There are many schools of thought when it comes to answering the 2 most important questions when trading and investing. Where will price turn and where will it go? What makes Online Trading Academy different is that we don’t subscribe to anything related to conventional fundamental or technical analysis. We don’t do this just to be different, we ignore conventional technical analysis theory simply because it’s very flawed at its core, which is why you don’t see people making a low risk living with it year after year. For today’s piece, let’s focus on the basics and look at a trade from a recent and very volatile session where market timing needed to be very precise in order to produce that day’s trading income.
NASDAQ Income Trade 10/19/17
Notice the pattern, the little base of trading in the upper left corner and the huge drop in price from that base. This is the picture of supply that helps you be a willing seller high up on the supply and demand curve. With any picture of supply, you need to make sure it is very “fresh” meaning there are still significant unfilled sell orders in that area (price level). The entry, once the picture above is produced, is to short a rally back up to that supply level. The “drop” from the level tells us supply exceeds demand in that area. We sell short at the proximal line with a protective buy stop just above the distal line, and that’s the sell setup.
This is the pattern right out of our Core Strategy course that we see live every day in the markets. Once price rallied back up to that level, the shorting opportunity is at hand if you wish to take the trade like I did. These are typical of our early morning income trades. This is not about taking many trades in an income trading session, it’s about taking the high probability ones that meet our criteria. There is nothing fancy about this, no indicators or oscillators or conventional chart patterns, there are not many different strategies, there is simply one. Buy where banks and financial institutions are buying and sell where they are selling. Another way to say that is, buy where the smart money is buying and sell where the smart money is selling. These groups leave clear footprints if you know what you’re looking for. One last way to say this is… Buy where demand exceeds supply and sell where supply exceeds demand. Keep it simple and focus on this and only this for your short-term income trading and long-term wealth investing. The purpose of this article was to help you focus and to identify what the picture of that looks like on a chart.
Hope that was helpful, have a great day.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
EUR/USD stays below 1.0800 after upbeat US data
EUR/USD stays under bearish pressure and trades slightly below 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold clings to strong daily gains above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.