Home Blog

Risk Reward Ratio for Forex, Stock Trading and Day Trading

0
Risk Reward Ratio
Risk Reward Ratio for Forex, Stock Trading and Day Trading that works in today's market. Sound approach in using risk reward ratio

Risk Reward Ratios are often times overlooked by most traders nowadays, and the theories underlying these ratios, in this discussion, risk reward ratio, are often times under-studied. Traders are so caught up by established candlestick patterns, which in some instances, don’t necessarily work, unknowingly underestimating the importance of learning and understanding the fundamentals running this structured knowledge. Thus, they go out and complain that the market is against them, and the like.

This video will tackle a sound risk reward ratio strategy that works in today’s market which will definitely help you tremendously in your trading career.

Was this video on Risk Reward Ratio for Forex, Stock Trading and Day Trading helpful to you? Leave a message in the COMMENTS section at the bottom of this page. 

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.


Risk Reward Ratio

Welcome to this video on risk reward ratio for forex, stock trading, day trading and well, this applies to swing trading as well for that matter. So here’s the big issue. A lot of people out there will say things like, well, I won’t take a trade unless it has a better than three to one reward to risk ratio, four to one reward to risk ratio, five to one, reward to risk ratio, whatever it might be, and that’s all great. However, I want to share with you some real-life considerations when you’re taking a stance like that. The first issue is that risk reward ratios are generally inversely correlated to win-loss ratios. If you want to have more winners than losers, you’re going to have to be willing to take some trades that don’t have as good a reward to risk ratio, and that’s a psychological issue.

We’ll come back to that a little bit. So trades with the higher risk reward ratio tend to have a lower win-loss ratio. Why is that? There is a very clear reason. That’s because it’s simply easier to determine a short-term move in the market. Why is that? Well, because as more time goes by where things can happen in the market to change the market sentiment, and this is why; one of the reasons why I should say that the trades that have a better risk reward ratio, they take more time to develop and therefore they’re less likely to complete. And so when I want to say they have a worse win-loss ratio, I mean to completion. What we’re expecting it to have as a final target doesn’t mean you’d lose money necessarily if you manage your money well, but it’s less likely to complete its pattern.

What is Risk Reward Ratio

Let’s talk about a trade that has the best risk reward ratio, which is a reversal trade where you get in at the end of a trend, and then you’re looking to trade a new trend in the opposite direction. That is the single best reward to risk ratio trade there is. The average trend last five waves. So there is wave five right there. Now we would say, this is statistically the time to take a trend reversal trade and catch a trend in the opposite direction before it even confirmed and therefore get a fantastic reward to risk ratio. Definitely better than three to one, usually even better than a five to one reward to risk ratio. These are so phenomenal. So sure, we all love to risk a little bit to make a lot and that’s fantastic.

Here’s one of the challenges. So this particular trend went seven waves instead of five. And this is one of the challenges, it is very difficult to determine when exactly a trend will end. Five is statistically the average, but because it’s an average by definition, there’s got to be some trends that last only three waves. Now there are another seven waves and, therefore, again, you’re not going to have a good a win-loss ratio. You get stopped out here, for example, and this will turn into a losing trade. Another problem with trend reversal trades is that they’re the best reward risk ratio trade. But most trends don’t actually reverse. In other words, even if I really take this trade here and go short, odds are the market will stop trending. But it’s not typically going to immediately reverse and go into a downtrend.

Trading Risk Reward Ratio

What happens at the end of most trends is that they just kind of go sideways. There’s a cycle in the market of trending and non-trending, and what most likely will happen is that the market will go into a non-trending cycle. Then again, trading trend reversal trades. Sure, great reward to risk ratio, but only when they complete, and they do not complete most of the time. So here’s another example, again, you’ll see that we get the same thing where we get five waves and then it goes down and, that’s not it. If we would have taken this long for a trend reversal trade, it went down to meet another lower low. First of all, let me give you one solution to this when I trade trend reversal trades – yes, five waves is the average trend.

I don’t want to trade within the average. When I take trend reversal trades, I actually wait for wave seven. That means that sometimes the market will stop trending after wave five, and I won’t get an opportunity to take a trend reversal trade. That’s okay. I want that market to be more extended. I want it to be beyond the average because I have actually a really good chance then that seven is going to be the final low. Now, does that then give me a guarantee that the market will go up into a new uptrend? No, but what I like to do is what I call a hybrid trade. So scalp trades, okay. What has a better win-loss ratio since these big long trend trades or trend reversal trades that have a very good reward to risk ratio traits don’t have as good of a win-loss ratio?

