Кaтегория: Best forex strategy without indicator

Count back line forex trading


count back line forex trading

One strategy that traders may consider for forex trading is looking at how far the price tends to deviate from the mean before reverting back to the mean. Tip: One good way to cope with tough situations like these is to count backwards 30 bars, next, locate the lowest bar out of the 30 and treat it as Support. In. Support lines represent prices where the market had difficulties to break below. and resistance levels, which is popular among retail Forex traders. BARCELONA VS SEVILLA 2022

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You need to look to touch as many as possible swing points to get better trend line area use higher time frame like daily time frame do not force a trend line to fit the market — if there is not trend move forward to another pair Downtrend Example For a downtrend you need to connect only lower highs because the downtrend line is drawn above the price.

In case of uptrend you need to connect higher lows because uptrend line is drawn below the price. In the image below I have pointed several swing high and swing low which I will use for connecting them and making a trend line. In this case I will make a downtrend line but also a second line above the price just to get a channel to give you a better overview how price follows trend lines. When a trend line is drawn and at least two lows or at least two highs are connected we get a trend line as in the image below.

I have connected at least three lows which makes a trend line better and confirms that downtrend line is valid. You can see minor swings high which are not connected with the trend line. You can make new trend lines and connect them together like I have done on the image below. The thing is when you connect minor swings with another trend line you get an area between two trend lines.

In my case above I have two trend lines in a downtrend where swing highs are connected. Area between those two trend lines gives you the price area where price could bounce. In this area you can watch to exit your trade if you are in buy order or you can wait for the sell order to be activated. Connect Body or Wick Will you connect the lows of the body or wick it depends on you because both ways are valid.

For all of this to make sense, you have to remember why prices in a market move. Markets respond to the orders that traders make and the actions of participants in a market influence how prices move. The majority of traders will place their stop and limit entry orders and take-profit orders on or close to big round levels. A lot of traders who are unfamiliar with the bias for rounded numbers will also dangerously place their stop-loss orders on round levels too.

Traders may do this consciously, or even subconsciously. Check the image below, taken from our depth of market snapshot tool , you can see how orders are clustered at round levels. The fact that round number levels have a significant influence on the market cannot be denied and should not be overlooked. These psychological levels are used by both retail Forex traders and major banks that deal in Forex.

This theory explains why prices seems to lose momentum, even in a strong trend. See the chart below, most price reversals shown are aligned with round-number price levels. Price reversals at round numbers happen because traders create sufficient trading volumes that allow the price to bounce off these levels and move in the opposite direction. When price approaches these levels, the number of trades and trading volume increases, and the price moves in a more dynamic way.

How to Trade with Round Numbers Now you know why round numbers have such a significant impact on how the price of a currency pair moves. But how can you put that theory into practice and apply a round number trading system? To recap, an overwhelming majority of participants in the Forex market, and other asset classes for that matter, have a tendency to place their entries and exits near round levels.

The price naturally moves towards these clusters, because market orders must be matched against other orders in the book. Trading round numbers in Forex allows you to increase the efficacy of setting a take-profit, a stop-loss and identifying the right levels to open a trade. Consider using our Stop-Loss clusters MT4 indicator to corroborate the two principles. Rebound and Breakout Indicator When using round numbers to determine psychological levels, you can follow the sentiment of the market and possess more clarity on how the price can develop in the future.

A considerable accumulation of pending orders being triggered can easily change the flow and move the price in the opposite direction. Context is needed to truly understand the premise of why the price reacts the way it does. Selling pressure that pushes the price down can be due to people positioning themselves for a downtrend, or it could be traders having their take-profit or stop-losses hit.

For a take-profit, it is a good idea to place it on a round level since there is a more substantial probability that the price will move towards it and ultimately be hit. On the other hand, for a stop-loss, you will want to move it away from a round-price as the likelihood of it getting hit is much higher. The idea of using a stop-loss is to get out of a position when you know the trade is invalid.

We know that prices can bounce off round levels, which means there is a strong chance that the price can move in your favor after bouncing off the round-level. For more context, read our article, which outlines how to set a stop-loss correctly.

Conclusion about Round Levels in Forex The role psychology plays and how it influences the decisions made by traders and investors is crucial.

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How to Use Counter Trend Lines When Trading

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