A Comprehensive Guide to Profitable Trading; by YES

[YES]

**If you have enjoyed reading this thread or have benefited from the information here, please don't just leave, please contribute**

My name, even though it's a witty twist on the currencies (Yen, Euro, Dollar!), it is also an acronym for:

Yielding | Earnestness | Self-Mastery

Yielding - This is to do with the practice of patience and discipline. When you want to make THAT trade, stop, pause and think. Yield when the opportunity isn't the best and wait for a better one. Also yield early when you're in an losing position (getting out quick!).
Earnestness - Being diligent in every trading decision you make and being sincerely zealous in improving your trading knowledge and ability with every single day.
Self-Mastery - Self control over yourself, over your emotions. Having complete control over your trading and yourself in every way possible.

Let's be honest; we've all had struggles with the Forex and we're all wanting to better our trading results.

The aim of this thread is to teach people how to trade successfully; not just successfully but also consistently. It's a brilliant place for beginners and seasoned Forex traders alike; that's my goal.

Forex has to be one of the most difficult things in the world to master for most people. To be successful you need to have a good methodology; a control of your emotions and psychology; a dash of common sense and a massive amount of self control.

What Traders Need to Know
When setting out in the Forex, you should be aiming to increase your knowledge and skill, not necessarily your account size. Invest into your trading education and set a solid, unshakable foundation on which you can build something which is long last. Be like the man in the parable who built his house upon the rock, it lasted when the winds and rains battered against it in the stormy weather. This is a picture of a trader who has built a strong foundation of knowledge and experience. Don't be like the man who built his house upon the sand, who's house came tumbling down when the storm came. This is a picture of a trader who isn't prepared; one who hasn't built their sound foundation.

I think every trader should learn all of the following, inside out:

• Learn to lose (taking a necessary loss)
• Be able to read charts fluently
• Skilled in technical analysis
• Skilled in fundamental analysis
• Understand how different markets affect each other
• Know what effect different news has on a currency and how important it is
• Understand the underlying factors which drive price
• Have 100% self control over yourself
• Able to think of trading systems
• Able to test trading systems, realisticly and not be biased
• Know how to manage risk
• Understands the importance of money management
• Know when to stay out of a trade
• Knows when to enter and exit a trade, and how to limit losses
• Able to master one's emotions and psychology

Converesely, it's also just as important for traders to know what not to do. See below what traders shouldn't do:

• Being too proud to close out for a loss
• Trading because of the buzz it gives
• Over-leveraging and putting too much risk on the table
• Closing out a winning position too early
• Trading with a small account
• Feeling you always have to be in a trade / over trading

In each of those points above there is a massive wealth of information to digest and to learn, and it's for that reason why trading is such a complex business. It's a learning process which will continue for the rest of your trading life; every true trader never stops learning.

Practice makes perfect, and trading is no different.

Forex is a Business: Treat it Like One

Forex isn't a place for gamblers; it's a place for traders; it's a place for business persons who don't see FX as an easy way to riches, but rather a business which you build consistently; on a solid foundation. If you don't see Forex trading as a business you're chances of success will be diminished greatly. So when you hear that 95% of Forex traders fail (I presume 95% do), I would say they fail because:

• Naivety
• Lack of common sense
• They're out of their depth
• They don't know what they are doing
• They're crushed psychologically
• They don't have a method
• They aren't treating trading like a proper, genuine business.

Look at it this way; Does the HSBC bank see trading as a fun way to make money? Of course not; they trade as it's part of their business. It's all about numbers and cold hard cash. This is how it's meant to be treated; as a business; so try to adjust your thinking and approach it in this way.

For New Traders / Traders Struggling

If you're new or if you're a trader who has been struggling, you must realise that 'Trading Isn't Easy'. If trading were easy, everybody would be a successful trader and everybody would be doing it! This is a zero sum game, and by that we mean money is moved from one account to another. When you lose money when trading, guess where it's gone? That's right, it's gone into my account! I'm just joking, but seriously, when you lose money, that money which you lost has gone into the account of another trader somewhere around the world. So understand what trading is; it's you against other traders; your skill against theirs. They want the money in your account and they're trying to get it.

