The Best Times to look for Forex trades

Whenever we enter a trade on the lower time frame, say the 4hr, we have to consider if it’s the best time to enter the trade and if we have the 'right eyes watching'.

For example, if we took a 4hr setup on the EURUSD pair whilst we are trading through the Asian session would this be wise as Europe and America are not trading? I think not!

Always bear in mind which markets are open and if they can have an effect on the pair that you are looking to trade.

The best time to look for intraday setups on the 4hr charts for most pairs is:

*10.00 and 14.00 GMT (I avoid the 06.00 and 18.00 GMT).

As I am based in the UK, this makes up most of my trading with the final 10pm daily chart being my final time to check for setups.

If you are based elsewhere in the world and want to trade the Asian sessions, just make sure the pair you are trading includes either the JPY, NZD, or the AUD.

Time table for trading sessions:

London - opens at 08.00 and closes at 17.00 GMT.

US - opens at 13.00 and closes at 22.00 GMT.

Asia - opens at 22.00 and closes at 09.00 GMT.

Note: I merge the Syndey and Tokyo sessions together to make the Asian session.

The best time to trade is when two sessions overlap, purely because we have more traders moving the markets.


Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Using Fibonacci Retracements to Trade the Forex

Fibonacci Retracements.

The Fibonacci retracements tool (fibs) is the only tool I use and before I go into how I use Fibs. I want to point out this tool is only used when we have a well established trend in place. Fibs are used by a whole host of different traders across the world, so it can be a useful accessory for us to utilise.

The Fibonacci retracement tool can be found on most trading platforms and will usually show the following common retracements: 23.6%, 38.2%, 50%, 61.8% and the 78.6%.

I only concern myself with the 50% and 61.8% retracement fibs, the rest are irrelevant to me.

So How Do I Use Fibs

When we have a nice trend in place, where a pair is making new highs and new lows. I employ the fibs tool to add confluence to key levels.

Whenever I see a key level has been broken and price pushes on. My radar is switched on to look for a pull back and a price action signal to form back at the broken key level.

I prefer to look to trade strong pull backs because if the pullback is too shallow it reduces the space for a trade to move back into. This is why I scrap the 23.6% and 38.2% retracement, as it isn’t a large enough pull back.

However, the 50% and 61.8% retracements give us much more space for a trade to move into, so these two are the only ones I consider valid.

So I stretch the fibs tool so it sits on the last swing high and last swing low and this will then show us the fib retracement levels. It very easy to modify the fibs tool to just show the 50% and 61.8%, just right click on the fibs tool and change the levels.

Remembering we only use fibs to add confluence if they form in line with a key level. The key level is way more important. Fibonacci just adds strength to the key level.

So I don’t use fibs in range markets, only trending markets.

Below is an example of how fibs retracement tool can add confluence to a key level:




Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Become the Hunter not the hunted

Hunters Routine.

So having a good trading routine set up will enable us to become more professional and consistent about where we look for trades to form.

At the end of every week, I have a weekly review of all my pairs, checking to see if I have the correct two key levels marked, one below current price and one above. I will then highlight any really nice potential key levels where I would like a large price action signal to form.

Remembering that the market has to come to our marked key levels and we then are waiting for the price action signals, turning us into the hunters, rather than the hunted.

Forex trading is all about taking money off other traders that have got it wrong, it’s a zero sum game with money just transferring from one trader to the other. So that’s why we need to be as professional as possible and look to reap the rewards off the undisciplined traders (the hunted).

Being able to patiently wait for setups to form can be a challenge but over time it gets quite satisfying, when you start to see trades forming at your key levels you begin to realise how simple trading can be.

One point I must make though and it’s very important, if we get price showing rejection at one of our key levels but no valid price action forms, we should not get annoyed and wish we had got into that trade.

We need both the key level and the price action signal to get us into any trade.

So What's the Best way to Hunt for Trades?

 

I like to use a price alert program to signal to me when a pair is at a key level, so at the start of the week off the daily charts I will set all my price alerts where I would really like a price action signal to form.

