs. For this reason, many traders prefer countertrend trading strategies, which are more risky methods. Most often, they are the reason for the complete drain of capital.
What is the best strategy to use to enter the market? Experienced speculators recommend after identifying to find its foothold. That is, in order to reduce the level of risks, it is recommended to first draw a trend line, and then identify important support and resistance levels. Then you need to wait for the moment when the price will pull back from the main trend, reaching the level after which the price will be ready to return to its previous movement.
By opening trades along the trend and from the support and resistance lines, you can achieve good profitability. Such trading provides short stops and long profits.
Entering the market along the trend line
Many experienced traders enter the market at the moment the price touches the trend line for the third time. I propose to consider specific example entry into the market in the presence of an uptrend. First, a trend line is drawn, which, in the presence of a bullish trend, should be directed upwards.
In the next picture, you can see how the price stayed in a flat for some time after a rollback. Then local minima began to form higher and higher.
It is recommended to build a trend line through local minima. We draw a straight line through the first 2 lows, and when the third touch happens, we enter the market. This method is called "Login after the third touch".
If you decide to use this method, then you need to remember that the price often makes a false puncture. In this regard, it is recommended to enter the market when the candle closes above the trend line. The trade is opened with a stop that is placed a few pips below the low of the candle. The trade is opened with a take of 3 to 1 in relation to the stop. As soon as the price passes a certain distance in a direction favorable for the trader, the transaction can be transferred to a breakeven state. Then you can use a manual trailing stop.
If there is a downtrend on the market, orders are opened according to the same principle, but in a mirror image. The trend line is drawn from two lower highs, and the market is entered after the third bounce from the trend line.
Breakout trading
The price often rises or falls in a zigzag pattern. At the same time, if the trend is up, then at first the bears will be active, trying to pull the price in their direction. Because of this, the price will roll back after growth, after which the uptrend may continue, or a downtrend may begin.
In this case, it is recommended to enter the market from the support levels on the Fibonacci grid. If buyers lead the market, the price will not roll back below the levels of 23 and 38%. A price pullback to level 38 is a great option to enter the market.
Pay attention to the next picture, the price rolled back to point 2, then the price continued to rise, then another rollback to point 3 appeared, and then the price rose again. At point 3, the price broke through the level of 38.2, and at point 4 - the level of 161.8.
Point 4 in our example is a mirror for the third point. The same relationship exists between the first two points. In our example, at the level where the fourth point is located, it is recommended to enter the market. That is, after the next rollback, as soon as the price breaks this level, it is recommended to enter the market.
In a downtrend, a breakout occurs when levels that previously acted as extremes are overcome. Often before a sharp jump down, the price tests resistance. At the moment the price touches the resistance line, you can open sell trades. An important level can also be identified using the 38% level, but the 23.6% level is also worth considering. Reaching the level of 23.6 indicates the weakness of buyers, as well as the readiness of the market to continue the downward movement.
The following picture shows an example of how to act when the price moves according to the rules described above.
Entrance to break the trend
It is very dangerous to trade against the trend when there is no good place to enter the market with a small stop and a large take. How to identify such a point to enter the market? This situation appears when the price breaks through the resistance line, as shown in the following picture.
After that, you need to wait for the completion of the correction after the breakdown of the resistance line. If the lower correction point is above the resistance line, then the reversal has taken place and you can open a buy order. Immediately after this, the resistance line becomes a support line.
If you doubt the trend reversal, you can additionally use Fibonacci levels.
Sell trades are opened in a completely opposite situation. First, the price should break through the support line, and then roll back a little and turn around without reaching the support line. In such a situation, you can safely open a sell order.
Flat trading
Many traders do not like to trade when they are in a flat market. But this is not always correct, since during periods of lateral price movement, you can find good points to enter the market. The first way is to enter the market at the moment the price rebounds from the boundaries of the constructed channel. Trading in this way is a bit uncomfortable from a psychological point of view, since orders are opened against the trend.
The second way to trade during this period involves building a channel at the moment when the price goes sideways. Next, you need to follow the median line, and if the price is higher, open deals to buy, and if it is lower, to sell the currency.
That is, you need to create a price channel, the middle and wait. As soon as the price breaks the middle line from top to bottom, it is recommended to sell, and as soon as from top to bottom - to buy. This method of trading is recommended to be used intraday or on a daily chart, transactions are created for 2-3 days no more. You can supplement the strategy with Fibonacci levels.
Now you know how to identify the best market entry points. I hope this article will help you in increasing your income from trading on foreign exchange market. In order to be aware of all the most effective strategies, advisers, indicators and much more, subscribe to my channel. I wish you all good luck and good profits!
New to trading? Know where to buy and sell
When investing in cryptocurrencies, it is always important to understand the right entry points to the market. Suppose you have analyzed a coin. You have concluded for yourself that the technology of this coin is unique, the news background is excellent, and the coin itself is in demand among market participants. This means that this currency is promising for further investments. But before you the question arises: "When exactly to buy or sell to get the maximum profit?".