Now don't get me wrong; Foreign Exchange is much bigger than market traders as price movement is also influenced by Central Banks, Business Acquisitions, Business Transactions and smaller currency exchanges such as when you change money to go on holiday, etc. All of this has an affect on price. But back to my point; you're against other traders, so realise that it's a vicious dog eat dog business. You need to be on guard and protect your account at all times so the thieves of the market don't dip their hand into your pot and help themselves!

Once you understand that, understand this - There is a LOT of money to be made in the Forex. Yes, believe it or not, even though you may not have made a lot of money, a lot of traders do make hundreds of thousands or millions of dollars a year trading.

But let's zoom out a moment and look at other occupations such as dentists, lawyers etc; Most occupations which demand a six figure salary also demand many years of training, every day, for often 5 years plus. Therefore if you have just entered this business thinking you'll be making lots of money in 3 months, 6 months, 1 year, then I want to tell you that those expectations are completely unrealistic.

You need to see this as a LONG TERM learning experience and a LONG TERM business, not a get rich quick scheme. If you think you'll make killer money after your first year of trading then I have to tell you that the chances are you'll lose all of your money in the first year; NOT what you want; in fact, the complete opposite to what your goal is! Be smart!

Account Size

From my personal experience and from my experience with other traders, I have found that small accounts don't work. The majority of people don't have the discipline and self control to manage a small account. Of course, small is relative to the person, but all that matters is that the person's who's account it is believes his account is small.

If you think your account is small you'll be:

• Wanting to increase the size of it faster than is safe.
• Over-leverage to make more money per trade; therefore becoming over exposed.

For the amount of mental and physical effort which is invested in trading it's only natural that you want to have a high return on your efforts, but the only way you can do this safely is to have a large account.

You need to have an account size which you can trade lot sizes which you're happy with. If you NEED to be trading $1 a pip to be satisfied, make sure your account is big enough for that kind of leverage.

You need to be happy and satisfied with the value per pip which you are trading, and that value per pip needs to be at a sensible level compared to your account size for you to be successful.

Furthermore; You need to choose ALL, yes, EVERY SINGLE ENTRY very carefully, as every trade has the potential to wipe out a trading account.

If you're wanting to open an account with only a few hundred dollars I suggest you do so only with a micro account which trades contracts as small as 1cent per pip, and see this as a training experience in a live account; not to make killer money! Otherwise save your money and save up so you can open up a larger account.

What is a large account? - I have heard that brokers consider an account which is $5000 to be small and that first time traders who operate this sized account are likely to lose all of their starting capital. Traders who start with more than $25,000 are considered by brokers to have more of a chance. Ideally, this is the size of account you want to have as a base; $25,000 or more.

I know not all can afford this, therefore be cautious in any smaller accounts and know you're skating on some thin ice; just be aware of that reality.

To choose your trades carefully you need to have a plan, a method.

Don't trade with money you can't afford to lose - This is similar to saying, don't trade unless you have other streams of income which are supporting you, so if you do lose you're not relying upon trading profits to survive! Having the pressure of HAVING to make money from trading can have a detrimental effect on ones account as you'll make rash foolish trading decisions. That type of pressure can have mammoth effects on your trading.

On the other hand, when you trade with money which you're not relying on you will trade with a clearer head and a cooler demeanor.

[YES]

Trading Principles

The Price to Pay
I'm sure the majority of you reading this will agree with me when I say this; Trading is one of the most difficult professions out there. I think this is something to be proud of when you master it; and this challenge in itself is a draw for those who are hungry for a challenge.

