October 29, 2015 at 9:26 am
Back when I was still learning how to trade, I loved seeing trading examples of other traders. It motivated me big time. I also learned a lot from just staring at their chart and seeing where they took trades. So today I thought I will share a few trading examples with you. If you don’t already know, I mainly trade with Supply and Demand levels, combined with price action and candlestick patterns. The next examples will be focused on these types of trading. Without further a due let’s kick it off with our first chart:
Figure 1 – Trading Examples
These are two extremely straightforward trades. They happen about every single day depending on the timeframe you trade. Ok so in the example we saw a beautiful supply zone that was untested (fresh supply zone).
As price approached this supply zone, we saw that the market was taking out the smaller demand zones. This is a good sign for us because it means that when the market starts to sell off there will be no demand pockets to stop prices from going lower.
When the price finally reached the supply zone, we could have traded it straight away or waited for confirmation before entering the market. For the purpose of this example, we wait for confirmation. A few minutes later a Doji candlestick pattern formed that were perfect for a PUT trade. 15-minutes to 30-minutes would be an ideal expiry time for this setup.
After taking the trade, we saw that the market sold off quite strong and broke the higher low (HL) to the left and formed a lower low (LL). This indicated that the market was likely to form a downtrend. This means that we should be looking for more sell trades.
After a while, we saw the market make a pullback into a smaller supply zone (not marked on the chart). It formed a lovely bearish candle at our second arrow where we could have taken our second PUT trade. Again your expiry time could be 15 or 30 minutes.
There were obviously more trades on the chart but I just wanted to show you the most basic ones. You could also have gone to a smaller timeframe to look for trades.
If you have any questions, please feel free to ask
November 2, 2015 at 2:20 pm
Wow it looks so easy when I see some of your trading examples… Truly inspirational Alex! I have a question though – how many trades do you take in a day?
November 2, 2015 at 8:34 pm
Hi, Chrissie. Thanks, man 🙂
Now to your question. The amount trades I take per day will vary on most occasions. I only focus on high probability trades so if there is an opportunity I will take it, if not I will stay out of the market.
Working on the website keeps me busy so I trade on larger time frames than what I normally traded with. This means that I don’t get as much trading opportunities as I used to. The minimum trades I had taken before I started working on the website were 2 trades per day. Nowadays, I don’t get as much time as I used to. In my Trading Plan, one of my rules is to take at least one trade per day, so I try my best to achieve this.
All I really need is one good trade per day, and I’m sorted. That being said if I have more time to trade and the market conditions are favorable, I take anything from 1 to 10 trades.
November 3, 2015 at 8:46 am
Aaaah I see what you are saying. Yes, I wondered how you still manage to trade in between all the stuff you do with the website. Thanks for coming back to me. Please share some more trades when you get the time, I’m sure it’s not only helping me, but others as well
November 4, 2015 at 3:26 pm
Ok, so today I want to concentrate on the smaller timeframes. Trading smaller timeframes is a little faster paced than the larger timeframe trading. Trading with small timeframes is great if you don’t have a lot of time to trade, or you get bored quickly staring at charts and not taking any trades. Trading with timeframes from 5 minutes and down will keep you busy, especially if you are trading more than one pair at a time.
Most of the time I will mark of levels on a large timeframe and then trade the levels on smaller timeframes. In these trading examples, I used the 5-minute chart to mark off my zones where I want to look for potential trades. After drawing in the levels, I go down to a 1-minute chart to look for entries. The reason I do this is because I get much better entry prices on a smaller timeframe than what I would have got on a bigger timeframe.
Ok, so if you take a look at Figure 1, you can see I marked off a few levels on the EUR/USD 5-minute chart. The first level is a swap level as indicated on the chart. A swap level is a level that acts as support and resistance. You can use this level for buying or selling opportunities. Have a look at Figure 2 and 3 for trading examples in this zone.
Figure 1 – Levels on EUR/USD 5-minute chart
The second level I marked was a 5-minute Demand Zone. This is a good zone as it has a lot going for it. When price initially left the zone, it easily broke through the swap level. The only way that price could break through this swap level so easily is if there were big buy orders in the market. Usually, if there are big orders at a level, not all of the orders will be filled the first time. This will cause the price to come back to the level and fill the rest of the orders sitting there. When the price reaches this level again, the market will go back in the original direction as we can see in the above chart. Refer to Figure 3 for trading examples in this demand zone.