I will also monitor all of my pairs on the 4hr charts using the 10.00 and 14.00 (UK time) and then check the daily close charts at 22.00. So I am not at the charts 24/7, I just come to the charts 20 minutes before the time frames closes but remembering to only enter a trade once the candles closes.

We do not ever enter a trade before a candle closes because the market can turn on its head in seconds and a setup that was visible before can look completely different 5 minutes later. Let the candle close and be printed then set your orders.

If for some reason we get to the charts a bit late and a price action signal has formed where we were hoping, we need to stay calm. If price has already moved past where our entry point would have been we do not try to get into this trade. Let it go there’s always another trade around the corner, we don’t want to get into the habit of chasing the market.

As we have a set of very clear trading rules, the number of trades we take is limited and it can range from 1-10 trades a month. The problems that can arise from the low volume of trades taken per month, can be the inability to enter trades when they form. It’s like your killer instinct for spotting the best trades fades but the best way to keep your mind sharp and ready for those killer setups is to basically print out every trade you take and either make a trade album or stick them up on a wall somewhere, so you can see them every day to refresh your mind what a good setup looks like. It’s all too easy to forget exactly what killer trades look like and this is a simple way to get around this problem.

Summary

 

this article was designed to get the point across that we need to have a set routine. We need to come to the markets at the same time each day and look at the charts like clockwork. We have to stick to our trading rules and only enter trades that meet all of our criteria.

If we can do this, we will be acting in a professional manner and have the key attribute of discipline on our side. Becoming the hunters rather than the hunted is where we can begin to really master trading the Forex.



Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

How to Read Price Action to Trade the Forex.

How to Read Price Action.

Price action is the art of learning how to read and interpret the candles printed on our charts. I have already written an article in the “Basics” section of my website. If you haven’t read this yet, please take your time to read it – Trading with Price Action.

Price action is like a different language and it will take you some time to get to grips with it. Once you begin to understand the reason why certain candles are produced the story of price action begins to unfold.

The candles we look at that form the price action are amazingly informative, the size and shape of the candles can indicate the momentum. So large sized candles with large bodies indicate strong momentum and small candles indicate indecision (weak momentum).

We want to be on the side of the current strong momentum and so using the size of the candles and trading in line with the larger candles is very important.

Impulsive and Corrective candles.

Impulsive candles are very easy to spot, they simply show up as large candles usually with large bodies. So the high and low of the range is large and they really do pop out on the charts due to their size. They indicate strong momentum.

Corrective candles are the opposite, they show up on the charts as small weak candles, they tend to form after a large impulsive candle and indicate a time where the market is taking a breather before moving on.

As the markets are unable to continuously move in one direction, we have to expect price to reverse a little after a big move. The reason this happens is because when the market does make a strong move in one direction, traders who got in on that move have to take profit at some point and this is when we get price reversing or move sideways on us.

So we have defined that the size of the candle is very important and that we want to trade with the current strong momentum.

Candlestick wicks.

Candle wicks, are the thin pointy parts found at the top and bottom of the candles and they too can tell us a lot about what is going on. The wicks indicate where price has been rejected and the larger the wicks the stronger the rejection.

The wicks are our best friends because we can use them to help us mark our support and resistance levels (key levels). It’s not rocket science but like anything it takes practice to convert the candles structure into information we can use.

Check out – How to mark support and resistance levels.

Time frames.

The time frame on which we look at the price action is worth mentioning. The reason being the larger the time frame the more accurate and valid the price action is.

Why?, well if you compare the 1hr chart to the daily chart we have to realise that a candle that has taken a whole 24hrs to form is going to be way more important than a single 1hr candle.

Therefore, we must remember to make sure if we do venture onto the lower time frames to trade, the price action candle we take has to be larger than all of the other candles around it. All too often we will see pin bars or engulfing bars being printed on the 1hr charts but these are what suck in the newbie traders and cause accounts to be drained.

The best way to think about this is to ask yourself – “Does this candle stick out from the rest of the candles and scream out –TRADE ME!!!!”

This simple question will help keep you from taking those sucker trades, we just don’t need to take.

Putting it all together.

Therefore, the candles that get printed help us to read the price action, it’s like a jigsaw puzzle we just have to use all of this information and put it together to get a good picture of what is going on in the markets.

