Category Archives: Forex & Stock Education

How Fibonacci Confluences Work In Forex Trading?

There is no doubt that markets move harmonically. Each move in any direction is somehow harmonically associated to some other move in past. As traders we should be able to recognise these moves and make use of them for our profits.

Fibonacci confluence is an area/zone where more than two Fibonacci levels are in close proximity with each other. This zone has high probability of trend reversal and hence can be traded. Fibonacci confluence along with structure create powerful trading opportunities.

For example take an example as below. The zone marked in red had multiple Fibonacci confluences making is perfect zone for an trend reversal entry.

It had:

  1. 3 Drives Pattern completion
  2. ABCD Pattern completion
  3. 1.272 Fibonacci extension from last retracement
  4. 1.414 Fibonacci extension from previous retracement
  5. 50.0 Fibonacci level of impulse leg

It turned out to be a winner as the trend reversed from this zone achieving all targets:

#GBPUSD LONG IDEAS (200 SMA, ABCD PATTERN, STRUCTURE).-2png

Most common and major Fibonacci levels are:

  • 38.2
  • 61.8
  • 78.6
  • 1.272
  • 1.618

Other minor Fibonacci levels are:

  • 23.6
  • 50.0
  • 88.6
  • 1.113
  • 1.414

However it is important to note that not all Forex pairs use just major levels of Fibonacci. They have their own personalities. For example EUR pairs such as EURUSD uses these levels more often

  • 23.6
  • 50.0
  • 88.6

In the example below a confluence of 127.2 extension of last retracement with 88.6 of impulse was good enough to give us completion of two targets.

#EURSD 15 MIN LONG-2

USDCHF also makes use of these levels.

So it crucial to understand their personalities and use their usual Fibonacci levels to find the confluence zones.

Good Luck.

-TradeYodha

 

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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
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Best Financial Stock/Forex Trading Training Videos

These are some of the best financial Stock/Forex trading training videos that has helped me in past. I thank to all posters of these great trading videos and grant whole credit to them for their contents.

5 Candlestick Patterns

Candlestick Breakout Patterns

Trading Trend Lines and Channels

Harmonic Ratio Trading

Forex Trading

Forex Trading: Risk/Reward, Hedging

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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Must Read Books for Forex Traders and SmallCap Investors

Here are some Must Read Books for Forex Traders and SmallCap Investors

The New Market Wizards: Conversations with America’s Top Traders (Paperback)


List Price: £12.99 GBP
New From: £7.81 GBP In Stock
Used from: £2.94 GBP In Stock

Hedge Fund Market Wizards: How Winning Traders Win (Part of Set 9781118582978) (Hardcover)


List Price: £32.99 GBP
New From: £17.81 GBP In Stock
Used from: £24.10 GBP In Stock

One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Wiley Trading) (Hardcover)


List Price: £52.50 GBP
New From: £32.08 GBP In Stock
Used from: £33.29 GBP In Stock

Fibonacci Trading: How to Master the Time and Price Advantage (Hardcover)


List Price: £59.99 GBP
New From: £37.71 GBP In Stock
Used from: £42.00 GBP In Stock

1: Harmonic Trading, Volume One: Profiting from the Natural Order of the Financial Markets (Paperback)


List Price: £36.99 GBP
New From: £36.99 GBP In Stock
Used from: £31.63 GBP In Stock

Trade What You See: How to Profit From Pattern Recognition (Wiley Trading) (Hardcover)


List Price: £50.00 GBP
New From: £30.20 GBP In Stock
Used from: £26.77 GBP In Stock

High Probability Trading Strategies: Entry to Exit Tactics for the Forex, Futures, and Stock Markets (Wiley Trading) (Hardcover)


List Price: £57.50 GBP
New From: £34.05 GBP In Stock
Used from: £32.07 GBP In Stock

Come Into My Trading Room: A Complete Guide to Trading (Wiley Trading) (Hardcover)


List Price: £39.99 GBP
New From: £28.06 GBP In Stock
Used from: £6.67 GBP In Stock

2: Harmonic Trading, Volume Two: Advanced Strategies for Profiting from the Natural Order of the Financial Markets (Paperback)


List Price: £55.99 GBP
New From: £54.94 GBP In Stock
Used from: £86.29 GBP In Stock

Trading in the Zone (Hardcover)


List Price: £38.11 GBP
New From: £28.09 GBP In Stock
Used from: £30.78 GBP In Stock

Trade Chart Patterns Like the Pros: Specific Trading Techniques (Paperback)


New From: £76.66 GBP In Stock
Used from: £124.95 GBP In Stock

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
---------------------------------------------------------------------------------

Videos for Traders and Investors

Best Learning Videos for Traders and Investors

Floored: Into The Pit – Epic Trader Movie!