But how do you get into trading? There are some routes to becoming a trader that aren't an option:

• You can study Finance or Banking as an undergraduate and then study a masters in something like 'MSc International Securities, Investment and Banking'.
• You can join a brokerage firm or any organization which trades and go through their training programme and take the exams.
• You can teach yourself through seminars, programmes, courses, books, videos and audio teachings.
• The school of hardknocks; learning from trial and error. This is the best teacher as nothing can replace the learning curve that comes when you lose money.

Each of these will cost you money! I don't know if you've noticed but trading books are very expensive! You can spend £50 ($80USD) on a normal hardback book on trading.

Trading courses can set you back thousands, and formal education can be upwards of $20,000.

Education is expensive, no matter what the subject area is. Doctors and lawyers pay between $20,000 and $30,000 a year to learn.

Now I'm coming to my main point - When you lose money in trading, this is part of your Trading education. Don't see it as lost money, but an opportunity to learn and to sharpen your craft. Learn from your mistakes and try not to make the same mistakes twice.

Don't expect your trading journey to be cheap or easy. It can take about 5 years to learn the ropes and cost anything up to $100,000 or more.

Trade With the Trend
I know you've heard it thousands of times, but how often to people go against the rule? Only trade in the direction of the major trend. If you trade with this one rule alone, you'll save yourself a lot of money and heart ache!

In an up trend, buy on the dips. In a down trend sell on the rises. A good way to buy on dips is the 50% Fibonacci level. You essentially want to be trading extremes but in the direction of the trend, just like a rubber band when you start to stretch it, it'll pull back.

How to Determine a trend?

The trend is your friend. Don't overcomplicate it. It works on every time frame as the principle remains the same. First, choose the time frame you want to trade, then follow these rules and you'll be fine.

*Rule* Make sure you have at least 200 bars on the chart - more the better.

• Down Trend - If the price starts in the top left of the chart and finishes in the bottom right of the chart; this is a down trend. The further price finishes in the bottom right, the stronger the trend.
• Up Trend - If the price starts in the bottom left of the chart and finishes in the top right of the chart; this is an up trend. The further price finishes in the top right, the stronger the trend.

Imagine you make a trade and immediately price races into the red. You're stacking up a bit of a loss in your account, but you know you traded in the direction of the bigger trend. More often than not, price will come back and get you out of that sticky mess. Now imagine if you had traded in the opposite direction to the trend and price goes against you... You're absolutely lost!

How to Know When a Trend is Over
There are several things to take into consideration when determining whether a trend is about to end or has ended: (assuming trend was an up trend)

1. Is price still above the supporting major trend line.
2. Price has stayed above previous major low (higher highs and higher lows).
3. Up waves are longer and stronger than the down waves.


Chasing Bad Positions

Have you ever heard the trading expression - 'Don't throw good money after bad'. This basically means, 'Cut off your losing positions'.

What every trader needs to fully understand is that EVERY SINGLE trade which they enter has the potential to wipe out their account. Once you truly register this thought inside yourself, you'll realise how important it is to control your risk and know when to cut off a losing position.


Feeling Good About Discipline
Letting losers run is one of the biggest mistakes people can make in trading. Most professional traders will tell you that you have to cut your losses and let your winner run. Then why is it that most people do the opposite; let their losers run and cut their winners short? People need to learn to love setting stop losses, and taking a necessary loss.

When I set a stop loss and take a loss, just the reward from being disciplined feels good and is a confidence builder; especially when you see that the market would have carried on going against you if you had stayed in the position.

It's better to take a loss, being prudent and disciplined in your trading, rather than breaking your rules and coming out with a winner. When you break your rules, when you don't set your stops and trades go FOR you, this is one of the worst things that can happen to you as a trader as all it's doing is reinforcing bad trading habits. Let me paint two scenarios -

Scenario 1

Imagine you've been in a bad trade and you take your stop loss away and let your loss run; your account has gone $10,000 into the minus ($8,000 past your stop loss level!), then the market turns back around and goes $500 into the profit, at which point you close.

