Something Interesting in Financial Video December 2013 - page 2

Sergey Golubev
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Sergey Golubev  

21. How to trade a double top in Forex Part 2

Video 2 of 2 - In this Forex trading course video we discuss how to trade the double top pattern. Instructions are provided on entry and exit points and also where to put your stop loss.



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Sergey Golubev
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119543
Sergey Golubev  
197. Contango, Backwardation, and The Futures Curve

The next lesson in free futures trading course which discusses contango, backwardation, and the futures curve.


Sergey Golubev
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119543
Sergey Golubev  

Candlestick Charting - Vol 15 - Evening Star

Forum

Libraries: MQL5 Wizard - Candlestick Patterns Class

newdigital, 2013.09.14 19:53

Evening Star

The Evening Star Pattern is a bearish reversal pattern, usually occuring at the top of an uptrend. The pattern consists of three candlesticks:

  • Large Bullish Candle (Day 1)
  • Small Bullish or Bearish Candle (Day 2)
  • Large Bearish Candle (Day 3)


The first part of an Evening Star reversal pattern is a large bullish green candle. On the first day, bulls are definitely in charge, usually new highs were made.

The second day begins with a bullish gap up. It is clear from the opening of Day 2 that bulls are in control. However, bulls do not push prices much higher. The candlestick on Day 2 is quite small and can be bullish, bearish, or neutral.

Generally speaking, a bearish candle on Day 2 is a stronger sign of an impending reversal. But it is Day 3 that is the most significant candlestick.

Day 3 begins with a gap down, (a bearish signal) and bears are able to press prices even further downward, often eliminating the gains seen on Day 1.

Evening Star Candlestick Chart Example

The chart below of Exxon-Mobil (XOM) stock shows an example a Evening Star bearish reversal pattern that occured at the end of an uptrend:


Day 1 of the Evening Star pattern for Exxon-Mobil (XOM) stock above was a strong bullish candle, in fact it was so strong that the close was the same as the high (very bullish sign). Day 2 continued Day 1's bullish sentiment by gapping up. However, Day 2 was a Doji, which is a candlestick signifying indecision. Bulls were unable to continue the large rally of the previous day; they were only able to close slightly higher than the open.

Day 3 began with a bearish gap down. In fact, bears took hold of Exxon-Mobil stock the entire day, the open was the same as the high and the close was the same as the low (a sign of very bearish sentiment). Also, Day 3 powerfully broke below the upward trendline that had served as support for XOM for the past week. Both the trendline break and the classic Evening Star pattern gave traders a signal to sell short Exxon-Mobil stock.

The Evening Star pattern is a very powerful three candlestick bearish reversal pattern. The bullish equivalent of the Evening Star is the Morning Star pattern



Sergey Golubev
Moderator
119543
Sergey Golubev  
22. How to trade a double bottom in Forex Part 1

In this part Forex training series we discuss how to trade the double bottom. In this video we go through the basics of how to identify the double bottom and the characteristics you need to look for when trading it.


Sergey Golubev
Moderator
119543
Sergey Golubev  

23. How to trade a double bottom in Forex Part 2

In this 2nd part of the double bottom series we learn how to trade the double bottom pattern. By now we know how to identify it so in this video we will go through the details you need to know when trading it. With a risk/reward ration of 1:1 this is a great pattern to trade.



Sergey Golubev
Moderator
119543
Sergey Golubev  
198. Free Video Futures Course - What is Basis?

The next lesson in free video futures course which covers basis in the futures market.


Sergey Golubev
Moderator
119543
Sergey Golubev  

Candlestick Charting - Volume 16 - Morning Star


Forum

Libraries: MQL5 Wizard - Candlestick Patterns Class

newdigital, 2013.09.18 12:41

Morning Star

The Morning Star Pattern is a bullish reversal pattern, usually occuring at the bottom of a downtrend. The pattern consists of three candlesticks:

  • Large Bearish Candle (Day 1)
  • Small Bullish or Bearish Candle (Day 2)
  • Large Bullish Candle (Day 3)


The first part of a Morning Star reversal pattern is a large bearish red candle. On the first day, bears are definitely in charge, usually making new lows.

The second day begins with a bearish gap down. It is clear from the opening of Day 2 that bears are in control. However, bears do not push prices much lower. The candlestick on Day 2 is quite small and can be bullish, bearish, or neutral (i.e. Doji).

Generally speaking, a bullish candle on Day 2 is a stronger sign of an impending reversal. But it is Day 3 that holds the most significance.

Day 3 begins with a bullish gap up, and bulls are able to press prices even further upward, often eliminating the losses seen on Day 1.

Morning Star Candlestick Chart Example

The chart below of the S&P 400 Midcap exchange traded fund (MDY) shows an example a Morning Star bullish reversal pattern that occured at the end of a downtrend:


Day 1 of the Morning Star pattern for the Midcap 400 (MDY) chart above was a strong bearish red candle. Day 2 continued Day 1's bearish sentiment by gapping down. However, Day 2 was a Doji, which is a candlestick signifying indecision. Bears were unable to continue the large decreases of the previous day; they were only able to close slightly lower than the open.