All the information we need is printed on the charts to help us understand what price has done previously, where price has been rejected and what the current momentum is.

No indicator or robot has the ability to do this, and this is why price action is a very competent way to assess the charts and trade consistently.





Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Trading the Forex with Price Action

Why is price action the best way to trade the Forex?

If you are new to the Forex markets you may have already been enticed into using fancy indicators, filling your charts full of colourful lines and curves. Price action trading is completely different, it strips back our charts to the bare basics. Price action charts look clean, easy to read and enable consistent technical analysis of the Forex markets.

 

So what is price action?

Price action enables traders to see all the information presented in a simple and easy to read format using candle sticks. These candle sticks can inform us about the opening price, the closing price, the high and the low of a 'candle', for each specified time interval.

Therefore, price action is a very simple yet extremely powerful technical tool.
The candle sticks have two main structural qualities:
1. The body of the candle - this is the coloured rectangular part of the candle stick.
2. The wicks of the candle - these are the thin pointy parts found at the top and bottom. These are very important as they show us where price has been rejected from. Longer wicks indicates bigger rejection.

Wicks act to help us mark our key horizontal support and resistance levels.

Below is an example of a bullish candle, where price has risen above the opening price. I use white to indicate a bullish candle but you can choose any colour you like.

Next is an example of a bearish candle, where price has fallen from its original opening price. I use the colour black to indicate a bearish candle.

The size of the candle stick can also provide us with valuable information. The simple rule here is the larger the candle the more momentum it possess and so in turn smaller candles indicate weak momentum.

Price action is like learning a new language but once studied it really does give us all the information we need to get a grip on where price has been and where price has been rejected. Thus, support and resistance levels can be marked using the price action on the charts.

Once you begin to follow price action, you learn to spot certain patterns forming. These patterns have a habit of repeating themselves.

Why do these patterns repeat themselves?

Simple, the market is run by humans and as humans we love to repeat ourselves when presented with similar circumstances. It’s just a basic instinct that we all possess.

Understanding this concept means we can use human habits to find trades that have a high chance of coming off.

This has to be taken with a pinch of salt though - although price can repeat itself we should be under no illusion that it's fool proof.

For example, say two trades that looked exactly the same formed one after the other on two different Forex pairs.  Can we expect both of them to have the same outcome - No!

The reality is that the Forex is its own master and can do what it likes when it likes and this is something we must understand. Yes we can use the price action to trade the Forex but the key is to learn how to take high probability price action setups consistently, to gain our edge over the market.

Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

If you want to learn more about trading the forex check out dontlettheforexdriveyouupthewall.com

Do Forex Indicators Work?

Reasons for using indicators

As soon as you enter into the forex markets you will probably be bombarded with information about indicators all claiming to do lots of wonderful things to help a trader become profitable.

I understand the first response for many traders is to try and find the easiest way to analyse the forex charts but do these indicators really help or are they just a distraction?

Placing indicators on our charts may help some traders and I have no problem at all with traders that use indicators as long as they do actually help but if you are honest with yourself, how many times has an indicator got you into a bad trade or stopped you entering a valid trade?

Indicators on the surface are attractive to many new traders because there seems to be an indicator for every specific situation, some indicate the current trend or momentum, some tell us when price is over bought or oversold, etc…. and so they seem to provide additional guidance, to add strength to a traders toolbox.

It’s very common to over complicate forex trading and trying to get too smart by adding indicators to analyse the markets is what can cause confusion and information overload. The lack of rules imposed on the forex means it is hard to know what we should and what we shouldn’t use to help us trade.

I myself started off trading with 2 exponential moving averages on my charts, thinking they would help me analyse the forex charts. The problem is you become quite reliant and attached to the indicators after a while and removing them is a hard decision. Thankfully, I did and haven’t looked back since.

I personally feel indicators are mainly used to mask the fact that some traders are unable to read the charts properly. Why use an indicator to determine what is exactly going on in the markets or when to enter or exit a trade, it just seems crazy!!

Drawbacks to using indicators

There are two main types of indicators, the first are known as “lagging” indicators, like for example moving averages. These present signals after the market has turned, meaning the market has already made the big move before you get the signal to enter the trade. So you basically miss the boat. So they are useful for when the markets are trending strongly but terrible when the market is range bound.