Scenario 2
You're in a bad trade and you've set your stop loss at $2000 USD. The market isn't going for you and price hits your stop loss. Price eventually comes back around and would have gone into the plus if you had waited it out.

Which scenario is better? Scenario 2 is! With scenario 1, you are reinforcing terrible trading practices that will at some point be your demise as a trader. Come on, we are people of probability, when will you realise that if you practise these bad trading principles long enough even though you may have gotten away with it for years, eventually there will be that 'black swan' that will annihilate you.

In 'Scenario 2', you are reinforcing good trading habits which will be your success for years to come.

Learn to love that feeling of gratification when you're disciplined: There's no feeling like it, and there's nothing better to build your trading confidence.

Wealth Preservation
I have always found it easier to maker money in trading when I switch my mentality from 'making money' to 'keeping as much money as possible'. When you change your mentality from 'How much money can I make on this trade', to 'How much could I potentially lose', and 'I must protect as many dollars as possible as I can, you'll find that you cut off losing trades fast. A simple switch in mentality; appreciating and trying to keep every single dollar in your account, stopping that dollar from landing up in the pocket of another trader who was simply better than you from the mentality of how much you can win will increase your longevity as a trader exponentially! Mix this principle with 'Letting your winners run' and sooner or later you're going to hit some mighty tasty trades. The longer you're in the game, the more good opportunities you'll be exposed to. All you have to do it sift through the bad ones and cut them off before they take root and suck your account dry.

[YES]

Time Frames
This is probably one of the most important aspects of trading, yet it's probably given some of the least thought. Some say that the most important element of trading is the traders psychology, and I will go as far as saying that the time frame has a direct bearing on ones psychology. I find that trading on a larger time frame with larger stops, I'm not staring at charts all day; I'm not getting stressed out; I'm not working myself into a mental and emotional frenzy, but rather I feel I have a grasp and a 'control' of the market.

Have you ever been in a trade where you've been screen watching at such an intense level for days or weeks on end that you just want to get out of the trade and have some emotional, mental and physical rest, no matter the outcome of the trade? You come to the point where you don't care too much about the trade because you're 100% mentally, physically and emotionally spent. This has happened to me in my early days of trading those many years ago, and I can put it down to two main things. Firstly, I was over exposed without a plan and secondly, I based my trade on a lower time frame which was against the main trend. If I had simply traded on a higher time frame, set a stop loss a good amount beyond the trend line I wouldn't have been emotionally attached to the position as it didn't require a babysitter.

From my experience with talking with friends who have been in the broker game, there is a high turnover of traders who trade the lower time frames (1M, 5M, 15M, 30M). This is two fold; their accounts blow up within days or weeks and if they aren't blown up, quite often the trader will be slowly ground down and worn out mentally, emotionally and physically until they can't handle it any more. Do you really want this? Of course you don't. Ask yourself why you're trading? The bottom line is because you want to improve your lifestyle and you want to be happy. Now ask yourself what time frame you NEED to trade in order to improve your lifestyle and increase your happiness: Screen watching from 6am until 2am probably isn't it.

Overall, you need to trade a time frame which is natural for you and a time frame which you have the most success on. I can't stress enough; FIND the time frame which suits you and become a master at it.

In principle, the higher the time frame the more reliable the technical analysis will be. I only trade on daily candles and above. The weekly candle sticks are even more reliable than the daily candles as there are 5 daily bars in one weekly bar.

The higher the time frame, the less noise you'll have. The lower the time frame, the more accurate and precise you have to be on your entries and exits. The higher the time frame, the more slack you have in your entries and exits. If you're trading on 5M candles and you're aiming for a 10 pip profit, you're already starting off at a massive disadvantage with a minus 2 or 3 pip spread. The effort that it takes to grab those 10 pips can be so excruciatingly painful; it's no wonder that scalpers and day traders have heart problems from the stress!