The question is logical, since each percentage of the price is essential for the purse of a novice trader. Most often, the Buy and Hold strategy justifies itself over long periods. But in this article, we will look at methods of short-term investment in cryptocurrency. I, as the author, will describe my system for choosing entry and exit points. And I will give the initial information about technical analysis, which, if used correctly, will help the beginner avoid unnecessary losses.
Technical analysis
Technical analysis is a method of analyzing price position using visual perception elements, indicators and oscillators based on historical data.
Many unscrupulous members of the crypto community are trying to convince beginners that technical analysis does not work at all in the market, because. the market is not mature enough yet. The logic of these people is understandable. They do not benefit from the situation when most people analyze on their own. The benefit for them is not the storage of coins, but the deception of gullible "gold diggers" of digital currencies.
Under conditions of competent application, technical analysis works on coins with large volumes and a long history of transactions. If the coin was recently issued and has a small volume, then any small injection of funds into the coin will lead to large price jumps. Therefore, in the case of a “young” coin, technical analysis does not work, because. price fluctuations are not predictable at all.
But do not think that technical analysis is a panacea for all ills. In extraordinary events, it will not work. But this does not mean that it should not be applied in practice. Technical analysis in trading is very important and must be mastered.
Trading system
I will consider this system of rules for short-term transactions.
To understand, it is necessary to determine the possible profit from the transaction. If you want to get 20-50%, or even double or triple your investment in foreign currency, only long-term and medium-term investments will suit you. To do this, use the rules that were described in previous articles:
If you want to make transactions within one or two days (up to a week on average), then you should prepare yourself for a profit in the form of 2-5% of your investment. In more rare cases, you can get 10-15%. Here the newcomer will say: “How so ?! I see in the currency column on Polonix an increase of 15-20%, and sometimes 80%! Is the author lying? No, the author is not lying.
Sometimes there are daily price fluctuations of 15-30%, but this only happens when the market is stable.
So, if you are watching the market during a period of positive growth, you need to understand that this will not always be the case. Rarely are hits "on the bull's-eye." The essence of the trading system is not to take on the entire growth movement, but to take only part of the growth, but fix your profit. If you wait for the greatest profit in short-term investment, most likely you will fall under the correction of the pair and close in the red. Therefore, you need to subdue your greed.
Now that you understand the difference between short-term and longer-term investment periods, let's move on to the basics of the trading system:
- It is important for us to have 10-15 currency pairs. It is on these pairs that we will make our transactions. It is these couples that are fundamental to us.
- To protect our funds from sudden volatility, we will always hold more than 50% of our funds in major currencies: BTC and USD. For what? In order to buy some currencies at the bottom during market corrections and get a very tasty profit.
- We will analyze charts for a history period of 3-4 months from the month of analysis. That is, if it is August, then we consider the schedule starting from April / May.
Now let's move on to the basic concepts of technical analysis.
trend
The word "trend" is widely heard and intuitively understandable. Accordingly, it will not be a secret that the trend is the direction of price movement. currency pair at a certain interval of time. The trend determines the mood of market participants in a given period of time. So the first thing to remember is:
- You should never (!!!) trade AGAINST the trend.
To understand this, let's understand the types of trends. There are three of them:
- Lateral (flat).
- Ascending.
- descending.
When the trend changes to a downtrend, our task is to sell our asset, and when it changes to an uptrend, our task is to sell the asset.
We define an uptrend by price lows. That is, we connect all price lows from right to left at a certain price interval. If each price low is located on the chart above the previous one, then the trend is up.
Determining an uptrend and breaking it
We define a downtrend by price highs. We connect all the price highs, again from right to left.
Determining and breaking a downtrend
Flat, or lateral price movement, is not characterized by high volatility. With a flat price movement, it is undesirable to make any deals to buy or sell. Usually, a flat tells traders about a possible “gain of strength” for a further price jump.
The trend that has formed at the moment in the market cannot exist forever. Therefore, there is the concept of "breaking the trend." An uptrend breaks from top to bottom and this indicates a change in trend to a downtrend. Descending breaks from bottom to top - change to ascending.
Support and resistance levels
When determining the levels of support and resistance, you will understand the situation on the market in relation to price highs and lows.
A support level is a price value below which the price of a currency pair does not fall at the moment. A resistance level is a price level above which the price does not rise.
To build support and resistance levels, we connect historical highs and lows at a certain "distance" of the chart, thereby obtaining the levels in question. We connect the most significant highs and lows, determining them by the number of price "visits" to this mark. It is very important to analyze charts by levels at different time intervals (for example, on an hourly chart and a 4-hour chart) and on long “distances” of prices.
If the support level has been broken, then it becomes the resistance level. Similarly, with a breakout of a resistance level, it turns into a support level.
