Brandon Wendell, CMT
Brandon Wendell
From time to time I discuss more advanced trading tactics and even technical indicators that I feel may enhance a newer trader’s ability to read price. However, you must realize that these techniques are designed to help you with identifying the price levels for trading. They are not to be your sole decision making process.
We need to keep our trading as simple as possible. Focus our decisions on when to buy or sell based on Online Trading Academy’s Core Strategy involving trend with supply and demand. That is the core strategy that we base our trading on and what we teach in our Professional Trader course. When we are sitting down to find trades, the first thing we need to do is to identify the trend we are trading in and even the trend of the larger timeframe. The trend will tell us whether we will have greater probability taking longs or shorts in our trading.
Once we discover the probable direction, we then need to identify the best entry and exit zones. I equate trading to riding a train. You first find a train moving in the direction you want, (the trend), and then board at a station (supply & demand zones). Trying to board the train between stations while it is in full motion is extremely risky just as it is financially risky to jump into a trend when it is not at a supply or a demand level.
We buy at demand and sell at supply for several reasons:
It is the area where we expect prices to resume a fast movement after a pause in the trend. If we are wrong, then we will have very small risk as our stops will be in a logical place that is very close to our entry.
By entering near the beginning of an impulse, (the dominant move in the trend after a correction), we are going to have greater profits than if we jumped in later as the trend was already moving.
If we buy or sell with the trend and in those supply or demand zones, we will have a higher probability of the trade working out.
When we trade, we want high profit potential, low risk, and high probability for our trades. This is a key to success. So how do the advanced techniques fit into our trading? They give us another perspective of price and can increase our confidence in taking a trade. You have to use those indicators properly though. Buy and sell signals in the indicators will always happen after we are moving away from the supply or demand levels so they are late. Divergence between an indicator and the price of your security or the indicator sitting in an overbought or oversold zone when we are hitting a supply or demand zone is an odds enhancer for your trade.
Trading is rules-based and needs to be as emotionless as possible. If you are unsure of the rules or how to identify the trend, supply or demand, then visit your local Online Trading Academy center and take a course. Proper education is the best way to protect your capital and grow your money consistently.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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