Risk Reward Ratio Indicator

What has a good win-loss ratio, scalp trades, but then again, conversely, scalp trades don’t have as good of a reward to risk ratio. So I do a hybrid. What I simply do is I will take some profits if I take this long, which this is a typical trend reversal trade for me. That’s a half cycle right there. And so I lock in some profits there, in other words, as a hybrid, I’m doing a little quick little scalp trade, lock in some profits, and then adjust my stop, put in a trailing stop. This way I’m golden, right at this point really can’t lose, especially if I have my position hedged and so forth. And that’s really the key. Psychologically, it’s very important for most traders, including myself – to have more winners than losers.

And if I have more winners than losers, and I get some big trades in there as well, then that’s just the best of both worlds for me. So this is what I do; I’ll take a full position, I’ll take part of my position, also my profits at the half-cycle. By the way, if you’re interested, my cycle indicator to share with you how the cycles work and how we measure them mathematically with precision, feel free to send me an email at barry@topdogtrading.com. I also make Webinars, pretty much every week, sometimes twice a week where I actually give away my cycle indicator for free and give you a 40-minute tutorial on how to trade it and that’s how we determine where these numbers go. You see the notations of the numbers and the ABCs and so forth.

How to Calculate Risk Reward Ratio

That’s all done with my cycle indicator. Happy to give that to you for free. Anyway, we trade a half-cycle, we lock in some money because that half cycle is a super high win-loss ratio. Rarely do I get a loss on that. Then I moved my stop and now, I’m golden. Wouldn’t that be great to be golden on every single trade? And again, then our win-loss ratio. It was through the roof and even if it’s small, a bunch of small little winners at the end of the day or the end of the week is, it adds up. And then not only that, but you ended up then getting some big wins as well. Now let’s take that off and let’s see what happens here because I want to share with you another problem when people say, I will only take these big win-loss ratio trades.

Okay, we’re going, and then we’re good. It’ll fit in the chart. So this one worked right? This trend reversal trade worked and indeed our risk is tiny. This is literally the risk on the trade and our reward is huge. That’s somewhere there; probably right in about, there would be our reward. So, reward to risk ratio. Fabulous, we love it. We’d like to have these every day of the week or every hour of the day. The problem here though, if you look at this, is that the longer the trend continues, in this case, trend reversal trade. But the longer the market moves, the more fluctuations come in on their journey to the top. Psychologically, this would be a bit challenging from here to here and not a big deal from there to there.

Risk Reward Ratio Forex

Not a big deal from here all the way down to here. Here’s the question, could you stay in when it broke this low, for example. Would you still stay in? And this is very typical of long-term moves. They get these big fluctuations from the time you get in over here to the target over here and it becomes psychologically challenging to hang in there for the whole movement because you see your P & L, you’re given the money back, we’ll give you money back, give him any back.

These are things that you need to consider, and some of them are personal decisions as to your own trading psychology, what you’re comfortable with and so forth. So the bottom line is I’ll end with this. A lot of it is personal. You need to decide what works for your brain cells, so understand too that scalp trades occur more frequently. That gives you more trades every day or every week if you’re a swing trader, and they give you satisfaction. They help you with the problem of getting bored. If you’re only going to take trades that have a very high reward to risk ratio, you’re going to get bored and you’re going to get antsy. And when traders get bored and antsy, they tend to make mistakes and it’s not as satisfying.

Rubber Band Trade Strategy

Now, if you’re a really patient person and you can do that, that’s fantastic. Then that might be the way to go for you. If you find yourself needing more trades and getting reckless because you’re not getting enough trades, you might want to incorporate a scalping trading into your trading as well. Pick up some of those quick profits along the way, waiting for the big moves. And to me, again, that combination is really the best. So, my friend, if you like this video, please understand that it’s free. I give away a lot of free education and I just ask that if you got value from it. You pay it forward by clicking on the share button and sharing good things with other people.

