EURO USD TRADING GAIN AHEAD OF STRONG REVERSAL - forex lines 7 trading system review

EURO USD TRADING GAIN AHEAD OF STRONG REVERSAL ~ forex lines 7 trading system review

The EURO USD provided us with a small trading gain of 46 Pips on Thursday as we took advantage of the sharp Bullish Reversal that was predicted in December 2015. The original trading target was 165 Pips but by the end of the Holding Period established for this trade this had not been hit, obligating us to close our trade for the smaller profit. During this trade, a sharp bearish pullback had threatened our Stop Loss, coming within 5 Pips of taking out our trade. 

This pullback would have tempted many to exit the trade for fear of being stopped out. However, thanks to the rule that we have of never looking at our trades while they are open, we were able to capture this trading gain as the market u-turned and rallied once more. As a result, this trade, combined with the 138 Pips from the GBP USD, has now given us a good start to 2016 with a Rate of Return of 9.4%.

The screenshot below is taken from the Private Video Analysis we did for the EURO USD in December which predicted the sharp rally. 

As can be seen from the current patterns for this pair, this was exactly what occurred in the last few days. This provided us with the trading gain as we entered at one of the Bullish Candlestick Signals.

The chart below shows our Entry Setup on the 4 Hour Chart, including the original target that was set at the Resistance Boundary of the Range.

Entry and our Stop Loss placement were done using this ABC setup - a setup that was predicted a few days earlier...

Now this is where it got interesting. For traders who choose to follow their trades, the pullback that took place after entry would have led many to close the trade as the market began reversing towards the Stop Loss.

This would have led to an unnecessary loss instead of the trading gains offered by the rally that eventually took place. The temptation to monitor our trades while they are in motion is very common. It is very natural to want to ensure that our trades are heading towards our targets without any pullbacks that threaten our Stops. While this can prevent some losses, it is a habit that can affect our long-term profitability. 

The Forex, like all markets, has a natural tendency to move in waves towards its daily, weekly, monthly and yearly targets. This reflects the changing value of currency pairs in response to changes in economic fundamentals and investor sentiment. It is therefore necessary for us to expect this for all our trades and not interfere. This is why it is crucial to adjust your platform so that you do not see the chart of the trade open nor the balance but only the tab that shows you whether the trade is still open.

Another important issue related to this trade was the Holding Period. Keeping our trades open for too short a period can curtail our profitability while having them open for too long can expose us open to unnecessary volatility. It is for this reason why a specific time period is used for each type of trade to establish a balance between these two extremes. 

When the Holding Period for this trade had ended, we had to close the trade regardless of the floating profit/loss at the time. This decision was later proven to be accurate as you can see from the pullback now taking place.

This trade highlighted many of the important things we need to succeed at trading over the long-term. These relate to the technical factors that determine our decision to execute a trade but more importantly the emotional aspects of trading - the traders Achilles Heel. 

Watching our trades can feel like the right thing to do to ensure profitability given the volatility of this market. However, this can be a serious hindrance to success if this leads to the habit of constantly closing trades before they have a chance to hit our targets. By adhering to the rule of not watching your trades and obeying the Holding Period, you will be assured of maximum gains for each trade ahead of sharp market reversals.

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ANOTHER FALSE BREAKOUT ON THE EURO USD - m1 forex trading system

ANOTHER FALSE BREAKOUT ON THE EURO USD ~ m1 forex trading system

Many traders will now be wondering why the 2 strong Bullish Breakout attempts on this pair have been met by sharp Bearish reversals in favour of the USD? The Bull Candle Signals given on the Daily Chart appeared to be strong enough to justify entry and provide sharp EURO gains, yet on each occasion, the Bears took control aggressively to pull us back inside of the Pennant Setup. So are there explanations for these reversals that are all so common across the Forex Market or should we put them down to just being random movements?

The Pennant Setup on the Daily Chart was formed by waves of Uptrends and Downtrends since June of this year. Within the last few weeks, we saw the first attempt to break out of this attempt with a strong Bull Candle at Resistance. However, this was followed up by sharp Bearish Candles that took the pair back inside of the Consolidation.

DAILY CHART- FALSE BREAKOUT SIGNALS

After only managing to reach half-way inside of the Pennant, we saw another attempt to head higher and breakout once more. This was given with a smaller candle signal but a very strong one nonetheless that usually leads to successful breakouts. Yet, once more, the Bulls were taken out by sharp Bearish Candles that have taken us back below the Resistance boundary. Based on this, it is very possible that we see a break to the Support boundary at 1.0815.