The other type are “leading” indicators, like for example RSI.  They try to predict when price may turn around and so are designed to help traders to pick tops and bottoms. The problem being they can be very dangerous and misleading because they produce lots of false signals before the markets actually turns. So in a strongly trending market they will tend to show over bought or oversold signals constantly. The leading indicators are more designed for range trading.

So what we have are two types of indicators which each work for differing market conditions. The next step many traders take is to then mix the two different types of indicators up, thinking it will help them to trade both trending markets and ranging markets. Sounds pretty complicated already, right?

So, here’s an example of a chart filled with indicators and one below it with no indicators. Which looks clearer and easier to analyse the current market to you?

Therefore, indicators do have some merits but also have some pretty big drawbacks. I guess they are so popular because they seem to take the hard decision making away from the traders that are maybe not confident enough to trust their own analysis of the market.

The use of indicators can also instill a false safety net and allow traders to deflect blame if a trade fails. Granted there is no trading style that will produce 100% win rates but atleast with price action and clean charts we the traders are making the decisions to enter and exit trades and not the indicators.

What’s the alternative solution

So what’s the alternative, well I really believe using price action and simple horizontal support and resistance levels is all you really need. Learning how to read the charts using price action is not easy and takes a lot of time and studying to become competent.

If you do decide to make the leap and study how to learn how to become fluent in reading price action, indicators just fall to the side-lines and you’ll begin to see how indicators can actually be a distraction from what is really going on in the markets.

Keeping the charts free from indicators, produces charts that are clean, simple and much nicer to look at, plus they remove all the information that is just not needed. “Keep it simple” I say.

Why not try it yourself, strip back your charts to the bare basics. I know it will feel very strange and almost like you don’t know where to look for trades to begin with but in time the art of reading price action does make sense.

You’ll begin to see that the market copies what it has done in the past and price just moves from one level to the next.

The harsh reality is there is no quick fix to learning how to trade, adding indicators will never solve the old problem of trying to making money in the Forex. They may well help new traders at the beginning of their trading careers but in the long term I’ve found them not to be an essential tool required to trade the forex consistently.

I hope after reading this article it may encourage you to consider removing the indicators from your charts and try just using simple price action with support and resistance levels to trade from.



Author.
My name is Jeremy Poor, I am a professional Forex trader and my aim is to help aspiring traders to learn all about trading the Forex using Price Action  and where to look and hunt for the best trades. With lots Forex articles, videos and a dedicated  price action forum to look at, its a great place to learn how to become consistently profitable at trading the Forex.

Trading the Forex using the Daily Charts

Trading the Forex using the Daily Charts.

Why is it so important to start with the daily charts.

With so many options available regarding what time frame we should use to trade the forex from, choosing which is the best time frame to start our forex trading journey is an interesting question.

The temptation to turn on the 1hr charts or maybe even go lower and immediately look for trade setups to form, is very high indeed. It tends to be the case that many new traders do follow this trend and completely overlook the daily charts.  Now, these are all completely natural emotions and wanting to get straight into the forex markets is very common.

It’s mainly because traders feel pressured into taking as many trades as possible to validate themselves as traders. This lack of discipline and hunger to be constantly trading the forex markets is a dangerous path to take and learning to be patient and waiting for the really strong setups on the daily charts is something most traders find hard to recognise.

Comparing different time frame candles.

Let us compare the data contained within a 1hr candle against a daily candle which has had 24 hours to form and therefore contains 24 x 1hr candles. The amount of data in the daily candle will be far greater and thus produce much more accurate candles to use to make a judgement on the current momentum in the market. Therefore using the more reliable daily candles will make reading price action a lot more consistent.

The frequency of how many price action setups, e.g. pin bars, form on the lower time frames will be much higher than on the daily charts. This means traders who focus too much on the price action setups themselves will find it hard to pass up on a juicy pin bar on the 1hr even if the level it’s forming at is not a very strong one.