That’s really the best thing you can do. If you’re watching on youtube, give it a thumbs up and leave a comment because I really love your comments. The encouraged me to keep providing more free tutorials for you. Also, I’m giving you one of my favorite trade strategies called the rubber band trade. It has a very high wind loss ratio talking about high win-loss ratios. This is probably the highest win-loss ratio trade I’ve ever seen in my life. Happy to share it with you absolutely free. Just click on the little icon there at the top right-hand corner of the video. I’ll be happy to email it to you. Also, there’s a link in the description box below. You can click on that if you’d prefer, and then once you do that, I will personally email the video to you with the rubber band trade strategy.

GET MY FREE MARKET ENTRY TIMING INDICATOR

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on Risk Reward Ratio for Forex, Stock Trading and Day Trading? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also, I’m giving away one of my favorite new Risk Reward Ratio for Forex, Stock Trading and Day Trading tutorials. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with the first video.

Those interested in Risk Reward Ratio for Forex, Stock Trading and Day Trading video that works in today’s markets also showed an interest in this video:
https://www.topdogtrading.com/support-and-resistance-trading-strategy/

Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
https://www.youtube.com/user/TopDogTrading?sub_confirmation=1

Technical Analysis Tutorial – Indicators are Never Wrong

0
Technical Analysis
Technical Analysis Tutorial, Indicators are Never Wrong, Best Technical Analysis Tutorial that works today's market

Employing technical analysis in every trade is a great way to better anticipate market movement. With the availability and use of a vast selection of indicators, there really is no way for a trader to say his/her loss is due to lack of resources; it all falls on their approach to trading; in essence, their psychology, trading strategy, etc.

Indicators are, ultimately, a valuable asset for traders. They’re never wrong in providing supplemental data for traders to help them in every aspect of their trading framework. However, most traders nowadays have fallen under the false assumption that these indicators make them money! In fact, they seem to be so caught up with this idea that most, if not all, blame their losses in indicators.

In this video, we will tackle why technical analysis indicators are never wrong and how to utilize them to greatly improve your trades.

Was this video on this technical analysis tutorial helpful to you? Leave a message in the COMMENTS section at the bottom of this page. 

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.


Technical Analysis Tutorial

Welcome, my friend to this technical analysis tutorial with the very controversial title of ‘indicators are never wrong’. That is a strong statement. In technical analysis, indicators are never wrong, let’s just be very literal about what indicators are, they are mathematical formulas. They’re not magical, but they are mathematical. What happens when we talk about this in most traders mind? Well, they start to think of people who say ‘I don’t trade with any indicators, I don’t need any stinking indicators because they are all lagging’, things like that. And let’s deep dive into that a little bit.

There’s a lot of truth to that, but it isn’t the truth, the whole truth and nothing but the truth. When we talk about indicators being lagging, it is an issue of yes, I acknowledge what people are saying that in the sense that the market, in this case, whatever market we’re looking at the stock market today, by the way, no particular reason that I’m looking at the stock market, but whether it’s futures, Forex, etc., you’ve got people who say ‘I just look at price bars’.

Think of price bars, are they leading? Know that the price bar there is also lagging, and so is every other price bar on the chart in the sense that it’s already posted data. The data is done, the buying and the selling are done when that bar is closed and, therefore, after that bar is closed, it’s not telling you anything about the future necessarily.

Stock Market Technical Analysis Tutorial

Now, some people might disagree with that, with price patterns and so forth. And, perhaps, we’ll get into that in a future video because then you get into the whole issue of our price patterns leading, and there’s been a lot of studies done on that. But, today, we want to just focus on the issue that price bar is just as lagging as an indicator is and the sense of here we have MFI, as you can see, it’s just taking the data from whatever market you’re trading relative to whatever time interval you’re trading. It is taking that data, putting it into the left side of a math equation, and then that indicator’s equation crunches the numbers and spits out a value out the right side. That’s the value at this snapshot in time.

So really the indicator isn’t leading or lagging price, it’s giving you the same or it’s giving you the information at the exact same time which is in real time. So that is the first thing to say. Now, why do I say indicators are never wrong? Because math is never wrong. Math is just it, it is always what it is. So you can’t really say that indicators are wrong. I find that people get sloppy about their language because they imply things from that language and then they use that language in their self-talk. Then it messes them up psychologically when they come to trading because they’re not being accurate enough in their understandings and definitions of things. Therefore, what we need to be looking at here is the fact that indicators by themselves, price bars by themselves, nothing by itself makes us money.