First we take a look at 2 put trades in the Swap level as marked in Figure 1. Price pushed into the zone without forming any demand pockets on the way up. This is an extremely good sign. If there are no demand pockets being formed as the price is moving towards the supply zone, there is nothing in its way to stop it. I also spoke about this in my previous trading examples. We had multiple entries at our first arrow to enter a put trade. As you can see, after price left the swap level, the price dropped like a rock. This was a sure winner.
Figure 2 – Put trades inside the Swap Level
The second red arrow pointed out another potential put trade. I will typically only take one trade per zone as the orders that were there are decreasing. But in this case, I decided to take the second trade as well because I saw that the market sold off aggressively the first time when it entered this zone. If you compare the reaction of the first and second trade, you can see that the selling pressure is getting weaker. Knowing this, it was a little too risky for me to take a third put trade. In hindsight, it would have worked out but like you can see in Figure 1 and 3 price eventually broke through this swap level.
After price broke through the swap level price came back to test it again. I saw a small Pinbar form that indicated that prices were being rejected. This was not the best Pinbar, but it was enough confirmation for me to take a call trade. The trade worked out beautifully. I saw that prices moved away very slow from this level, so I decided not to trade this swap level again. Thankfully I made the right choice as prices just blew right through it when it reached the level again.
Figure 3 – Call Trades
After breaking the swap level, the next level I was looking at was the demand level on the 5-minute chart in Figure 1. As price approached this level, I saw a few supply zones being formed. I waited for the market to consume some of this supply with the first push from the demand zone. When the market came back into this level, I waited for some confirmation before entering. A perfect Engulfing bar formed right at the edge of the demand zone marked with the second green arrow. After seeing this, I immediately entered a call trade which ended up being another winner. I knew that the price was likely going to continue upwards, so I took a few more call trades. I did not mark them on the chart. See if you can find them 😉
All in all, it was a good trading session for me. As usual if you have any questions, just shout.
November 6, 2015 at 1:20 pm
Lately, I have come to realize that a lot of traders struggle to find trading opportunities when trading with a naked chart. This is because there are no set rules when trading with price action as there is when trading with a system that uses indicators.
As you all probably know by now, I’m a big advocate of using price action combined with technical analysis to trade. Believe it or not, I also struggled to find trading opportunities when I stopped using indicators. I stared at charts for hours and hours just watching what the market does at certain levels. I slowly but surely started noticing “patterns” that occur in the market. After a while, I could pinpoint where the market will have a reaction. I thought to myself, am I just lucky? As time went by I started getting better and better at spotting levels and trading opportunities. I can say with 100% certainty that there is no indicator out there that can beat price action and “screen time” when it comes to trading. If you put in the necessary time and effort you will succeed!
Let’s take a look at the EUR/USD 5-minute chart. On this particular day, the market was in a trading range. This is a perfect market condition to trade using support and resistance levels. Supply and demand levels also work great in these conditions.
I spotted a nice support and resistance level the day before this particular trading day. Unfortunately, I could not fit everything into the chart. Anyhow, I inserted arrows on the chart each time the market touched this level and rejected it. There were 11 trades in total that you potentially could have taken. There were other smaller support and resistance levels also which you could have traded.
Figure 1 – Trading Opportunities
I marked off a good supply zone that provided two perfect put trades. This was a high probability setup. Firstly, we saw that the market broke the previous lows AND the support/resistance level when it initially came out of the supply zone. This tells us that there are some big orders at that level. Secondly, support and resistance levels generally act as a “magnet” for price. In this case, when the market entered the supply zone, big sell orders were sitting there, and the market was attracted to the support level just a few pips away. This was an A+ setup in my book.
I only caught two trades from the support and resistance bounces and one trade in the supply zone. So in total I got three trades that I was more than happy with. It is not necessary to catch each and every trade in the market. Go to your charts and see how price reacts to different levels.
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