you know? Trading is not something difficult in principle, what really makes it difficult is the discipline that must be applied to be consistent and thus not die trying.
The strategy is not everything in this work, although it does have a great weight in the trading process itself.
To do things right, one must have "soaked in" as much knowledge as possible in regards to "reading" and understanding the graph that is our main source of information.
Concepts as basic as understanding what a Japanese candle is, its opening, its closing, the volume it moves, etc... may seem trivial to the majority who see nothing more than bars colored in red and green following a more or less erratic path.
But believe me when I tell you that a single candle gives a very large amount of data based on which one can extract a lot of information about the future.
There are people who only observe the "price action" in very small timeframes, for example 1', and simply enter the trade having "read" the previous 3 or 4 candles, exiting in profit as soon as the target is achieved, which can often be in a matter of seconds, obtaining an overwhelming success rate. This type of trading is called "scalping" and it is about "scratching" tenths of a percentage of the price movement in numerous operations, sometimes hundreds a day.
Obviously, if you do not have an exclusive dedication to this type of trading you cannot play.
Others, like myself, need more information to enter the trade, many times this information is provided by other things on the "game board" such as previously identified indicators and resistance and support locations.
In my particular case and at the present moment, I use the following for day trading or even for scalping:
- 15' time frame
- Support and Resistance
- RSI
- Exponential Moving Average of 200 (EMA200)
- a triple Supertrend
This combination of indicators and the price action can give me up to 4 BUY(or SELL) SIGNALS at a time, which gives me confidence and a high probability of success in the trade.
The chosen timeframe is vital here, what usually works in 15' may not work in 5' or 1 hour. Obviously, everything needs a lot of observation and testing, and for that, you need to do a lot of backtesting and trading with small real amounts to assess the strategy.
This is just an example, it is not the only strategy that I use, but the one that currently seems more balanced in terms of probability and benefit is therefore valid at the present time, but it may also expire and not serve in the future.
There are people who do the same but with another combination of indicators and even in other timeframes, MACD, ICHIMOKU CLOUD, Double or Triple MA crossing, etc...
First of all, you have to understand what each of these indicators do and tell you, you have to know what information they offer you.
For example, a Moving Average gives you an idea of the general market trend while an RSI gives you an idea of the intensity of the speed and the price change (it is a momentum oscillator) with which the second is usually used as a corroborator of price action.
It is therefore a matter of understanding what the market trend is in the observed timeframe and analyzing at each moment which movement is more likely to occur immediately after that analysis.
Finally, I do not recommend at all to use exactly what I have explained here. It is up to you to define which are the market conditions that you must "read" in the graph so that your set-up is confirmed.
I hope you enjoyed this post and found it entertaining.
This post is the third in "My Trading Guide" saga, if you liked this one take a look at the previous ones as they will guide you in the topics that, perhaps, interest you the most.
Enjoy!
Posted Using LeoFinance Alpha
Combining multiple indicators and taking a good trade is a great thing to do. It looks like you waited until the chart was set up to take that trade.
It is a fact that if one wants to work in this market, then a person must first have all the knowledge about it, otherwise, a person can only make a loss in it, and if a person does not have patience, then he will never succeed in this market. There should be no go within the market.
I have been in the crypto space for the last 5 years but I'm not able to learn trading. Trading doesn't attract me. I'm rather a holder.
Great overview.
#hive #posh