Forex Technical Analysis Tutorial

So normally when people say ‘indicators are wrong’, they’re talking in the context of making money, right? So that’s going beyond the next step of what I’m talking about here, which is just being very literal. Now, to make money in the market, we cannot rely on any one thing. There are no certainties in the market. There’s no one magic holy grail indicator. There’s no one magic holy grail, candlestick pattern or multi-buyer pattern. We’re moving average or anything like that. The way that I make money in the market is by putting together five non-correlated variables and when they all agree, they’re all bullish or bearish, because they’re non-correlated. It gives me a probability scenario. Still does not give me a certainty; there is no certainty and trading. In fact, I don’t even like calling trading, trading. I’m a little old-fashioned.

I’m born in 1959. So back in the days of Yore, we didn’t have computers. We had a black and white TV. I’m an oldster and back then, back to the days of Jesse Livermore, thinking about that, if you’ve ever read the classic books about him and so forth, they called it speculation back in those days. I actually like that term better because that’s really what we’re doing. And again, the self-talk, if I call it speculation, then it reminds me, it keeps it in the forefront of my mind that what I’m doing is risky and that what we’re doing is managing risk and there no certainties. Still, call me old fashioned fine, but I think it helps me psychologically actually. I know it helps me psychologically and that’s up to you whether you want to adopt that term, that ancient term or not.

Technical Analysis

So, getting back to how can these things be helpful in actually making money, since there’s no one thing, what I look for are five energies in the market and I’m looking for them at the moment of taking the trade. Those five energies are numbered and I treated them where I look at them in this order. Number one is the trend, the direction of the market; not only the direction but am I early in a new trend?

That’s a good place to start, tells you, which side of the market you want to be on. Also, the trend is your friend until the end, so we don’t want to trade a trend late. We want to trade it early, so timing and the trend are critical. Number two is momentum. That determines what the strength of that trend is. Is it a strong trend or a weak trend, do I have to trade in the direction of the trend or not?

Learn Technical Analysis of Stocks

Because there are weak trends and a weak trend, even if you trade in the direction of it, you will get stopped out. Number three are cycles, and that’s about timing your entry – when to get in and out, when you’re going to get a final swing, high or final swing low, so that after you get in, you don’t get stopped out.

By the way, I do have an amazing timing indicator that I actually give away for free on a Webinar that I offer absolutely free. Feel free to send me an email at barry@topdogtrading.com to get access to that and it works on any trading platform, any market. And that’s a Freebie that I gave out. I’ll give you a free tutorial with it as well. Those are the first three energies: trend, momentum, support and resistance levels. And number five is then the fractal energy where I’m looking for the dominant energy of the next higher timeframe.

Technical Analysis of Stock Trends

And that’s it, those five non-correlated energies; when they’re bullish, I go along, when they’re old bearish, I go short, and I put in hard stops. I hedge my position to manage the risk, and that’s trading in a nutshell. So let’s look at a couple of things here real quick and I’ll show you why they work sometimes, why they give us a high probability scenario. So first of all, let’s get this stuff off here and draw in a couple of new lines.

First of all, for trend, as you can see here using the 50-period simple moving average, why is there any magic to it? Nope, but on a daily chart, a lot of people look at it. So, one of the reasons why certain things in technical analysis work is that it has a self-fulfilling prophecy to it. Nothing magical. It’s just purely that you got a lot of people looking at it and at times you have a lot of people looking at something, then the mass psychology kicks in and people respond to it.

Technical Analysis of Stocks

Especially on a daily chart, a lot of people look at a 50-period, simple moving average. You see it provides resistance here. Again, nothing magical. It’s just mass psychology. So the same principle applies to support resistance. Nothing magical about them, but if you have certain levels that everybody’s looking at 52-week highs and lows would be a good example of that, then the market’s going to respond to it in some way and you should include it as part of your trading methodology. Keep your eye and knowing that everybody’s watching that level. Okay? Again, can’t read it alone. It’s one piece of evidence now. So that’s one category of technical analysis indicators which, again, is things that a lot of people are looking at and that’s the reason that they work or at least give you a probability scenario as part of an overall method.