Boooom! Blowing up You Account
If you're an honest person you'll admit that you've blown up an account. Okay, not everybody has but the majority of us have. Myself, when I started out trading blew up 6 to 8 trading accounts over a 3 to 4 year period. It wasn't that I wasn't learning from my mistakes as I was, it seemed that the market was throwing new lessons at me every single time! Sometimes my accounts lasted for days, some weeks, some months. My best was 5 months. I remember thinking on one of my accounts after I'd had it for 2 weeks and I hadn't blown it up, 'I'm doing well on this one, I haven't blown it up yet!'. Can you imagine my heart ache, shattered hopes, discouragement and emotional deflation which I had experienced over a 4 year period. This wasn't a 3 month downer, this was FOUR YEARS! Some of you reading this will have experienced a longer learning curve than me before I became consistent in my trading.

For those who have blown up an account, I will say this: Stick in there. Only the determined will win in this business so if you drop out from discouragement after 3 months, you're just not cut out for Forex trading. I stuck in there and have made a success out of it so there is no reason why you can't do the same. If you read up on the greatest traders in the world, you'll find that most of them have blown up at least one trading account when they started out - It's part of the process for most, so don't be embarrassed about it! It's the best trading education you can buy.

Keep a Trading Journal

I am going to suggest that all of you, from the newest to the oldest of traders keep a trading journal / Diary. Keep a track of every single trade you make. After enough time, you'll notice patterns appearing. You may notice that you're always losing on a Monday, or you may be making poor trading decisions just before lunch when you're feeling hungry. You may notice that you're constantly losing on a certain currency pair, but also notice that you're winning on another currency pair.

Without the use of a trading diary you may never even notice these patterns; however, by keeping track of all your trades in this way will enable you to eliminate the things that aren't working for you and allow you to focus on the things that actually work. It'll also be an invaluable tool in helping you avoid making mistakes more than once.

On every single trade, keep the following information:

• What Currency Pair I Traded
• Date & Time of Trade
• Stop Loss Level
• Take Profit Level Target
• Reason for Taking the Trade
• Strength of Conviction About the Trade (out of 10)
• Length of Time You Were in The Trade
• Profit or Loss of Trade
• Did You Stick to Your System / Initial Analysis (Yes or No)

Setting Trading Goals
Have you ever sat down with a pad and a pen and done some simple calculations on how much you could make if you could just make x% a week? Most of us have! We start with $3000 and expect to make $1000 a month. Then when our account reaches $6000 we think we'll make $2000 a month and so on. This is completely unrealisic. Some of the best traders in the world are over the moon when they increase their account by 30% in a year; and these are experienced traders who have been trading for years. I'm not saying you can't increase your account exponentially fast with a lot of luck; it happens! Hillary Clinton for example turned her $1000 into $100,000 in one year trading cattle futures.

I'm saying that it's a difficult journey from where you are as a new trader to becoming a successful trader. It's HARD in every sense of the word. New traders have unrealistic dreams and expectations in what they can expect to make in trading from the word go.

As a new trader I believe your goal should be to trade and keep your account for at least a year without trying to make lots of money. I think the goal should be capital preservation rather than capital appreciation. In this year, you will be gathering the tools you need into your tool bag, and you'll be building your foundation for long term success. A newbie trader who is dreaming of making big money straight away is like the story of the man who built his house on the sand. There is no preparation, no sound groundwork, no long term planning to build something which will last. They just have the immediate, the now, the 'must make it big straight away' attitude; and that's just another reason why there is such a high turnover in the Forex market: IMPATIENCE and GREED. I'm thankful now that trading is what it is because it's a way of making money that most people can't do.

The unfortunate thing is that every single person who trades THINKS that will make money. Every single trader (at least before they start trading!) doesn't believe they will be a part of that 85-95% of people who lose. Why would they expect that anyway; they've been successful in other professions in life, why not trading? Well that's the thing, trading seems to go against our natural inclinations and the way we work in real life.