The area at which price action setups form is the most important factor, using the price action merely as a way to enter a trade and this is why using the daily charts to pick where we want to find trades is so important.  Getting this the wrong way round and focussing our attentions on the price action setups, ignoring where it is forming is a big mistake. I understand when traders see a pin bar form on a lower time frames it is very easy to get excited and decide to take the trade but this is where traders can get stung.

Increased noise.

Studying a 1hr chart and comparing it with a daily chart highlights the differences which can cause traders to find it much more difficult to determine the trend, mark and find the key support and resistance levels and to know exactly where to look for trades.

The increase in noise found on the 1hr charts makes it a lot harder to read the price action accurately. The daily chart however removes a lot of this noise and makes the charts a lot cleaner and easier to read and this is why marking our key levels from the daily charts is so much easier.

Advantages to using the daily charts.

What’s great about using the daily charts to begin trading the forex is that you can still stay in your current employment to see if the forex is right for you. The amount of time needed to monitor a daily trade is very low and so not only will it keep you from watching the trade throughout the day, it also helps to remove the emotional roller coaster new traders can experience whilst in a trade. The illusion that we have to watch every tick on the charts is nonsense. We have no control over the market and so scrutinising every single movement is completely counter-productive and unnecessary.

You may also hear some traders complaining that the number of daily trades that present themselves each month is too low.  Yes, this can be the case because we are now asking for trades to have very high requirements and so this does have a knock on effect on the number of trades available. This in turn though, should work in our favour and increase our win rate as you now only take the really stand out trades, that scream out “trade me”.

Using the daily charts as our base chart to mark the key levels off is definitely the best technique. It means we find the really important key areas where price has a good chance of moving strongly away from. Which is where we want to look for trades to form.

Trading also requires us to make important decisions regarding entry, stop loss, take profits etc… and carrying this out on a 1hr trade compared to a daily trade is going to be completely different. The pace of a 1hr trade will be far quicker than a daily trade and require you to make very quick decisions under pressure. We all know making decisions under pressure can result in mistakes being made and this is why daily trades are a far better starting point allowing more time to make all our important decisions in a far less pressured environment.

When to use the lower time frames.

The progression to lower time frame trading should be a process that starts off from the daily charts and once comfortable then moving to lower time frames. Going down time frames is a very useful tool but only once experienced on the higher time frames is it wise to venture lower.

If you can’t trade the daily charts properly the chances of making consistent gains off the lower time frames is very slim indeed.

This does not mean lower time frames are redundant though, it just means they require greater experience and control which comes only in time. Once we have these attributes in place the lower time frames can be accessed.   

The attraction of using the lower time frames before mastering the daily charts can also be down to the fact that the size of the candles are smaller and so reducing the size of the stop loss. This should not be considered a plus point though, it doesn’t matter if the stop loss is 10 pips or 100 pips the amount we risk should be the same for both trades.

However, if you are a trader who finds yourself in a position where you are struggling on the lower time frames to make consistent gains, please take my advice and move up a time frame. Turn off the lower time frame charts and resist the temptation to even watch those charts.  It’s much better to begin again on a higher time frame and then once mastered move down lower if you feel it necessary.

Summary.

Therefore, the daily charts not only provide us with more consistent data and cleaner charts to assess the forex markets but also teaches us the patience and discipline required to trade the forex consistently. If you can just hold back the urge to go down to the lower timeframes and learn to master the daily charts first, the road to success will be a slow but steady one. If you think learning to trade the forex is a quick fix, think again!!!

It’s all to do with taking little steps and finding those eureka moments that open your eyes to what the forex is all about.

This may sound strange but I use a simple technique where I tell myself every day before looking at my charts, “I do not have to trade today”

Being a trader and telling myself not to trade may sound a little odd but it’s to promote a mind-set that requires the market to really “wow” me and produce a stand out trade setup that I cannot ignore.

Chasing the market like a dog after its tail is no way to trade the forex, making price come to you is a far more controlled technique. It not only teaches you about the patience and discipline required but also gets you to understand that sometimes, less is more when trading the forex.

The lower time frames certainly have a place in trading the forex but it’s far safer to begin on the higher time frames, like the daily charts and gain the knowledge and patience that can only be learnt first-hand through hard earned experience and many, many hours of studying.