RSI Technical Analysis Tutorial

The other thing that we’ll talk about today is momentum. So momentum is the second thing that I look at after trend here. We have the MFI – Money flow indicator. It’s money flow index actually, and it is a volume-weighted RSI, so it’s similar to the RSI but incorporates volume, which is what makes it actually a more literal momentum indicator. By the way, RSI is not a momentum indicator; that’s the ‘Big scandal’. Might as well throw another heresy out there. Classically, we identify it as a momentum indicator. But really it’s a rate of change indicator because it doesn’t incorporate weight. And in physics, momentum is volume times mass, so mass equates to volume in the market. So, if your indicator doesn’t incorporate volume, it technically is not a literal momentum indicator.

Let’s talk about something practical here in trading. Those are again, I am a pretty literal guy, that’s why I bring those things up. If you’re going to trade something like you know, you’re looking at a downtrend here, right? And then we’re going to look for connecting these two lows and trade a breakout. Now, a great fail goes back up. What would then give us an indication that that might fail, that that breakout might fail? Just a very simple example here is the momentum is up. So, therefore, this is a weak trend. Well, momentum is moving up, therefore, I would not want to sell bearish into bullish momentum. And therefore, again, the trend is your friend until the end. We’ve already been in this trend for a little while and when you get a momentum shift now, it’s like we’re going down here a little bit.

Technical Analysis Course

We break that little trend line. That’s a common trading method that a lot of people use. Not a bad method, but I wouldn’t trade the price pattern alone. I want to know is if the market moving down on strength or weakness. Here, it’s moving down on weakness. We have conflicting energies, in other words, so I’m looking for the confluence of those five energies. We don’t have it, we have the energies fighting each other. Here, the trend is down, and momentum is up.

Let me show you a different example of the opposite of that. Here, we now have, if we were to draw a line across these highs and use that same technique, then we would again look at momentum. In this case, the MFI and it is moving up. Therefore, as we break this trendline, we have upward momentum. 50 MA is up. It’s early, again, early in a new trend and trend being defined by getting above the 50 MA, the 50 MA angling up so we’re early in the new trend, not late in an old trend.

Learn Technical Analysis

Now the trend is our friend, but that’s just direction. We need strength behind it and in this case, momentum does confirm it so we have an alignment and therefore when it breaks the trend line, it actually follows through. That’s the type of way that we combine indicators which mathematically measure the energies, these energies of the market, the underlying energy of the auction place, if you will, to give us a probability scenario. And, obviously, we always manage our risk in the process, but by having these non-correlated energies align, it gives us a much higher probability of success because the indicators are mathematical and, therefore, they’re never literally wrong. We can use them to create a rule-based method. We’re actually measuring the flow of money by the way, bar by bar, so I’m not necessarily looking for anything to be a long-term leading indicator.

Again, I don’t believe anything like that does exist. Nothing magical here, but we look for this kind of stuff at the moment we enter. So at that moment, that’s what I’m interested in. In fact, if you look, we’ve even got a trend line break here, right? So it’s at the moment I enter that, I’m interested in all this stuff and that’s the only moment. And then from there, I trade bar by bar and I continue to watch the money flow, the energy of the market because the market can do anything at any time. It can change at any time. And this is why nobody can predict the long-term moves of the market. So we use our trailing stops and our targets and things like that to help us to become successful traders.

Rubber Band Trade Strategy

Now, if you liked this video, please understand the universe says it’s not free. That’s right, because according to the universe, Karma and universal spiritual principles, if you got value from this, you have a moral obligation to pay it forward by clicking on the share button below. And you know when you get a warm feeling in your heart, you know you did the right thing by sharing something good with other people. That’s really the best thing that you can do.

Now, if you’re watching this on youtube, also click the thumbs up icon and leave a comment. I love your comments. In fact, they encourage me to continue to create more free lessons for you.

And a special thing I’ve got for you is one of my favorite trade strategies that I will give you absolutely free with all the rules and the parameters and the filters. It’s called the rubber band trade. It has a very high win-loss ratio and it’s actually a simple trade. I can teach it to you in 26 short minutes. Get my rubber band trade strategy absolutely free by clicking on the image in the top right corner of this video or in the description below the video. If you’re not watching this on youtube, then there’s probably a link below or an opt-in form on the side. Once you do that, I’ll personally email the video to you with the rubber band trade strategy.

GET MY FREE MARKET ENTRY TIMING INDICATOR

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this technical analysis tutorial? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also, I’m giving away one of my favorite new Trading Indicator tutorials. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with the first video.