Analysis based on support and resistance levels on the example of the hourly SCBTC chart
On the hourly chart, I identified support and resistance levels. When analyzing the chart 3 months ago, I realized that the most delicious price to buy is 0.00000260 btc / sc. At this price, the support level was concentrated, which was formed by the previous price touches to this mark. And the upper limit of the resistance level was the mark of 0.00000330 btc/sc.
Due to the unfavorable news about Bitcoin, all alts started a violent correction, Sia Coin is no exception. Therefore, the support level at 0.00000330 btc, which was relevant before the general fall, becomes a resistance level.
My actions: entering the market at the level of 0.00000260-0.00000270 btc and exiting at 0.00000310 btc and higher. Accordingly, my order to buy at an average price of 0.00000265 was triggered. Now my task is to select a sell order. And here there are two options: wait for the price to reach 0.00000330 btc or sell lower at the level of 0.00000310. Since I sincerely believed in Sia Coin, I decided to wait for 0.00000330 btc / sc, that is, the maximum possible growth.
So, with the help of technical analysis with an analysis of the technology of the coin and the news background, I made conclusions about buying and selling a coin at the right time. My strategy brought me 25% profit.
Fibonacci retracement
Technical analysis implies a mathematical justification of actions. I recommend using the Fibonacci retracement tool to determine the correction from the initial growth in order to determine market entry points and, later, exit points. We should think like this: “There is a situation of stable growth on this pair now, but it is not limiting and therefore I think that I can make one more trade. To do this, I need to choose an acceptable price for the purchase. How to do it?"
Determination of entry and exit points based on the Fibonacci retracement
We impose a Fibonacci grid, connecting the minimum and maximum of the initial movement. Now we have to choose the value of the price, the purchase at which we are completely satisfied. This may be a correction at the level of 61.8% or 50%. Let's say we are waiting for a correction to 50%. It turns out to be final: at this level, the price drop stopped and the general trend changed.
Now, after we bought this coin, we need to choose a point of sale. To do this, we measure the initial movement, that is, we connect the high and low with a line, after which we postpone this line from the 50% correction level. This means that we have an idea of possible growth. Now we can wait for the maximum increase or sell out in the middle of the movement. Everyone chooses for himself, but do not forget about the risks.
Indicators and oscillators
After reading the first 1600 words of the article, the patient reader has an elementary idea of the real use of technical analysis on cryptocurrency pairs. But this is not all that a beginner needs to know for his own safe earnings. Now we will move on with you to consider the concept of indicators and oscillators.
The operation of indicators and oscillators is based on the transformation and analysis of historical information. The difference between an oscillator and an indicator is that the oscillator is mainly used when the price moves sideways to determine oversold and overbought zones.
Bollinger Bands
Bollinger Bands (Bollinger bands) on the chart are presented as three lines. The upper and lower lines represent a kind of support and resistance levels, and the middle line is a moving average.
Application of Bollinger Bands in practice
Bollinger Bands allow the participant, in combination with other indicators and methods of technical analysis, to find the correct points of minimums and maximums for building their activity. If other sources of information for the trader do not contradict the readings of the Bollinger bands, then we can conclude that:
- The contact of the price with the lower line of the bands is a signal to enter the market.
- Price contact with the upper line of the bands - to exit the market.
But once again I would like to draw your attention to the fact that Bollinger bands should not run counter to the information obtained from other methods of analysis.
MACD indicator
With help MACD indicator you can determine the existing mood in the market and a possible trend reversal. MACD is a combination of a histogram and moving averages. The histogram determines whose sentiments are currently prevailing in the market. If the histogram bars are above the zero mark, buyer sentiment prevails (bullish trend). If below zero - the mood of sellers (bearish trend).
Working with the MACD indicator
Also, the highs and lows of the histogram can be connected according to the rules for determining the trend. In this case, it may be that the trend on the histogram is opposite to the trend on the chart. That is, for example, the trend on the histogram is down, and the trend on the chart is up. We conclude that the existing trend has reversed to a downtrend. This phenomenon in technical analysis is called divergence.
Stochastic Oscillator
Stochastic ("stochastic") shows the state of the market at the moment. Based on the stochastic, you can determine the point of entry and exit from the market. To do this, we need the bottom line at level 20 and the top line at level 80. When crossing level 20 from below, we can conclude that it is a favorable point to enter the market. When crossing the level 80 from top to bottom, we can conclude that the exit point from the market has been reached.
Conclusion
Proper trading is like playing chess - the player must anticipate all the opponent's moves and use all his knowledge to move ahead of the opponent's intentions.
In trading, use various ways information extraction: use all the methods of price movement recognition known to you, a group of indicators, memorize price lows and highs of prices, look at charts over long periods of time, and also do not forget to use the news background and analysis of the technology of the coin you are trading. If you carefully and wisely use all the information you know, you will never lose your money and interest in trading cryptocurrencies.
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