Technical Analysis Explained - Types of Trading or Market States
There are steps the market moves in , and the steps can be set apart and then studied, one at a time . Also, these steps follow each other in a regular sequence , and this sequence can be analyzed and defined, item by item.
If the trading type can be understood that is manifested by the market at a particular moment, we can find techniques and even tools that work the best for a specific market activitiy . Also, You'll also find, if you know the type of previous trading , the trading occuring now , and the type of trading that will follow , we'll have an advatnage over other traders. We will always be able to choose the best tools to use , and we'll be prepared for the future . This is often half the battle .
Experience and a technical analysis explained course has taught us that the trading definitions must be crystal clear and without the slightest ambiguity , or we lose the value of our analysis. We want definitions that can be applied to any market , and to any timeframe . We need definitions that are both simple and robust .
Within the technical analysis explained series types of trading will be discussed in future articles, and we will find that simple definitions combined with careful observations can lead us towards success.
The starting point will be an overview that is simple, so you'll be able to get the big picture. Then we will start with our discussion of the market in a trend run . After observing trends in the market, we will see how the Drummond Geometry tools combined with time period analysis will enable us to find out where the origination of the trend will be, and where it will end . We will also see how our monitoring tools , the 1-1 zones and the envelope , go along with practical observations and theory collections . And finally we'll suggest some rules for trading that may provide some help as you develop your own trading plan .
Let's get our start ....
We divide all market activity into two major divisions : markets in congestion and trending markets . We can divide up congestion further into congestion entrance, congestion action, and congestion exit . We add trend reversal as a final market condition , bringing us to a total of five trading types .
The definition of what a trend happens to be is irrevocably attached with the position of the close of the bar vis-à-vis the Pldot . No other element is part of the trend definition, while there is much to say about trends and their own characteristics. A trend is always defined by this rule : If 3 closes occur on the same side of the Pldot, there is a trend. This rule is known as the three close, and no trends can occur without closing on the one side of the Pldot. It will never occur . Next in our series on Technical Analysis Explained Congestion Entrance will be the topic .
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Wondering how to trade in a trend ? Various tactices can be used. Some of the older traders believe trends happen to be easy since any old trading plan will work . Because prices are always moving in one direction , even if you start out with a bad trade position, it doesn't matter , since the trend will bail you out in the end . Some truth is there within this maxim, but trend trading can use some refinements as well .
We speak here of congestion action trading . Congestion action in a market is one that goes back and forth between congestion confines , between support as well as resistance ( or between the block level and dotted line in the terms of Drummond Geometry ). This is action in the market that happens in congestion , and when there is not a trend run. The Dotted Line is the level created by the highest high of the preceding up trend , or the very lowest low that the preceding down trend created.
If ever or whenever you are making a trade the question quickly rears its head : How and when do you leave with a profit? Pointing targets has to be one of the most important elements of your trading strategy , and this is the subject of the next article in our series Technical Analysis Explained.
Let's continue our discussion of congestion action trading in the article series about technical analysis explained.
Elliot wave calculator construction and its application based on fibonacci relationship is one of the most complex subject for many traders. The use ,construction of wave calculator ,guide line is being explined in this article.
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Created by David Lambert, the CCI was first used as an indicator for determining reversal points in the Commodities Markets. It was then discovered to be very useful in the share and forex markets. It is based on the theory that all activities move under the influence of cycles. The Maxima (+100) and the Minima (-100) occurring at regular intervals. The CCI measures the speed of price fluxuations as determined by oscillators.
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Even traders who enjoy success don't change styles of trading as the conditions of the market change; they find a pattern that usually brings success and they just stick to it . During those times when their style is not compatible with the market and they lose , they accept the loss and say that that is the way the breaks go . They seem to think their stock trading strategy all possibly trade styles, but this isn't right.
I hate to tell you one thing . The winner doesn't really do any thinking . Are you surprised? In reality, he really is bored.
If ever or whenever you are making a trade the question quickly rears its head : How and when do you leave with a profit? Pointing targets has to be one of the most important elements of your trading strategy , and this is the subject of the next article in our series Technical Analysis Explained.
The second tool to use is momentum tools. To make appropriate judgments you should use momentum tools and apply these tools to a timeframe that is smaller than that of which you are trading... in other words if you're trading on a daily chart, trying to pick either the low of the day or the high when trading, then for support for the intraday trading decisions you'd be looking at half hour or hourly charts .
Let's continue our discussion of congestion action trading in the article series about technical analysis explained.
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