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Showing results for tags 'smart money'.
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Volume analysis is often an under-rated indicator. If Volume is normal, it really doesn’t say much. But when you see something out of the ordinary, like very high on a given day, you must conclude that Smart Money is active. And the trick is to judge whether that high Volume was buying or selling volume.
Hi friends, I am Vincent and I have been investing since 1985 and trading full time for the past three and a half years. I have learnt a lot from the various contributors at various websites such as Forex Factory, Traders Laboratory, etc. and am grateful for them sharing their experience so I decided that I am consistent, it will be good to share as well to help those that are still coming to terms with trading. The journey from being a passive investor to an active full time trader has been anything but easy. The psychological aspects cannot be underestimated. This is especially when one reads "you should not risk money that you cannot afford to lose." It's a sort of oxymoron when many retail traders that started had to do so because of age, etc. that made them relatively unemployable and being desperate for a "solution", they believe that trading is IT! The less capital that one starts with, the more the odds are stacked against them because the Catch 22 for them is they need to generate enough profits with as little as possible, that means higher leverage and also higher risks. A few bad trades could wipe out their entire account if they over leverage or have insufficient knowledge of how to trade. Usually BOTH are true when many start out. I used to consistently lose money until I learnt how to understand what was going on in the market. When I was learning trading with the many indicators and systems, it was not that they could not work but simply that they could not work for me for the amount of risk that I was prepared to take (typically my trades utilize a 15 - 20 pip stop loss for the EU and GU pair). Some systems, especially trend trading systems will require stops of 30-70 pips at point of entry, this was simply not feasible for me. It does not mean that these systems could not work but just that I could not bear to see the drawdown because often there will be drawdown and when that happens, many will not be able to take it and hence get relieved when they can get out with 20 pips after risking 50 pips only to see the trade run for 100 pips profit. It also explains why many traders let losers run and cut the winners short. They don't understand the supply/demand dynamics and why the market will retest levels of entry and they end up seeing the trade run away with profits that they could have made. They also fail to see that trading is a reward/risk endeavor where a high reward/risk will more than offset the inevitable losses. Intraday Trading can be really tough just based on indicators. Thanks to the works of Richard Wyckoff, Steve Williams and Chad/Sterling from "Day Trading Forex Live", it finally made sense and I could start piecing the jigsaw together. What was important was to understand the way the markets actually worked and find the tools and methods that work. I have incorporated the principles to develop my own system for intraday trading. I have a free blog called "Trek the Smart Money Trades" that provides a daily review of EURUSD and GBPUSD, with possible Smart Money price action and probable price levels. I have started by posting daily reviews on my blog and maybe later will add some of my trade setups, actual trades, etc. along the way. All tools that I use are freely available on the internet so it will not be difficult to follow me. I look forward to comments and will answer emails as best as I can. This is a free blog, if you find it helpful, my only request is to share/follow/tweet, etc for the google page ranking. This is the Market Analysis posted earlier today: DAILY REVIEW 24 Jul 2013 The daily EU candle is a below normal-spread (75pips) bull just off the high on vol >1days with clear bearish vol divergence. Price has closed above the FOMC spike high 1.3205. With the volume yesterday slightly higher than Mon and the price closing near the high, SM is likely to push higher. Price is close to the daily ema200 at 1.3249, this is a key moving average closely watched by many traders. This is also about the previous breakout retest level on a daily basis that was rejected at 1.3253 therefore even though the price has not reached the daily 1.3390 – 1.3400 supply area yet, this would be a possible area for SM to fade the weak longs to restock their inventory. SM has been creating selling pressure to fade the weak longs since last night which may well mean that they have commenced stocking up to go long later. While my bias is still long, I will be prepared to take profit at the 1.3250 level if price stalls with clear stopruns to the level and take a short back down. On the other hand, if price is able to breakthrough and does it on higher vol with each high, I’ll just hold the trade and look for 1.3290 – 1.3300 which is a previous congestion breakout level. If price actually closes below yesterday’s low during London, I will be looking to short at the retest of the breakout level as SM may go a bit lower before resuming the up move. EU long levels: 1.3184, 1.3163 EU short levels: 1.3250, 1.3305 GU: Daily candle small-spread small-body bullish spinning top (75pips) closed just off the high on vol>1day. Keeping in mind that we had bearish vol divergence yesterday and yet price made a higher high to 1.5390, the narrow body and range reeks of SM intention to sell. With H4 bearish divergence already playing out in Asia with the sell pressure created, if they stall above 1.5325 (yesterday’s low) and push back up, a stoprun/spike through the 1.5400 key level will see me go short as this has the possibility to reach the 1.5280 – 1.5260 level before reversing. If they break yesterday’s low during London, I will look to short at the retest of the breakout. GU long levels: 1.5325, 1.5280, 1.5260 GU short levels: 1.5390, 1.5400 Regards and Good Trading Vincent