Those interested in Swing Trading the Market Profile Trading Indicator video that works in today’s markets also showed an interest in this video:
https://www.topdogtrading.com/swing-trading-strategies-best-trend-trading/

Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
https://www.youtube.com/user/TopDogTrading?sub_confirmation=1

Swing Trading the Market Profile Trading Indicator

0
Market Profile Trading
Swing Trading the Market Profile Trading Indicator, Best Market Profile Trading Indicator

Timing low and high volatility swings in the market using a rather famous technique called market profile trading indicator is a great way to earn more profits, whether in stocks, forex, etc. However, to maximize its advantages, one has yet to know the fundamentals and principles underlying the said indicator.

This video will teach you the basics of the market trading indicator and the different ways on how you can use it – methods that in today’s market, which may help you tremendously in your trading career.

Was this video on Swing Trading the Market Profile Trading Indicator helpful to you? Leave a message in the COMMENTS section at the bottom of this page. 

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.


Market Profile Trading

Welcome to this video on swing trading the market profile trading indicator. What we’re going to look at here today is a rather popular technique called market profile, but the way I use it is a little different than the classic way. The classic approach is to use 30-minute increments – I am using 30-minute bars here, but they don’t really normally use bars. They use what’s called TPOs and that stands for time price opportunity; it’s certainly a fine, legitimate way to use it, but I’ve just decided to simplify things. So in market profile, I take two things only, and that is the value area high and low – that’s what these Magenta lines are. This is the value area high and that’s the value area low. Now, what are those lines? What those lines are is they tell you where 70 percent of trades took place the previous day.

So you’ll notice that the lines are actually the same two days in a row. So this day, 70 percent of the trades occurred between these two lines and you can kind of see that. But these two days pretty much were the same – their price range was essentially very close to the same. So what we have here, what this tells us, and how we can use this in our trading is the concept of expansion and contraction. Similar to Bollinger bands, triangles, wedges – things that are contracting patterns, this is another type of contracting, low volatility signal.

Market Profile Trading Strategies

So we get to the low volatility signal for two days. Well, what do we expect after a low volatility, there’s actually a cycle between low volatility that then turns into high volatility. Now, we’re looking for a breakout of this range. And what’s cool is that if you looked at the high those two days, it would be here. But if you look at the value area high, it comes in much lower and you could potentially get in earlier into a trade than if you break out or if you trade the breakout of the previous day’s high. One of its advantages is it can actually get you earlier in a new trade and then it just runs these very clear lines, very horizontal lines – that concrete nice patterns for you.

So, as you can see this, we go from low volatility and high volatility. And, of course, the benefit of that from a practical point of view is that high volatility markets have the potential to make us big money, fast. That’s fun to see the P and L go green really fast. That’s why I like to trade these low volatility to high volatility cycles. Now, other than looking for expansion contraction patterns, another one is for trends. Here is a pattern for trending; by the way, I’m showing you for swing trading, holding two, three days, you can also use these levels on day trading if you’d like. But I really prefer, well, I use it on all my charts actually.

Market Profile Trading System

So it’s really great. I should mention here too, if you’re wondering where to get these levels, you really need to talk to your software provider and see if they offer them. Now, this is a trend, and look at how clearly this marks a trend – it’s just a different way of, well, mapping it on your charts so it’s very clear. Again, I call this stairstep pattern. So, go up one, there’s the next step two, there’s the next one and three. And you can kind of think of this almost as a five wave pattern if you will – we’re going to try to draw some lines here. So that would be one and that would be two down here. Actually, if you want to draw it on this, you could just draw one, two, three, four, five – draw on the actual lines themselves.

And the bars are going to come into little different places obviously because the horizontal lines only update once a day. They just stayed the same place all day long. Although there are some variations of this that do update intraday, I haven’t used that. I just prefer to use a traditional approach. So you can see nice stairstep pattern and it takes out some of the noise that could otherwise shake you out. And five waves is about average, that’s about normal. So, if you get five waves, you’re doing good. So then you can’t go more and, of course, you can go less. But I find that five is about the average and good a place to take some money. Actually, we can just stay here in this slide and see where it goes.