DAILY CHART - EXPECTED BREAK TO SUPPORT

These scenarios are very common traps that lead to trading losses. Breaks of Consolidation barriers are usually strong indicators that a profitable move will take place, offering large gains in a very short time. So it is no exaggeration to say that these losses can be surprising and frustrating for traders -especially when the signals are strong.

Based on what I have observed in the market over the years, I have found that there are 3 main categories of Breakout Signals that appear at Consolidations and only 1 of these leads to profitable breakouts. I have also noted that these candles also have to break the Resistance/Support boundary by a large enough distance in order to justify entry.

TAKEN FROM THE TRADING MANUAL 

("Successful Currency Trading With the Daily & 4 Hour Time Frames"-
Available as part of the Swing Trading Course at www.drfxswingtrading.com)

The first Candle that attempted the break out is one of those that have a low probability of success and should be avoided. The 2nd Candle is actually one of those that are normally safe to trade but the distance by which it broke the Resistance was not enough. Ideally, more than half of the body of the Candle needs to close beyond the boundary.

DAILY CHART- TYPES OF BREAKOUT SIGNALS

In order to have a correct signal, therefore, the type of candle and the distance of the breakout need to be appropriate. Once you are able to identify these types of Candles and examine if they should be traded based on these and other criteria in the Trading Manual, you will be able to avoid these traps and focus on those that lead to profitable moves.

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LARGE CANDLE LEADS TO NZD USD REVERSAL AS EXPECTED - launch pad forex trading system

LARGE CANDLE LEADS TO NZD USD REVERSAL AS EXPECTED ~ launch pad forex trading system

As was predicted in a recent Private Video Analysis for Subscribers, the NZD USD has begun to show volatility that is typically associated with Large Candles. This Candle appeared as part of an ABC Setup at the Support Boundary of a Range Setup on the Daily Chart as the pair heads to Resistance. Despite the strength of this Signal, I warned that trading this Candle or any other that followed would be too risky based on the theory behind Large Candles across all time frames. 

As we would see the following day, the market began to pullback with a strong Bear Candle that would have taken out Long Positions that may have been opened - justifying our decision to avoid trading this pair.

The video below shows the analysis that was done last week and the rationale provided about Large Candles.

There are 3 main types of Candlestick Signals. One of these is the Large Candle that is very risky to trade. It is usually associated with pullbacks and sideways movements instead of profitable trades. This can be very tempting to trade because of their strength but unfortunately this is one of the traps of the Forex Market that can take us by surprise. As long as you are aware of this type of Candle and the reason they are dangerous to trade, you can focus your trading on the other 2 Candles that lead to profitable trade.

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BREAKOUT CANDLE TAKEN OUT BY SHARP REVERSAL - ma forex trading system

BREAKOUT CANDLE TAKEN OUT BY SHARP REVERSAL ~ ma forex trading system

Last week, the EURO USD provided another example of how Consolidation Breakouts with Large Candles lead to False Breakouts -another "trap" set by the market.

In the Daily Chart below taken from the Daily Market Update of Monday August 24, you can see the Large Candle that attempted to start the breakout above the Resistance of the Consolidation...

However, as you can see in the note below the graph, I expected it to at least pause here before either moving sideways or reversing. A few days later, a sharp reversal took out that Bull Candle to start a False Breakout Reversal, taking us back inside of the Pennant...

This reversal is due to the fact that these Large Candles- as attractive as they are -hardly lead to successful breakouts. Across the Currency Market these signals, as well as what are known as Weak Candles, are notorious for either leading to sideways, erratic moves or pullbacks. Traders who are not aware of this can get caught by these reversals that appear to be strong enough to justify breakouts. 

They key is to distinguish between these candles and what are called Normal Candles. These are the ones that actually lead to successful breakouts and once you know their characteristics, breakouts become a lot easier to trade. After years of struggling with these trade setups, figuring this out was what I had to do...

Taken from " Successful Currency Trading With the Daily & 4 Hour Charts"

I cant tell you how much money was lost and time spent in identifying the right signals to trade, but it was worth it. This has made a big difference in my results and of those who now use it in their trading. 

Although this has example with the EURO USD has taken place on the Daily Chart, these Large Candles are seen across all time frames as well. It is not so much the size in terms of Pips but rather their appearance relative to the other Candles on the time frame being traded. So whether you are a Day or Swing Trader, they will appear on your charts.

Find out how to identify these Normal Candles and start trading profitably today!

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