Mark Douglas – MIND OVER MARKET

A Market Wizard Speaks: Marty Schwartz

Trading Video Winning Methods of the Market Wizard Jack Schwager

Disciplined Trading Van Tharp

Trading Emotions & Psychology – Forex The Secret of Getting a Winning Psychology

Rise Of London’s Millionaire Forex Traders

Jim Cramer – Market Manipulation

Jim Cramer Tells You How to Trade Like a Professional

Cramer’s Hedge Fund Tricks

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 1

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 2

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 3

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 4

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 5

Ex-Goldman Sachs Trader Tells Truth about Trading – Part 6

How to Make Money Like Top Hedge Fund Managers

Wall Street Billionaire Traders Lifestyle

How we made our Millions

Qualities of a Winning Trader

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Making Money in London AIM Markets

Making Money in London AIM Markets

1. Never have ego. Market feeds on people with ego because they are one who are trapped more often and get their stops hit. They buy high and sell low. Is that how you usually do your shopping? Aren’t you supposed to buy low and sell high?

2. Market manipulation (AIM is heavily manipulated by hedge funds and institution who release news, tips etc. Watch Jim Cramer’s video on that, If you can not beat them in their game, you have no chance of survival. So at least stay in the game with them. They have the kind of money to move a stock up and down.)

3. Charts and market behaviours (You can not escape that. Chart shows orders filled and L2 shows orders in book. They tell you what will happen with 80% of accuracy in my experience not matter what RNSs. Charts are representation of market psychology)

4. Investment versus trading (hedge funds trade, novices invest in AIM. Read up on 4 emotional cycles link)

5.Never trust any one. Make your own decisions and research. If you are not capable enough, stop trading/investing and study markets.

6. Plan your trades/investments and follow that. Remember: “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win – Art of War”. This quote explains the difference between professionals and novices.

7. Trade what you see, don’t speculate

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Issues With RNS Based Trading/Investing – Simple Logic

Issues with News(RNS based trading)/investing are:

1. you do not know when it is expected
2. you do not know what it is or will be
3. you do not know at what price it will come
4. you do not know what is the max the share price will go up to.
5. you do not know whether and RNS is not something designed by Institutions.

For example: Let’s say a particular stock goes down to lets say 5p and then the long awaited RNS comes and I get a bullish signal and I enter the market at 7p.

Lets assume that on this long awaited RNS the share price can go up to 100-200% up but what really matters is point 3 above i.e. at what price the RNS came in. Lets say it it came in at 5p and the stock goes up by 200% so the price will be 10p. At this point the person who bought at 10p will NOT be in profit. He will barely break even. A person who bought at 10p+ price will still be in loss.

On the other hand, because I entered at 7p price I will be up by 40%+ at soon it hits 10p and if the market carries on further I will make more and more profits. In this example, in effect I have bought at low price and sold at high price. Whereas people who bought at 10p or 10p+ will still be either in break even or loss.

It is simple logic.

Remember: It is a war, plant it or lose it

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Dangers of Averaging Down Your Positions

One of the most common practices that investors and traders is average down. In simple terms it makes sense but some of the logical and obvious points are always ignored. Here are Dangers of Averaging Down Your Positions.

People who average down by adding at lower prices have following issues:

1. If their previous buys were at high prices then they will have to spend a lot more money to be able to bring their average to a break even level

2. You do not know when the market has bottomed out. What if you bought more at a low price to average down but then market falls further. Now you will have to buy even more. There is no end to it. Every time market falls further, you will have to spend more and more money to bring your average to break even.

3. By buying too many shares in the rush to average down, you are increasing your market risk exposure. That means if the company goes bust, you will be seriously out of pocket; much more than you previously were before you started averaging down.

4. If there is a heavy placement of new shares at low prices, it may dilute the stock value. The share price in that case may never return to its highest highs leaving investors/traders in losses for good.

It is all simple logic and maths. Take care.

Happy Trading

Remember: It is war there, plan it or lose it.

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
---------------------------------------------------------------------------------
Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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