Market Profile Trading Rules

So the same thing, but now we go into a downward trend, the opposite of this. And we’ve got basically the same pattern, but now upside down – I kinda like to show things both from a bullish and bearish perspective. So there’s your one and there’s your two – actually one, two, three, four. And then goes down just a little bit for five. Now, the market goes down way beyond that, but, of course, the reason is that this valley area low is measuring from this day, the previous day. And if you notice too, this is very significant. Pay attention to this one, this retrace here. In fact, let me a redraw this – I don’t want to get too messy here. I want to be as clear as possible. Now, as we go down, we make an impulse move down and we barely retrace.

So that’s a very good bearish continuation pattern. We don’t like retraces to be too steep. We don’t want a lot of buying to come into the market. Now, this strong impulse moved down and now we just go straight across again. That’s good because it means there’s not a lot of bullish buying coming in against our downtrend trade. Now, we get a different type of retrace. This one is not as favorable. We don’t like this one as much because it comes up to the lower line, which is the value area low. But it also goes up to the value of your high. So you might be wondering, does this thing have to stay below the valley area low during the entire trend? Preferably, yes, that makes trading so much easier.

Market Profile Trading Setups

However, remember that this zone between the value area high and low is a neutral zone and, therefore, it really hasn’t gone into bullish territory yet. It would have to get above the area high. So this retreat, this is still acceptable. Just makes it a little tougher if you want to keep tight stops. But from a technical point of view, it is still a bearish trend. And if you could psychologically stay in there through that, then you’re golden because it does actually go down and make another low. So again, one, two, three, four, five, and that’s going to be real – your optimal point to exit and take some profits.

Rubber Band Trade Strategy

Now, if you liked this video, understand that of course it’s free, but if you got value from it, then that means you should pay that value forward. And the best thing you can do is do it literally by clicking on the share button and sharing it with other people. That’s the best thing you could do. Now, if you’re watching this on youtube, go ahead and click the thumbs up icon and leave comments.

I love to get your comments. They really encourage me to continue to create more free lessons for you and I got something very special. It’s actually one of my favorite trade strategies. I call it the rubber band trade, has a very high win loss ratio. I take this trade every time it sets up. It’s simple. I’ll teach you to in about 26 short minutes and you can get that rubber band treat strategy absolutely free by clicking on the image in the top right corner of this video or also in the description below the video, and if you’re not watching on youtube, if this has been embedded somewhere else, then there’s probably a link below or an opt-in form on the side. Once you do any of those. I will personally email the video to you with the rubber band trade strategy.

GET MY FREE MARKET ENTRY TIMING INDICATOR

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on Swing Trading the Market Profile Trading Indicator? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also, I’m giving away one of my favorite new Swing Trading the Market Profile Trading Indicator tutorials. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with the first video.

Those interested in Swing Trading the Market Profile Trading Indicator video that works in today’s markets also showed an interest in this video:
https://www.topdogtrading.com/swing-trading-strategies-best-trend-trading/

Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
https://www.youtube.com/user/TopDogTrading?sub_confirmation=1

Multiple Time Frame Trading Methodology on How to Draw Support and Resistance

0
Multiple Time Frame Trading
Multiple Time Frame Trading Methodology on How to Draw Support and Resistance, Best Methodology that works on today's market

Having a multiple time frame trading methodology on how to draw support and resistance levels is a great way to supplement your trades using timely indicators as to when to enter and exit trades. It allows for more informed trading decisions, providing more stability in your trades.

This video will tackle a sound methodology on how to use multiple time frames to establish support and resistance levels that work in today’s market which may help you tremendously in your trading career.

Was this video on Multiple Time Frame Trading Methodology on How to Draw Support and Resistance helpful to you? Leave a message in the COMMENTS section at the bottom of this page. 

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.


Multiple Time Frame Trading

Welcome to this video on multiple timeframe trading methodology; specifically, how to draw support and resistance trading multiple timeframes. There’s a couple of different ways that people like to do this with multiple timeframes – one would be to look for setups on the daily chart. For example, here on the left, we have a daily chart. By the way, it’s a stock here, but this applies to forex futures, commodities, whatever you’re trading. So people would say, I’m going to look for a setup on the long-term chart but I’m going to drill down to the short-term chart for a very precise entry, and you may be using that for day trading or swing trading. So fine, we find that that low does indeed hold and comes back. Then draw a support level at that line and let’s see what price that is

I’m bringing over my data box for you to get real specific here. That low is 41.36. Then we go over to our five-minute chart in this case, and you might use different timeframes. There we go – 41.36 on our five minute chart, we draw the support level on there and then we say going into the future now, we will be looking if the market comes back into the future: days, weeks, months, we will have a support level there from our long-term chart showing up on our short-term chart. Now, let’s see what happens and how well that works out for us. Little Hint, it’s not going to work out so great. Actually, let me just skip right to that section.

