So you have been through the course and looked at all the things I teach.
You have also recognised the importance of trading in line with my ethos and making sure that your psychology is good.
But maybe you are still struggling to put it all together in a simple easy to understand and manageable way?
Well, this section is designed to help you clarify all the things that you have looked at so that you find trading as easy as possible. First of all, I will remind you of the tools principles and rules that you need to adhere to at all times when trading and their order of importance. And then I will show you the main things that you should be looking for when starting a new day of trading.
First let’s start with our tools:
Next we have our core principles:
Finally we have a very important rule that ties in with all of this:
Price is King, if price action disagrees with your potential trade stay out.
So when putting a trading plan together or even deciding whether to enter a trade make sure you bear in mind the above.
Also the order of importance means that the rule is more important than the principles and the principles are in turn more important than the individual tools.
So assuming that you know all of this information how should you approach the markets on a daily basis with all this in mind?
Well you need to be looking for 3 main things from your trading day:
This is vital, because if you are not trading in the right direction you will have obvious problems.
To do this you need a confluence of reasons in order to get the correct direction. You will have far more success if you have multiple reasons telling you which way to trade.
The best tool for direction is price and specifically market flow and the best timeframes to look at market flow on are the daily, 4 hour and 1 hour charts.
So one tactic you could employ is to look at what the majority of those timeframes are saying in terms of market flow, the more of them that agree the better, having said that if you do decide to use just one I recommend that you stick with 4 hour. It’s important to remember that if you are looking to trade from a certain price; you need to make sure that market flow won’t change by the time price gets to your level; this will make sure that you are always trading in the right direction.
Once you know which direction you want to be trading in you can start looking for a place to buy or sell from in line with that.
One thing you can do is utilise the daily pivot trading Zones.
So let’s say for example that market flow is telling you to look for buying opportunities the next thing you could do to add strength to that potential trade is to look for areas of support within the daily pivot buy zone.
So for example, perhaps there is a Fibonacci overlapping with the daily S1 level and possibly this level coincides with a previous level of support and resistance on the price chart. This could be considered a very solid level of support from which to go long from.
This is a very important thing to make sure that have prepared before you even enter the trade.
It’s also vital that once you find a way of exiting the market you stick to this method consistently on every single trade that you take. It’s really important to realise that whatever you use there will be times when you wish that you used something else! Don’t worry about that you will never find a method that gets you out at the perfect place all of the time.
What you need to make sure that your exit method does is give you a profit after a sustained period of trading, if it does this for you it really doesn’t matter what your method is all that matters is that you follow it consistently on every single trade.
Even if you have a multiple confluence of market flow and your entry level is in the correct pivot zone and you have a nice confluence of support or resistance levels there if the price action on your charts is not agreeing with that trade it’s always best to stay out of the trade.
What I mean by price action is the formation of higher highs and lower lows on the chart.
If price is making a series of higher highs and higher lows, no matter what everything else is telling you it’s unwise to be looking for selling opportunities because the price is clearly telling us that it’s going totally against that direction.
Ideally you want to see price action that agrees with your proposed trade, so if you were looking to go long and you saw the higher highs and higher lows this would be an extra but major confirmer to your trade.
One very frequently asked question that I get asked is which timeframe to watch this kind of price action on?
Well the answer is that you can use any one that you feel comfortable with; they all work, and remember that the higher timeframes rule.
But if I was to recommend a timeframe for day trading and watching price action in this way I would suggest the 15 minute charts for your final check.
If you approach your trading day in the above way you will have great success in your overall trading but if you need any extra help, perhaps to confirm a plan you have devised or go over some trades that you have taken remember that the forums are there to support and help you develop into an independent Forex trader. Finally I will show you just how simple a trading plan can really be!
Next: Example Trading Plan