Setting unrealistic goals leads to overtrading:

Over Trading
Over trading is another top reason for trading failure. We need to understand the root of the problem. The root of the problem usually stems from one of the following:

1. Setting unrealistic goals (trying to grow your account too fast)
2. By having set targets which you are trying to meet.
3. Trading for a living with an undercapitalized account.
4. Trying to claw back losses.

But I have a $25,000 account, isn't this enough? Well, it may be, but it depends where in the world you live and your expenses. If you made 35% a year on a 25k account, you'll be making $7500 a year. This will be enough for some, but for others it won't.

If you had a $100,000 account and made 35%, you'll make about $35,000 in a year which is a more reasonable figure. Therefore, to realistically trade for a living for most people, you'll need an account of $100,000 or more.

We also need to remember that different investment vehicles can expect a different return based upon the risk. The higher the risk, the higher you should expect your return to be. A government bond may yield 4% but it's one of the safest investments available. Forex is risky, therefore a higher return for the risk you've put up should be expected. I have used a figure of 35% as I believe this is a realistic figure for a consistent skillful Forex trader.

Trying to claw back losses - Imagine you have set a target of making $100 USD a day. You are making $200 here, losing a $100 there, but then you lose $1000 in one trade. The natural thing to do is to try to gain back those losses as fast as possible. You start to double up, even tripple your position sizes to claw back those losses. You make more trades than you would have; you even make trades you never would have if you weren't on a mission to gain back your losses. As a result you dig yourself even further into a pit of loss as you've been ignorant and unwise in your trading decisions. You need to pause, make a conscious decision to keep a level head and not chase those losses, but to continue with your level headed method and try to understand the reasons for those losses, and ultimately avoid them in the future.

ATR (Average True Range) & Setting Take Profit Levels
So you want to set a profit level but aren't sure on how to do it? I would suggest the use of the ATR indicator. For those who don't know, the ATR is a tool which measures the average range (high and lows of the the candles wicks) over a particular time period. The default you'll find in most trading programmes is a 14 bar period ATR.

For example, over the past 14 periods (bars), the EUR/USD has moved on average a range of this many pips for the following time periods:

M1 - 2.8 pips (in the last 14 minutes, price has moved an average of 2.8 pips per bar from bar low to bar high).
M5 - 5.8 pips
M15 - 9.5 pips
M30 - 13.3 pips
H1 - 38 pips
H4 - 70 pips
D1 - 178 pips
W1 - 383 pips
MN - 735 pips

If you're a day trader and you know that the average range price moves in a day is 178 pips, and price has already moved 170 pips, it's probably a good idea for you to close the trade, as squeezing out more may be unrealistic based on past performance (based on normal market conditions). The more pips you try to squeeze out of a trade at this point, the lower the probability of it being a success.

See the chart below for a visual idea of the ATR.

Try to keep in mind the ATR when making take profit decisions as if you make a take profit of 400 pips, and price moves in your direction, you can expect it to take at least 3 days at an ATR of 178 pips, so you know that you have to wait at least this amount of time at a minimum before your take profit level is hit.

I tend to set my take profits about 10-15 pips or so below a major resistance level, trend line or large round number. You always have to take into account the spread. If the spread is 3 pips and your take profit level is 1.5990, price will have to reach 1.5993 before your take profit level will be executed. Always remember, you buy from the ask and sell to the bid.

On top of the spread, price doesn't always reach the exact resistance point, so give a little room for price not reaching there. The Forex market isn't as mechanical as some people think, as it's all based on real people, money flow and supply and demand. If the demand isn't there to push price to 1.6000, it may only reach 1.5996: Therefore, if you had your take profit at 1.6000 your order wouldn't be filled.

Again, don't try to squeeze every single pip out of the market. You don't want price to miss your T/P by 5 pips, only to have it turn back and lose all of your profits. It happens; and if it hasn't happened to you, it will! I've found that over all, I've made more by not trying to squeeze every pip out of the market and having my trades hit their take profit and not have them turn around and head back on me.

