Archive | Trading Strategy RSS feed for this section

Asian Trading Strategy

18 Aug



Stock Market Likely to Crash From Here

1 Mar

Triple Top?

The S&P 500 and Dow Jones are both once again near all-time highs…for the third time.  The old saying third time’s a charm can work both ways when it comes to the stock market.  Sometimes an index will bust through to new highs, and other times it will fail spectacularly crashing to new lows.

We should all be watching the behavior of the major indexes here, because the possibility of a major triple-top failure is quite high, for reasons outlined below.

If the S&P 500 fails at the triple top and breaks down, from a charting perspective the next thing for it to do is revisit the bottom and then make up its mind as to what it wants to do next.  The implication here is that a major failure of the S&P 500 will open the possibility of it revisiting the 600-800 level, or some 45% to 60% lower from the 1,500 level where it currently churns.

It will take some time to get to that level, typically 3-6 months, unless there’s some sort of financial accident to hasten things along, in which case it could all be over in a month or two.

SP-500-triple-top Continue reading

Swing trading in forex

2 Jan

Forex swing trading is a form of range trading. The swing trader attempts to capitalize on periods of market indecision, and aims to make use of support and resistance lines, channels and price patterns such as tops and bottoms in formulating his strategy.

This style offers greater odds of success for beginners as it doesn’t limit the trader’s attention to a couple of hours (unlike day trading), and because the swing trader doesn’t need to invest a lot of time trying to identify the perfect price for entry and exit. As long as the price remains within the range identified, and the periodic reversal patterns persist, the trade will return a profit. When the range breaks, the swing trader has no illusions about what he must do. His period of bounty is over, he can enjoy his profit and rest as he awaits the next suitable period.


Swing High

Swing high

A price bar is considered a swing high when the high of that bar is higher than the high of a certain number of bars before and after it. The Strength input specifies the required number of lower highs that need to be on either side of the swing high before it will be plotted on the chart.

Swing Low

Swing low

A price bar is considered a swing low when the low of that bar is lower than the low of a certain number of bars before and after it. The Strength input specifies the required number of higher lows on either side of the swing low.


Swing high and swing low bars can be used to calculate trendlines, support and resistance lines, and pivot points.

Needless to say, the main requisite for successful swing trading, as with trend following in general, is the correct identification of the range or trend. In doing so, the employment of both fundamental and technical analysis perhaps offers the greatest rewards, but the trader will usually choose the method that he favors the most. In either case, gaining a good understanding of the type of market experienced for a particular currency pair and formulating a defined strategy on that basis is the best course. As previously mentioned, the swing trader does not need to be precise about the entry and exit points; all he needs to do is catch the main movement, taking profit as soon as the price action runs out of speed at a point close the limits of the range identified.

Exit Strategy

30 Dec

Forex Exit Strategies

Traders often discuss entry strategies but rarely do they talk about how or when to exit a trade.  The exit strategy is without doubt one of the most crucial components of any trading system. This post gives a very basic overview, covering a range of exit strategies, for those who have little previous exposure to this area.   I will start off by showing some of the various forex exit strategies that are utilised by technical traders and follow this with chart examples to run-through a simple exit scenario in action.

Continue reading

How to spot False Breakouts

23 Dec

  Breakout trading has become popular as traders await many pairs to breakout from their consolidating ranges. Trading a breakout strategy is fairly straight forward; traders will look to buy a breakout of price above resistance or sell as price breaks through support. However, there is one question on the back of everyone’s mind. How can I avoid false breakouts?

A false breakout occurs when prices moves through a support or resistance level and proceeds to immediately move in the opposing direction.As a trader, you must be familiar with how to identify a false breakout over a legitimate break out. Many traders try and force trend entries when a breakout occurs even though the market has no intention of honoring that breakout.

Breakout trap

Continue reading

%d bloggers like this: