In this short article, we will share some practical tips for riding forex and stock market price fluctuations (or fractal waves). Read this article for your own benefit as it doesn’t cost you anything. Forex trading is basically a decision-making process for entering and exiting the market. The most important variable you have to look at is price. You need to monitor how prices change over time. Therefore, we share the best way to calculate market timing.
Step 1: Open the chart. This is the first requirement for any transaction. You need to look at the price to know what is happening in the market. In particular, when you apply a peak trough analysis on a chart, you will see the automatically marked lowest and highest points. The lowest and highest points are basically price fluctuations that have occurred in the past. You need to use these price fluctuations to read the rhythm of the market before making a deal.
Step 2: Look for significant horizontal support and resistance or diagonal support and resistance. In this example, we have drawn a horizontal support line to visually illustrate this process. Marking up support and resistance is a simple task using peak trough analysis of charts. Don’t underestimate them. It can take a couple of minutes to draw one or two important lines.
Step 3: This is the most important part. As in our example, the price is heading towards the horizontal support line. You need to assess the risk of making a reversal or breakout transaction around this horizontal support line. Then apply a turning point probability graph to evaluate the chances of a reversal or breakout. The probability of a turning point is measured between points A and B. This is one price fluctuation or fractal wave. Let’s take a look at that number.
From the turning point probability graph, at point B we can see that:
- The price turning point probability is 38%
- The probability of a turning point in time is 37%
In other words, at point B, we know that:
- Price trend probability is 62% (1-38%)
- Time trend probability is 63% (1-37%)
Interpreting this probability shows that the current price level is a bit immature to expect a reversal. As the price goes down further and touches the horizontal support line, you’ll see:
- Price turning point probability is 45%
- The probability of a turning point in time is currently unknown. Depending on how fast or slow the price drops, it can exceed 50%.
In the analysis in Step 3, there are two important points to understand. First, this trading opportunity does not fully support reversal trading. The chances of reverse trading can be much higher than the chances of breakout trading. The analysis in step 3 usually helps to find it. Second, it’s a good idea to carefully position the size, as it’s not too certain. In other words, you need to think about mild position sizes, not large position sizes. More simply, reduce the lot size of forex trading. Then you can conditionally increase or decrease the position size according to the surrounding market conditions. The final check is to check the surrounding market conditions. It is advisable to skip this opportunity if the surrounding market conditions do not support your trading direction.
In the long run, we recommend that you follow Step 1, Step 2, and Step 3. Step 3 is the most important analysis, especially because you have the opportunity to access the risks of the transaction. Visualizing transaction decisions is usually not an easy task. Therefore, this article is not intended to provide a complete list of analytical procedures, but is intended to be used only as a few basic guidelines. Enjoy this short, practical guideline. There are more educational articles in this link below.
For the time being, there are only two tools that can measure price and time turning point probabilities. The first is the MetaTrader 4 and MetaTrader 5 fractal pattern scanners. The second is the optimal chart.
Below is the landing page for the MetaTrader version of the Fractal Pattern Scanner.
In addition, to achieve this article. Watch this YouTube video titled “Breakout Trading vs Reversal Trading (Turning Support and Resistance into a Killer Strategy)” at the link below and experience breakout and reversal trading opportunities with support and resistance technical analysis. can do. In other words, you can direct simple support and resistance to a killer strategy for forex trading.
YouTube video link: https://youtu.be/UbORmOacKIQ
How to Ride Price Fluctuations or Fractal Waves in Forex-Must Read-Trading System-October 14, 2021
https://www.mql5.com/en/blogs/post/746271 How to Ride Price Fluctuations or Fractal Waves in Forex-Must Read-Trading System-October 14, 2021