[YES]

Double Tops and Double Bottoms
I consider a double top to be on a daily or higher time frame where price has gone to within less than 5 pips of a previous support or resistance and then has been rejected from that point.

When price breaks through this point of support or resistance on another day it triggers a buy or a sell order.

Trend Lines
Trend lines can be ambiguous things, where one trader sees a trend line drawn different to another. I've been taught to draw a trend line from the first 2 major low or high point in an up trend and down trend respectively. When price breaks a major trend line you can expect price to quickly retrace; therefore it's important to see if price closes above or below a major trend line as this will be the telling factor on a reversal in trend or whether price will start to simply range.

I have attached a current chart below showing both double tops and double bottoms, as well as a break of a major trend line which happens to be today. Today price has broken through a double bottom and a major upwards trend line, which is incredibly bearish. Watch to see if price on the daily closes below the trend line for a confirmation.



Trend Line Break in Action

As I mentioned yesterday, we needed to keep our eye out on that trend line from the start of July; that's a decent 2 month trend line. It was broken through yesterday and closed below the trend line.

Price then retraced back up close to the trend line (which was actually above the level which was broken through on the previous day. As you can see from the chart, price was rejected from this level and has turned bearish again.

This is a bearish signal, therefore you should be looking for entry points for short positions.

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Retracement & Fibonacci

Take a look at the H4 chart of XAUUSD below (Gold). What do you think happens next?



It's in a strong up trend, but be weary, the market is likely going to pull back at some point where traders are banking their profits and are waiting for the next move. This is what happens next:



There was a sizeable correction of over $200. It doesn't matter what time frame it is, the market works in waves and swings. There are retracements and we need to expect retracements in a trend. It doesn't matter how strong the trend is, there are always retracements at some point.

The best traders often make their best trades after price has retraced to a support line; at this area they trade in the direction of the trend.

But how do we know how far and where a market will retrace to? This is where Fibonacci comes in. For those mathematicians out there you'll know Fibonacci from your mathematics. He is famous for his sequence of numbers. In trading the harmonious levels of retracement are 23.6%, 38.2%, 50%, 61.8% and 100%.

Out of these the most important at 38.2%, 50% and 61.8%, as that is where the bulk of retracements stop and the original trend is continued. These are areas where price will usually stall. They are self fulfilling prophecies as so many traders place traders around these areas.

If the market is in an up trend and retraces to one of these levels, you know that if you place a long you won't be the only trader doing so. For that reason, Fibonacci retracement is a powerful tool in determining when to enter a trade in the direction of the trend.

Price doesn't always stop and reverse at the exact pip; price tends to stall and reverse in areas. If price breaks through 38.2% wait for it to stall and reverse before simply entering a trade at 38.2%. Learn to read how price reacts around support and resistance levels; it's one of the most important tools you can add to your trading arsenal.

You draw a Fibonacci retracement from the swing low to the swing high. This is not an exact science as some people will be looking at different swing points and will be drawing their Fibonacci at different levels. Try to draw the most obvious one which you believe most people will be looking at: that's what I did in the chart above.

In the chart above I have highlighted the area at which most retracements stall and reverse. This has been proven time after time, and it works, so try to add Fibonacci into your trading analysis.

I personally like the 50% level the most as it's the average level between 38.2% and 61.8%; the average of the area highlighted above.


Candlestick Patterns







This part will be about

Divergence.
Chart Patterns
Volume & Volume Spread Analysis

[YES]

Again - I want to reserve some spots for me as I'm planning on sharing all of my trading knowledge with you guys, so there is going to be a LOT.

This part will be about divergence.

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I'm going to reserve some more real estate here as I don't want the posts to be slit up. Forgive me admin.

[YES]

...some more real estate here as I don't want the posts to be split up. Forgive me admin.

[YES]

I will delete any posts that are not used, I promise!

[MKForex]

YES, very good topic and great refresher of the basics. Hope to see some more posts from ya