Multiple Time Frame Trading Strategy

So, here we are and this is that same level – 41.36 as you recall, but we’ve moved forward. In fact, that’s quite a bit into the future. However, let’s say that you were trading this particular day and you had the support level there from the daily chart, and it went forward into the future so that if the market ever got back to that level, you would say, I’m going to look to buy there, take profits there, whatever you’re going to do. Or perhaps even sell if it gets below that level, right?

So what happens is in that day the market comes below and doesn’t even seem to acknowledge its existence. It just, for the first hour, goes straight down. Of course, as you can see, it comes back up, goes above it, comes back down, above, holds it a little bit, etc. So, the bottom line is this – when you have these lines that are drawn off of a really long-term chart, a daily chart, and then you transfer that line over to a relatively short-term chart, they don’t provide precise support and resistance levels.

Now, does that mean that you shouldn’t put them on your chart? Absolutely you should have them on your chart, but I treat them a little differently. Actually, let’s go back to the long-term chart here for a minute. We don’t need this anymore. Let’s look at the daily and see how actually that looked on a daily chart. So this is how it looked on a daily chart. A couple of weeks later it came back down and that’s how it looked on a daily chart. So, we’d marked our initial support here – that would be in real time as we’re putting that level on.

Multiple Time Frame Trading System

On a daily chart, this looks great, right? That is definitely a nice bottoming candlestick pattern. It made a lower low, but it had a rejection of value of those lower prices, especially with this candlestick bar, and it headed back on up, so that’s great. But remember, that would be hindsight. If we wanted to trade that later, we potentially could.

That’s a basic concept, nothing really fancy here. The point is when I’m drawing a support level from a daily chart or from a long-term chart to a short-term chart – let’s just say that because I’m not really referencing any specific time intervals. But if they’re really far apart like that, then I will just mark it with a thick line like this in a later line to let me know that that’s what that is.

Multiple Time Frame Indicator

I’ve got that stored in my brain cells so that if I’m looking at it on a five-minute chart and I see this line, I will be like that is from a really long-term chart. Therefore, I do not expect the market to just come down and hold that line. I expect it to have more wiggle room. It’s a zone if you will, so I don’t even like calling support resistance lines, lines. I call them support resistance zones. So this whole zone here, we have to respect and acknowledge that even if it laces through it with dramatic energy as it did, I mean, that’s pretty dramatic energy for just to go like that. You might get the impression that this thing is just going to go south, or you might look for a throwback and then for it to go down.

But the point is here, don’t look for precision at these support resistance lines off of a long-term chart when you see it on a short-term chart. But you still should have them there because those levels are very important. Just figure out your own way of drawing it that makes sense to you and to distinguish it from short-term support resistance levels.

Rubber Band Trade Strategy

If you liked this video, please understand that it’s free. But if you got value from it, you have a moral obligation to share it with other people. Pay it forward, click on that beautiful share button below, it gives you a warm feeling in your heart. And that’s really the best thing that you can do to keep these free lessons coming. I also love your comments, they encourage me to create more free lessons for you.

I’m going to give you one of my favorite trade strategies. It is called the rubber band trade, absolutely free with all the rules, all the parameters, the setup, everything. It’s a 26-minute video and you can get that for free by clicking on the image in the top right corner of this video or in the description below the video. Once you do any of those, I will personally email the video to you with the rubber band trade strategy.

GET MY FREE MARKET ENTRY TIMING INDICATOR

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on Multiple Time Frame Trading Methodology on How to Draw Support and Resistance? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also, I’m giving away one of my favorite new Multiple Time Frame Trading Methodology on How to Draw Support and Resistance tutorials. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with the first video.

Those interested in Multiple Time Frame Trading Methodology on How to Draw Support and Resistance video that works in today’s markets also showed an interest in this video:
https://www.topdogtrading.com/support-and-resistance-trading-strategy/

Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
https://www.youtube.com/user/TopDogTrading?sub_confirmation=1