Day 3 began with a bullish gap up. The bulls then took hold of the Midcap 400 exchange traded fund for the entire day. Also, Day 3 broke above the downward trendline that had served as resistance for MDY for the past week and a half. Both the trendline break and the classic Morning Star pattern gave traders a signal to go long and buy the Midcap 400 exchange traded fund.

The Morning Star pattern is a very powerful three candlestick bullish reversal pattern. The bearish equivalent of the Morning Star is the Evening Star pattern



Imtiaz Ahmed
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Imtiaz Ahmed  
great job man you r helping a lot
Sergey Golubev
Moderator
119543
Sergey Golubev  

Ichimoku Breakouts and Bounces

In this video we will discuss trading Kumo Breakouts, Kumo Bounces, Kijun Bounces and Kijun Breaks.



Sergey Golubev
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119543
Sergey Golubev  

How I Trade Breakouts

Forum

Indicators: TrendLine Touch Alert

newdigital, 2013.10.24 09:01

Simple Way to Trade Trendline Breakouts

Talking Points:

  • Always wait for the current candle to close beyond the trendline to confirm the break.
  • Enter into the trade when price retraces back within a few pips of the original trendline, trading in the direction of the original breakout.
  • Set your Stop a few pips beyond the trendline and set your Limit at least twice as far as your Stop.

Step 1. - Locating the Trendline

As a review, a trendline is a line connecting two or more lows or two or more highs, with the lines projected out into the future. Traders than look at these projected lines and look for future prices to react around those levels.


Step 2. – Wait For a Confirmed Breakout

Next, we need to see how the price reacts to the projected trendline. There are two potential outcomes when price comes into contact with a trendline:

  • The price will bounce off the trendline
  • The price will break through the trendline

So we wait to see if the price does in fact break through the price. But we aren’t ready to place a trade just because the price breaks through the trendline. We need to wait and see if the current candle closes beyond the trendline. We require a candle to close beyond the trendline to confirm the breakout. This is a very important rule.


Check out the chart above depicting a trendline on a current USD/JPY Hourly chart. There were two times in the past week where this trendline was broken, but look what happened. They were false breakouts. Sellers were not able to keep the price down below the trendline and both potential breakout candles closed above the trendline. Had we sold at either of those two opportunities, we would have been crushed two times in a row. Something we definitely want to avoid.

So even though it is tempting to get immediately into a trade as price breaks a trendline in real-time, you would be susceptible to false breaks. Patience is a virtue.

Step 3. Set Up The Trade

Remember the first image I showed you of the GBP/USD Hourly chart? Let’s go back to that example because it actually ended up producing a near perfect breakout setup. Soon after that snapshot was taken, the GBP/USD fell and broke through our trendline with authority. A very short time after that, the Hourly candle closed below the trendline and confirmed the breakout as well. Once this happened, it was time to get to work to setup this trade.

There are 3 things we needed to do to execute this breakout trade:

  • Set an Entry order to Sell just below the original trendline.
  • Attach a Stop order several pips above the trendline.
  • Attach a Limit that is as least twice as large as our Stop (increase your trading profitability by learning the importance of the risk/reward ratio).

There is a saying that goes “What once was resistance, can later become support. And what once was support, can later become resistance.” This is the mantra we rely on when setting an Entry order near the original trendline. We are looking for price to retrace back to the point of support/resistance it just broke through, and then continue back into the direction of the original breakout. Take a look at how the trade was setup below.


Our Entry order to Sell was placed a couple pips below the trendline, our Stop Loss was set several pips above the trendline (approx.. 15 pips from our Entry) and our Limit was set twice as far as our stop (approx. 30 pips from our Entry). Within the next hour, the price retraced back to the original trendline, and then move back in the direction of original breakout, exactly what we wanted.

So to recap, we were able to enter into a trade on a confirmed breakout, we were able to get in at a much more favorable price than entering the break in real-time, and we were able to set an extremely tight stop (read: lower our risk) beyond what should be a valid resistance level.
As it turned out, this particular trade was a success, but that doesn’t mean every trade will be a winner. However, you should take comfort in the fact that as long as you are using a 1:2 risk/reward ratio, you only need to be correct 33% of the time to break even. If you are right more than 33% of the time, you should be a profitable trader in the long run with this strategy.

Breaking Bad

Trendline breaks can be tricky to trade, but hopefully this article gave you a clear approach to mastering them. We've learned that you should always wait for confirmation of a break by requiring the current candle to close. We also learned placing our Entry order near the trendline will give us a better entry price and reduce our risk by allowing a tighter Stop. Setting our Limit as least twice as far as our Stop should also help shift the odds in our favor. Good luck with your trading!