FRACTAL WAVE TREND TRADING
They say that 95% that venture into the world of forex trading fail.
Could it be because one of the most important aspects of trading any financial instrument is overlooked.
Understanding that price is fractal could be vital and this could be be used to gain an advantage to follow trends rather than trying to predict where the markets are headed next.
A fractal is "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole,"[1] a property called self-similarity.
In trading terms the whole would be a wave (as the markets move in waves) and nested inside the whole wave are copies of the whole wave reduced in size.
Indeed this is a phenomenon that i witness on a daily basis across a range of markets and time frames.
Plant the seed and watch it grow , find the wave and watch it trend. .
So what causes this phenomenon ,is it the herd effect, more buyers when the markets are going up ,more sellers when the markets are moving down ,in fact this is a misconception that over the years seemed to gain popular consensus, of course there is more volume in the markets when there is a bias in one direction but this volume tends to be controlled by the major players in the foreign exchange markets ie. the central banks and various levels of trading institutions.
TREND TRADING
Trend trading forex is a simple trading methodology.
The trend is your friend – you’ve heard it a million times before and guess what – its true. This method only trades in the direction of the trend relative to its time frame using the lower time frame trend to enter into a trade and the higher time frame for confirmation of the cycle or wave.
An up trend is formed when price is making higher highs and higher lows.
A down trend is formed when price is making lower highs and lower lows.
During a trend we look for correction to enter into the trend.
We use prior areas of support as a target area in a down trend.
We use prior areas of resistance as a target area in an up trend.
We always use a stop loss and place our stop at a logical place as dictated by price action.
SUPPORT AND RESISTANCE
Resistance is an area where previously sellers out numbered the buyers.
Support is an area where previously buyers out numbered sellers.
We use the right side of the chart to view the trend and the left side to view support and resistance.
Resistance is found where the price previously made a new high then retreated to make a new low ,lower than previous low.
Support is found where the price previously made a new low then rise to make a new high ,higher than the last high.
PEAK AND TROUGH ANALYSIS
Its clear to see if you open a chart of any tradable instrument that the price does not move in a straight line but moves in what we call peaks and troughs moving either up down or sideways.
The peaks and troughs help us to see if the market is in a trend or range or reversal and also to find areas of support and resistance.
WAVES WITHIN WAVES
A fractal is "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole,a property called self similarity.
Fractals exist in nature These objects display a self-similar structure over an extended, but finite, scale range. Examples include clouds, snowflakes, crystals, mountain ranges, lightning, river networks, cauliflower or broccoli and systems of blood vessels and pulmonary vessels, Coastlines may be loosely considered fractal in nature ,fractals exist in may areas in life including time series or price series this means the markets we wish to trade are fractal too , you may have heard of elliot wave theory , although we do not use elliott wave theory to trade we need to recognise that the markets are fractal in nature and take this concept and use to our advantage.
We identify the beginning of a new wave this would be the whole part, we can then use lower degrees of time frames to identify the fractal waves that exist within the whole wave these fractals allow us to identify the trend moving in the direction of the higher time frame or whole wave and also to view the fractals that exist in the lower time frames to view the trend forming from the correction to enter back into the trend.
So if you are thinking of learning to trade any kind of market or are already involved in trading think of the fractal concept of waves within waves.
Www.123-trend-trading.com
They say that 95% that venture into the world of forex trading fail.
Could it be because one of the most important aspects of trading any financial instrument is overlooked.
Understanding that price is fractal could be vital and this could be be used to gain an advantage to follow trends rather than trying to predict where the markets are headed next.
A fractal is "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole,"[1] a property called self-similarity.
In trading terms the whole would be a wave (as the markets move in waves) and nested inside the whole wave are copies of the whole wave reduced in size.
Indeed this is a phenomenon that i witness on a daily basis across a range of markets and time frames.
Plant the seed and watch it grow , find the wave and watch it trend. .
So what causes this phenomenon ,is it the herd effect, more buyers when the markets are going up ,more sellers when the markets are moving down ,in fact this is a misconception that over the years seemed to gain popular consensus, of course there is more volume in the markets when there is a bias in one direction but this volume tends to be controlled by the major players in the foreign exchange markets ie. the central banks and various levels of trading institutions.
TREND TRADING
Trend trading forex is a simple trading methodology.
The trend is your friend – you’ve heard it a million times before and guess what – its true. This method only trades in the direction of the trend relative to its time frame using the lower time frame trend to enter into a trade and the higher time frame for confirmation of the cycle or wave.
An up trend is formed when price is making higher highs and higher lows.
A down trend is formed when price is making lower highs and lower lows.
During a trend we look for correction to enter into the trend.
We use prior areas of support as a target area in a down trend.
We use prior areas of resistance as a target area in an up trend.
We always use a stop loss and place our stop at a logical place as dictated by price action.
SUPPORT AND RESISTANCE
Resistance is an area where previously sellers out numbered the buyers.
Support is an area where previously buyers out numbered sellers.
We use the right side of the chart to view the trend and the left side to view support and resistance.
Resistance is found where the price previously made a new high then retreated to make a new low ,lower than previous low.
Support is found where the price previously made a new low then rise to make a new high ,higher than the last high.
PEAK AND TROUGH ANALYSIS
Its clear to see if you open a chart of any tradable instrument that the price does not move in a straight line but moves in what we call peaks and troughs moving either up down or sideways.
The peaks and troughs help us to see if the market is in a trend or range or reversal and also to find areas of support and resistance.
WAVES WITHIN WAVES
A fractal is "a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole,a property called self similarity.
Fractals exist in nature These objects display a self-similar structure over an extended, but finite, scale range. Examples include clouds, snowflakes, crystals, mountain ranges, lightning, river networks, cauliflower or broccoli and systems of blood vessels and pulmonary vessels, Coastlines may be loosely considered fractal in nature ,fractals exist in may areas in life including time series or price series this means the markets we wish to trade are fractal too , you may have heard of elliot wave theory , although we do not use elliott wave theory to trade we need to recognise that the markets are fractal in nature and take this concept and use to our advantage.
We identify the beginning of a new wave this would be the whole part, we can then use lower degrees of time frames to identify the fractal waves that exist within the whole wave these fractals allow us to identify the trend moving in the direction of the higher time frame or whole wave and also to view the fractals that exist in the lower time frames to view the trend forming from the correction to enter back into the trend.
So if you are thinking of learning to trade any kind of market or are already involved in trading think of the fractal concept of waves within waves.
Www.123-trend-trading.com
